Haggling For Cable

Jun 11 2012 @ 3:06pm

After calling Comcast and getting his bill lowered on a regular basis, Timothy Lee wonders why it works:

Comcast is taking advantage of the fact that most consumers expect an apparently reputable company like Comcast to offer the same deal to all similarly-situated customers. Indeed, I suspect the scheme is profitable only because it’s flouting a norm that’s observed by virtually all reputable firms. Because I think the no-haggling norm is good for society, I think firms that defect from it deserve to be stigmatized.

Alex Tabarrok disagreed:

Price discrimination is really the only way to pay for big fixed costs like laying cable.

On a related note, this week saw a passionate fan campaign for web subscriptions to HBO called "Take My Money, HBO!" with users tweeting the amount they would pay for monthly web access. Even though the average person would pay $12 a month, or about $145 a year, Ryan Lawler explains why it won't be happening any time soon:

What would happen if HBO no longer had the pay TV industry’s marketing team propping it up all the time? The results would be disastrous, and there’s no way that HBO could make up in online volume the number of subscribers it would lose from cable. Which is why, even though some users would actually pay more for access to HBO GO without all the other cable channels, you won’t see it show up as a standalone service anytime soon.

HBO agreed on Twitter: "Love the love for HBO. Keep it up. For now, @RyanLawler @TechCrunch has it right: http://itsh.bo/JLtSFE ?#takemymoneyHBO." Brian Stelter looks on the bright side:

Of course, HBO’s message included the words "for now" — a reminder that as the economics of television change, so too could HBO’s calculations about its relationships. For now, Web-only television viewers will have to keep swapping HBO GO passwords, it seems.