Think about that for a minute…

By Steve Effros Fudging Reality When was the last time that “list price” meant anything? Did you buy your last car at “list price?” How about the magazine subscription, newspaper home delivery or published price of the hardcover book you just got from Amazon? In the case of the car, particularly, there were discounts, add-ons, maybe an extended warranty and a dealer “incentive” of “free” oil changes. So what was the “price” you actually paid, for what? Certainly you started out buying a car, but it is far more complicated than that (were you offered a “deal” on financing? How much is that worth in the “value package?”) The same is now true in telecommunications. A significant and increasing number of cable customers are not simply buying “basic” or “expanded basic” cable service. They are getting that video delivery combined with additional “premium” channels, a DVR recorder, digital delivery or HD, and VOD thrown in as well. That’s just the start. A rapidly rising number of our customers are getting a “bundle” of the services we, as broadband suppliers, let them access, including telephone or internet service. So what is the “price” they are paying? And for what? This is the time of year when both regulators and journalists engage in the “yearly comparison” game of charades regarding cable. What was “the price” of “expanded basic” last year, what is it this year, what is the percentage difference? And, I would add, what relevance is there to that number? The headlines proclaim that increases are higher than the rate of inflation, or the consumer price index. The reporters go home happy that they didn’t have to report the reality, which is much more difficult to explain. And the policy makers go home happy since they can use the headlines to justify whatever it is they had already decided they wanted to do. The loser, of course, is the consumer who is no better informed after the game is over than when it started. I have lamented about this for years; the comparison of cable prices to the CPI, for instance, which measures static product costs, like a can of soup as opposed to cable’s offerings, which are incredibly dynamic. I have also used comparisons, like noting that unleaded regular gas went up over 19%, or the average cost of a movie ticket is now up around $7 while that same two hours of video entertainment on cable costs around eleven cents. But those efforts have been less than successful because it is just so easy for the headline writers and the regulators to keep repeating meaningless numbers to justify what they write or want to do. So let’s stop helping them. Our value equation is far more complicated than comparing one set of numbers. The value of the access cable provides to the broadband universe of video, telephone and Internet has increased exponentially. It is totally misleading to take one little piece and attempt to compare it on a year to year basis, especially when even that little piece has changed and become more valuable (as proven by increased viewership) with new, better and additional programs. Let’s not let them make simplistic comparisons any more. Instead, when asked, point out that the “comparison” is false and that the value of a bundle includes the ability to bundle in itself. Consumers, if not writers and regulators, appreciate that. It’s why our customers are buying new services and bundles in ever increasing numbers. Give them those numbers. Don’t help them fudge reality.