Cable companies change tactics to win back cord cutters

Lauren Abdel-Razzaq
The Detroit News

When Samira Guyot moved to her new place in Corktown last August, the only option she had for TV and Internet service was Comcast. But she'd gone with that provider before, and had paid for a lot of channels she never watched.

Detroiter Samira Guyot ditched her $100-a-month cable for streaming via Roku for $40 and a $7-a-month Netflix subscription.

So she cut the cord.

"I am living without cable," the Detroiter said. "I'm not living without television."

In place of her $100-a-month Internet and cable bundle, she switched to Roku, a device hooked up to her TV that allows her to stream whatever shows she wants for $40. She backed that up with a $7-a-month Netflix subscription and was good to go. It's all based on a Web connection, which she shares with the downstairs neighbor, saving her even more money.

"I haven't felt left out or anything," said Guyot, 36.

Broadband and cable groups such as Comcast, Time Warner Cable and Charter Communications, as well as telecommunications networks including Verizon (FiOS) and AT&T (U-verse) are facing an onslaught of smaller competitors providing viewing services via the Web and apps.

These include well-established streaming services from Netflix, Hulu Plus and Amazon Prime. Others, like Roku, Amazon Fire TV or Google Chromecast are small boxes or devices that allow you to stream to a TV set. Even YouTube provides entertainment options that can be streamed to a TV.

Each are effective on their own, but combined can offer an entertainment experience tailored to the viewer's needs and wants. And each costs far less to buy or subscribe to than the typical monthly cable package or bundle.

Guyot says she would consider going back to cable only if it was on her own terms.

"It would have to be way cheaper, and I would have to have more shows that are interesting," she said.

And that's exactly what cable providers have begun to do.

In order to stem the tide of cord-cutters, and to improve customer service, companies are changing their tactics and offerings.

Diversity offered

For example, Comcast has begun to offer more diversity in its cable packages.

"We know cord-cutters are extremely cost-conscious, but still looking for those basics: high-speed Internet, basic channels, HBO and access to online content," said Jason Gumbs, vice president of marketing for Comcast Cable Heartland Region. "We've realized the Triple Play or Quad Play (options) we offer isn't for everybody and subsequently we've tailored our products for our users."

Comcast now offers an Internet Plus package with everything Gumbs says constitutes "the basics" for $49.99 a month for 12 months. It also offers free access to Comcast's Xfinity TV Go app, which allows for streaming and viewing on a TV set, tablet or other mobile device.

AT&T's U-verse, the fastest growing TV provider in the country, is embracing the idea of moving to a universal watching experience.

It offers a TV Everywhere app, which allows customers to take AT&T content with them on mobile devices, tablets and computers.

"We kind of see it as complementary," said John Blinkiewicz, assistant vice president of U-verse TV marketing. "As we continue to grow customers, we see them using our TV everywhere as a complement to their TV service."

Boosting Internet speeds and expanding networks has become a huge focus for AT&T and Comcast, which could help both the cable providers and the non-traditional TV streaming services.

"As TV has grown up, so have the devices. We need to serve customers where they want, when they want," said Blinkiewicz.

For now, only a small percentage of people are opting out of cable TV service, and the big companies are not in danger of going out of business anytime soon. But they do recognize a need to adapt to changing trends in customer viewing habits.

"As technology gets better and the Internet gets better, customers have more choices," said TV industry analyst Jeff Kagan. "The bottom line is the industry is changing, there is more competition, and the cable television industry has to reinvent themselves to stay relevant."

According to a periodic media consumption survey conducted in June by consultants Frank N. Magid Associates Inc., 2.9 percent of those surveyed said they intend to cut the cord. That's up from 2.2 percent who said they'd soon cancel their paid TV subscriptions. That represents millions of TV users.

Of the 2,400 people surveyed, millennials (age 24-34) were most likely to stop cable service, with 5 percent saying they planned to cut the cord. The survey also says that 59 percent of homes use a video-on-demand service; Netflix accounted for 43 percent of that.

This doesn't mean TV is less in demand and that cable is dying, said Kagan.

"It's not that it's going away; it's that we have more choices added. If we want to watch the big screen TV with our family and friends, we can. If we want to watch it on our tablet, we can. If we want to watch it off the premises, we can," he said. "It's moving in a great direction if you are a user."

Saving money

Jordan Tabbakh of Harper Woods is exactly the kind of customer cable providers are looking to win over. He currently uses U-verse, although he says he really has cable service only for when he has visitors.

"It's the most basic TV I can get and the fastest Internet," he said.

Tabbakh, 25, gave up TV in college and prefers to get his entertainment and news through video games and online. He's considered cutting the cord completely, but "the cost isn't that much different" when the Internet and TV service are bundled.

Troy residents Christine and Ross Henri got rid of cable this year, switching to Netflix and Amazon Prime. They also bought a digital antennae to get the free channels.

"We really weren't using the cable that often and it was way too expensive," said Christine Henri, 25. "We saved a lot of money by canceling, and most of the shows we like are already available on Netflix."

Adding to the frustration was that they live in an apartment and had only one service available.

"We couldn't even shop around for a cheaper cable package," she said.

For those who have left cable behind, 76 percent said they were satisfied with the content they could get through streaming, according to the Magid survey. While 57 percent said they couldn't live without their TV set, only 21 percent of 18- to 34-year-olds said they use a TV set as their primary means of entertainment, down from 40 percent in 2012. In contrast, 50 percent said they couldn't live without their smartphones, up from 22 percent three years ago.

Also, 40 percent cited issues with customer service at cable companies.

Customer service is a key area of improvement for Comcast. In July, the company made headlines when a recording was posted online of a couple trying to cancel their service and the service representative wouldn't let them.

Since then, several more Comcast customers posted recordings online of their negative experiences.

"We're acknowledging that customer service isn't where it needs to be. We're trying a lot of steps to turn it around, but it's a big ship," said company spokeswoman Michelle Gilbert.

To prevent having to call customer service for every issue, the X1 Platform provides a troubleshooting guide on the TV screen, and if the issue is still not fixed, the user can schedule a time to talk with a representative. They're even offering an app to track exactly when a technician will be arriving.