Cablevision Systems Corp. reportedly is ready to offer unlimited local and long-distance phone service, plus digital cable-TV and high-speed Internet access for $90 a month, a move reflecting the scramble among cable operators to grab and hold on to subscribers.
Cablevision, which has 3 million cable customers in the New York metropolitan area, is offering the $90 service bundle for one year, with plans to continue with a discounted rate thereafter, The Wall Street Journal reported Monday. Cablevision officials did not return phone calls.
The offering is a reflection of cable companies' strategy of trying to lure customers with low-priced packages that would make it difficult for them to switch to competitors later.
"At the expense of short-term revenue, they're looking to increase the stickiness of their subscriber base," said Vamsi Sistla, an ABI Research analyst. There's an assumption in the industry that prices will continue to drop among competitors, so Cablevision is "basically pre-trumping future price drops," Sistla said. "They're trying to stay a few steps ahead in capturing subscribers."
While cable companies have dangled Internet-based phone services in front of potential customers, telecommunication companies have also offered cable TV services. SBC Communications Inc., for example, is offering a similar package to Cablevision's for $105 a month, delivering TV through satellite provider EchoStar Communications Corp. Verizon Communications Inc.'s competitive bundle sells for $123.89 a month in New York.
Other cable companies planning to offer phone service include Comcast Corp. and Cox Communications Inc. All the cable operators are offering telephone service based on standards know as voice over Internet protocol, which sends voice over the Internet in packets similar to E-mail and other data services.