Cable TV: King of misleading come-ons

The hits don’t stop there. Here’s a few other Comcast ARPU-enhancing tactics, pulled from the attorney general’s memo.

• Promoting Comcast's higher-priced digital packages, like its "Digital Gold" video programming, without disclosing to consumers that they could purchase less expensive digital cable packages
• Overstating the number of channels available on digital cable packages by failing to distinguish among video, music and pay-per-view channels, and overstating the capabilities or benefits of Comcast’s "On-Demand" and "Digital Video Recorder" services
• Charging a $5 monthly rental fee for a converter box and remote control, even for consumers who did not need the converter box and remote to get their programming
• Advertising "free" installation, but then charging consumers for installation and requiring them to redeem coupons or vouchers to receive an installation credit. In some cases consumers were unable to receive the "free" installation as advertised.

There’s no need to pick on Comcast, however. Time Warner Cable had a similar run-in with then-New York Attorney General Eliot Spitzer just a year earlier. Spitzer’s office found that Time Warner offered three-month teaser rates to consumers without disclosing that they had to keep the service for 12 months to get that price.

In another instance, the company offered “free Digital Cable TV and free HBO for one year.”  But there was a Gotcha. Consumers received free HBO and free digital equipment but still had to pay extra for monthly digital access. And in another case that might sound familiar to many subscribers, Spitzer’s office found consumers who signed up for a “$24.95 for four months” special who were actually charged higher prices during those four months. Finally, Road Runner Internet broadband customers who signed up for a promotional discounted Internet service later found out they also had to order cable TV from Time Warner — or else the Internet discount was forfeited. Such bundling is great for ARPU, but bad when a state attorney general notices.

Cable’s humble beginnings
The first cable television subscriptions cost about $3. Cable’s unceremonious invention is often credited to engineer Ed Parsons, who in 1948 rigged up a crafty community antenna and married it with long cables to bring television to his home in remote Astoria, Ore.

Parsons simply wanted to let his wife watch the new Seattle TV station, which had gone on the air a few months earlier. At the time, no one could have imagined he was inventing a multibillion-dollar industry that would become a king of sneaky fees.

In fact, cable came simply because Parson’s wife, and millions of other Americans, didn’t live close enough to broadcast stations to receive a signal. CATV, the most familiar abbreviation for cable, actually stands for community antenna television, and literally means sharing access to a superpowered antenna. Parsons discovered areas where signal strength was particularly strong, atop a nearby downtown hotel, erected an antenna, and then strung wire — coaxial cable — to his apartment across the street.

The addictive power of cable was clear from the start. As Parsons tells the story, from the moment he flicked the switch on cable TV in his apartment on Thanksgiving Day 1948, he said the couple “literally lost our home.”

“People would drive for hundreds of miles to see television. We had gotten considerable publicity. … And when people drove down from Portland or came from The Dalles or from Klamath Falls to see television, you couldn’t tell them no.”

To get the crowds out of the way, Parsons strung a similar cable into a nearby hotel lobby and turned on a TV there.  Soon, he had to shut the service off because the lobby was so full of visitors that guests couldn’t check in to the hotel.

Parsons turned his hobby into a business, stringing wire to area homes for $125 and charging $3 a month.  The price seems quaint now, but even in the early 1990s, when cable prices were controlled by regulatory agencies, decent plans could be had for $20. An activist Federal Communications Commission regularly kept cable companies in line, resolving 18,000 complaints involving 5,700 communities, ordering $100 million in consumer refunds to 40 million cable subscribers from 1993 to 1998.

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