Cable’s Secret Downgrade Fees: Big Operators Charge Subscribers to Switch to Cheaper TV Packages
Cable TV customers looking to reduce their monthly bills by switching to a less-expensive programming package may be in for a rude surprise: Some operators will charge a one-time fee of up to $6 for the privilege.
Among the biggest providers, Comcast and Time Warner Cable confirmed that they have such policies in place. These fees, which the companies don’t disclose on their websites, appear mainly designed to discourage customers from trying to pay a lower monthly rate for TV.
Comcast, the biggest pay-TV provider in the U.S., charges a fee of $1.99 to $5.99 depending on region for customers who switch to a less-expensive programming package, according to a company rep.
TW Cable, meanwhile, charges $4 for programming downgrades in certain areas, mostly in the western part of the U.S. (including Los Angeles). The operator calls this an “addressable change of service fee,” a Time Warner Cable spokeswoman said.
To be sure, six bucks won’t break the bank. And the tier-downgrade fee policies of Comcast and TW Cable, which in some cases have been in place for at least three years, are not always enforced by customer-service representatives, according to the operators. (The MSOs also don’t charge a downgrade fee for the cancellation of premium channels, like HBO.) In addition, Comcast waives the fees if the price of a customer’s programming tier has recently increased.
But the fees are illustrative of why many cable TV customers are frustrated with the industry, and why the biz is at risk of seeing more of them cancel as new and cheaper options come to market.
An over-the-top provider like, say, Sony or Verizon — which is close to clinching a deal for up Intel’s Internet TV unit as soon as next week, according to industry sources – might have a receptive base of disgruntled consumers just itching to switch to a more customer-friendly TV provider.
It’s worth noting that not every pay-TV distributor has such policies. DirecTV, Cox Communications and Verizon FiOS, for example, say they do not charge any kinds of programming-package downgrade fees.
And there are nuanced variations to the practice. Dish Network charges a $5 programming downgrade fee but only if that occurs within 30 days of a customer’s last change, according to the satcaster. In addition, new Dish customers are exempt from the charge if they are requesting a downgrade within 60 days of activation.
The bigger picture is that growth in the pay-TV segment is flatlining, at best. That means the fight to retain subscribers is about to get much more intense. In such a climate, it seems curious that any provider would retain a policy of charging fees that essentially stick a thumb in the eye of customers looking for a better value on TV.