Major cable operators are experimenting with various types of service agreements that offer customers discounted bundles or static pricing in exchange for contracts of set duration.
First alluded to by Time Warner Cable COO Landel Hobbs at last month’s Deutsche Bank conference (CableFAX, 6/5), special options from Time Warner Cable are available in Kansas City and Staten Island where new or existing subs may opt for discounted monthly rates on double- or triple-play bundles that are "locked-in" through a sliding scale.
For example, one triple-play service option in Time Warner Cable’s Staten Island market carries a $115/month retail price, but subs may agree to 1 year of service at $109/month, or 2 years for $103/month. Numerous variations exist, and termination fees (approx $150) apply to most of the offers. Roll out to 4 additional markets is planned for this year.
Comcast deals are available in Philadelphia and several Midwest markets but are much more qualified: only 2-year agreements are offered, and only with regard to triple-play bundles. Termination fees apply. The real benefit, a Comcast spokesman said, is the "lock-in" pricing.
Meanwhile, Cox Communications said it has tested service agreements in the past, although the MSO declined to disclose specifics on its exact current and future plans. "We are still using our marketing sciences approach to determine the appropriate role, if any, for agreements in our [bundled] offers," said a spokesman, who cited "aggressive" offers by marketplace competitors as the chief reason for pondering use.
Specific to Time Warner Cable’s discounted offerings, Pali Capital analyst Rich Greenfield isn’t sure what to make of the gambit. "Feels as if, Time Warner could be worried about triple play churn (unclear if this relates to Verizon FiOS activity in the market)… maybe Time Warner’s triple play pricing in year one is simply too high to drive penetration as fast as the company wants in the NY area." Of note: Verizon services NYC, and AT&T lurks in K.C.