Parks Associates Blog

Wednesday, October 31, 2007

More Bad News for Cable Providers, Good News for Consumers

On the heels of Comcast announcing a bigger than expected loss of basic subscribers for the third quarter, the cable industry received more bad news. This news was in the form of the FCC approval of banning exclusive agreements that cable providers have with apartment buildings and other multi-dwelling units. (Link to FCC Statement) With more than 25 million or 30% of Americans living in MDUs, this opens up a new marketplace to more providers of voice, video an Internet, particularly Verizon and AT&T.

In some of our recent consumer research we conducted on new television services, we did hear quite clearly frustration from consumers who are in apartments and locked into only one service provider. The same rules apply to competition at a multi-family unit as they would with single-family housing developments – the entry of new competitive players for multi-service offerings tends to have two immediate changes: lower prices and improved customer service. I’d add a third – innovation. Without competition, the incumbent service provider doesn’t have a great deal of incentive to upgrade their services and offer a more compelling service set. Although the FCC’s language clearly focused on lower-income MDU residents, there are clearly upscale multi-family developments where service providers may find fertile ground in offering advanced communications, data, and entertainment services.

For Cable providers, it makes an already competitive landscape even more treacherous. With more choice and lower prices, it will be incumbent on cable operators to not only provide the best products and services, but engage in strategies that deliver the highest customer satisfaction and value to consumers.

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