Kagan: Will Comcast data caps, price hikes cause users to leave?
Once again, Comcast Xfinity is making news their customers won’t like. Word is, in 2021 they plan to both place a data cap on all users, plus they plan on increasing prices, again. Parts of this bad news for consumers happen every year like clockwork. Other parts will be a shocker to their customers. Let me explain.
This is something customers will not like, but investors may, if the right outcome occurs. The bottom line is they are squeezing the customer to benefit the investor. As long as they don’t lose market share, this should make the investor happy.
However, that’s the big question. Will this cause the customer to switch? The industry they are in has been changing. In recent years, Comcast acquired NBC Universal.
Now they offer a wireless service called Xfinity Mobile. This is the first time a cable TV company also owned content and wireless.
That being said, today there is more competition than ever before. That means the threat of them losing market share is greater than ever.
Will Comcast Xfinity actions cause users to switch away?
First let me say the cable TV industry has been broken since its inception. Cable TV is a three-part system when traditional business is a 2-part system.
Let me explain. A typical two-part system has the company and the customer. If the company raises prices or plans data caps, and the customers don’t like it, the company feels the pressure. That keeps price increases less dramatic and they happen less often.
However, with a three-part system, there is the customer, the cable TV provider and the content provider. Within this system, the content provider can charge what they want to the cable TV company. They do this because they never hear the customer complaints.
They have a buffer which causes prices to continue climbing.
Cable TV companies like Comcast are the middleman. Yet they are the ones who get blamed by customers for increasing prices.
In cable TV industry, no one protects the consumer
There is never anyone at bat for the consumer and that’s a big and ugly problem.
That means the customer gets screwed and has little power to fight back. That’s why year after year cable television companies announced a price increase.
This year, in addition to higher prices, Comcast is said to be instituting data caps. Apparently, too many customers are using too much data.
The problem here is Comcast has been pushing their customers to use more data services like downloading video. Now that customers are doing what the company convinced them to do, Comcast is going to lower the boom on them, putting a data limit and charging their customers even more money, month after month.
Many customers say it feels like a trap they are lured into. Comcast just thinks it’s how they do business.
From time to time, it seems Comcast has data problems. Remember several years ago when they let users have a certain limit of data. Then as they passed that limit, customers had to pay more and more.
So, these moves help investors and cost customers. This is a bad business decision.
Customers complain Comcast already charges to much for their Internet and cable TV services. And this problem keeps getting worse.
Comcast Xfinity rewards investors at expense of users
In the past, I have been interviewed by the media on things that Comcast does to increase their revenues while at the same time hurting their customers.
Like when they switch channels from one bundle to another and force customers to buy more bundles, paying more and increasing Comcast revenues and profits.
The issue is there are two parties to consider, the user and the investor. And rather than think of ways to make everyone happy, these moves Comcast makes hurt the user and help the investor.
So why does Comcast continue to do this?
Over as many years as I can remember, they have always focused on the investor first and foremost. They don’t ignore the customer, but they are not concerned about the harm they create either.
They see their business model as squeezing the customer to reward the investor.
Comcast is a good company run by good people, but they are too short-sighted and focus on the wrong things. I keep warning them about this bad behavior, but they keep going.
Today, there is more competition than ever in pay TV. Consider AT&T with AT&T TV, Warner Brothers, CNN and more over the Internet and wireless network.
T-Mobile has entered the space as well with their TVision service. With other competing services, competition is only increasing.
That means yesterday’s growth strategies won’t work the way they always have. There must be new thinking to continue to win. That’s the problem Comcast Xfinity, Charter Spectrum, Altice and Cox face going forward.
Focus first on workers, then customers, then investors will be happy
Here is a better plan.
Herb Kelleher, previous CEO of Southwest Airlines said it best. He said first, take great care of your people. Then they will take great care of your customers. Then the investor will be happy.
That always worked for Southwest Airlines and so many others as well.
The reason is simple.
– If they keep their workers happy, they will take good care of the customer.
– Then if they keep their customers happy, they will love the company and it will profit.
– Then the investor is rewarded.
Why Comcast, and in fact no other cable TV company, has never focused on their business this way has always been a question to me.
Maybe it’s the way things were when cable TV was young. There was no incentive to be concerned about the customer.
No competition so no threat of losing customers. That meant cable TV companies never needed to care about the customer.
It is unfortunate this is still the case today at many cable TV companies.
Today, there is plenty of competition from many companies and technologies. So, continuing to behave this way will have a long-term, negative impact on the company.
Comcast Xfinity is now playing with fire
I recommend Comcast always focus on their workers first. Keep them happy. Then work to take great care of the customer. Then the investor will be happy.
This is a winning strategy that keeps many companies healthy and all sides happy.
So will Comcast change and follow this advice after all these years?
This Xfinity news about price increases and data limits says, no.
Well, today they face new competition and new technology that is eating away at their market share. It’s time.
They have been working on improving their customer care in recent years. So, parts of the company are better. That’s the good news.
However, other parts are just as sour to the user as ever. So, there is still plenty of work to do.
Comcast Xfinity and Apple treat customers differently
Consider Apple. I think they may have the highest mark-up on their iPhones of any smartphone maker, yet their customers still absolutely love them. The reason is they treat their customers like gold.
Something Comcast does not do. It’s really just as simple and as complicated as that.
I hope Comcast wakes up and realizes the marketplace is changing, technology is changing, and competition is changing.
I hope they become more like Apple. I hope they focus on their workers, then their customers, then their investors. Rather than focusing on the investor first which hurts their workers and users.