How Time Warner’s Acquisition Increases Your Cable Bills

Those who value competition should shed a tear for Charter’s acquisition of Time Warner Cable. The cable and internet oligopoly just shrunk even further. The US lags far behind the rest of the world in speed, pricing, and availability of high speed internet, and much of that is due to consolidation in the telecommunications industry. The few players have nicely carved out the country among themselves, preferring dominance over a section rather than expensive face-to-face competition. It makes sense. Laying down fiberoptic cables and building radio towers are expensive propositions.

It should come as no surprise then that after the acquisition, Time Warner immediately shook up their internet offerings. Previously, they had a $15 per month “everyday” package and a $30/month “basic” internet package. Those are gone. The cheapest remaining option is the previous mid-tier “extreme” package, at $35/month promotional pricing. By lopping off the low end, Time Warner nudges everyone slowly along the ladder to higher price points, making the company more profitable.

This is not consumer friendly! If their intent was to bring faster internet to all, they would have kept the same price points and instead raised the speed for each tier. That’s not what happened.

old twc internet options
The old internet plan lineup
new twc internet options
And now… After the acquisition

Oh, forget about being grandfathered in on the cheaper older plan. Time Warner has already planned for those people. You see, the advertised price of $15/month for the cheapest internet is actually $35/month with a $20/month promotional discount that lasts for a year. After that year, you can either re-up for another yearlong contract for whatever discount is offered at that time. By trimming the cheapest plans, Time Warner will count on attrition to nudge people on the older plans to upgrade. How cunningly have they planned things, for the $35/month true price for the cheapest internet matches the promotional discount price for the cheapest package offered after the acquisition (the “Extreme” plan). Someone on the Everyday plan whose promotional discount has already run out will compare the two and decide to “upgrade” to the Extreme plan for no change in monthly payment  and faster speeds.

While this is a big argument for telecom to be regulated like utilities (it won’t happen here; there’s too much money to influence government), what options does the little guy have? We can take cord cutting to the next extreme by refusing to play. Vote with our wallets and give up the cable or DSL internet and rely fully on LTE 4G from our phones. With tethering, we can turn our phones into wifi hotspots and broadcast internet to all devices that can connect to it. Tmobile offers a nice 4G package that’s throttled, not data capped, past a certain data limit. For the average consumer who consumes media and doesn’t need a fast internet connection, this should be plenty to meet his or her needs.

If you live in an available area, look into Google Fiber. Originally started in Kansas City, it’s now spreading across the country as a way to get high speed internet on the cheap. The lowest tier option gives you fast and free (!) internet at the price of a one time set up fee. What’s more, Google’s goal is to use fiber to bring more people online and to get them to use Google’s services. They don’t need to make a profit from being an ISP (internet service provider). That’s why I anticipate that they’ll be able to keep prices low going forward.

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