Cable Bill High? Phone Costs Up? Now, Let's Talk
by Vishesh Kumar
Friday, January 23, 2009
Frustrated with his hefty and mounting monthly bill for TV, Internet and phone service, Alan Weinkrantz of San Antonio decided to call his provider, AT&T, shortly before Christmas to ask for a discount.
"Times are tough, and I don't think I can keep paying these rates," Mr. Weinkrantz says he told an AT&T representative. A communications-industry consultant who keeps a close eye on the space, Mr. Weinkrantz says he hoped for a reduction of about 10% to his $159 monthly bill.
To his surprise, AT&T reduced his bill to $94 a month, a drop of almost 50%, for a one-year period. "I was very surprised," Mr. Weinkrantz says. An AT&T spokesman declined to comment on the specific bill but said that "we work hard to give our customers the services they need at the best price."
Mr. Weinkrantz is among a number of savvy customers who realize that while times are tough for consumers, they are also tough for cable and phone companies. Under intense pressure from Wall Street to keep subscribers as the economy sags and competition intensifies, many carriers are bent on retaining customers even if it means offering big price breaks.
"The key is to hang on to every possible customer right now," says Alex Dudley, a spokesman for Time Warner Cable, the country's second-largest cable operator by subscribers, after Comcast Corp. "They are our lifeblood." Mr. Dudley says that Time Warner Cable is also more receptive to giving stretched customers a discount during these tough times.
On the surface of it, the country's biggest carriers continue to boost prices despite the downturn. In January, Comcast and Time Warner Cable raised year-over-year prices by 6% for TV services, notes Craig Moffett, an analyst at research company Sanford C. Bernstein. AT&T Inc., meanwhile, increased the price of high-end services, such as bundled movie channels, by 30%.
Behind the scenes, however, the companies are much more accommodating. Many are offering steep discounts to keep, win or win back customers. Consumers, reeling from the recession, are crafting novel ways to cut costs, including switching to cheaper prepaid cellphone plans and using Web-enabled mobile devices to connect to the Internet instead of buying home broadband connections.
Negotiating with cable and phone companies may present a more direct route to saving on communications services costs. And companies are often happy to make deals with customers -- particularly if that allows them to poach them from rivals.
Louis Christie of Merrick, N.Y., left Cablevision Systems Corp. a few years ago for Verizon Communications Inc.'s FiOS TV, broadband and phone service. But after his introductory offer from Verizon expired and his initial price shot up, Mr. Christie says, a representative of Cablevision knocked on his door to persuade him to come back.
"The representative sat down with me and told me what the new cost could be, and my mind was made up," says Mr. Christie, who now pays Cablevision about $120 a month, down from the $226 a month he was paying Verizon for the three services.
Carriers' quest for customers is heightened by the battered housing market, since providers often target new customers when they move. "Faced with fewer purchase occasions, competitors are left to resort to more aggressive promotions to counteract the inertia of staying put," Mr. Moffett says.
That is leading to a slew of new deals for customers, some of which the carriers aren't marketing aggressively.
Many of the steepest breaks tend to be for so-called triple-play bundles of TV, Internet and voice service, since customers pay the most for subscribing to all three. Comcast now offers economy bundles that include scaled-down versions of all the services for lower prices.
Phone companies like Verizon and AT&T, meanwhile, are allowing customers to substitute cellphones for land lines in these bundles and still receive discounts. The move encourages customers to cut their land lines -- acknowledging that redundant phone connections are among the first services to go in tough times.
But discounts also include individual products. Last week, Verizon launched a new offer for a low-end DSL service -- it operates at slower speeds -- priced at $17.99 a month. For under $20 in some areas, Verizon and AT&T allow customers to sign up for "naked DSL," which allows customers to have a broadband connection without subscribing to a land line.
"If a customer calls to disconnect, we are not going to just let them go," says William Kula, a Verizon spokesman. "Our representatives try very hard in these times to keep customers rather than have them peel away to rival companies."
Emboldened customers say they plan to negotiate in the future. Mr. Weinkrantz says he will push to keep his cut rate once the six-month offer expires. "I already told the company to mark the date it expires on their calendar," he says, "because I will be calling them to ask for another year of the low price."
Write to Vishesh Kumar at [email protected]
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