Operators Vow to Not Subsidize Their Video

Video managers from New York, Indiana, and Texas said that their decisions to stop subsidizing the increasing costs of their video content was the best move they could have ever made. In a national webcast last month, three rural telecommunications executives opened up in a moderated panel discussion about the high costs of video.

Jason Miller, General Manager of DTC headquartered in Delhi, New York, made a  decision about five years ago to stop subsidizing TV.  To keep their video service profitable, DTC includes programming costs, transport costs, and an additional 10% as costs that are passed on to the customers. They have now taken it one step further with no subsidizing of the Set Top Boxes or auxiliary services associated with their video offering.  This increase in some cases hit twenty dollars per month, and while it caused some initial heartburn, Miller says it has not adversely impacted their video take rate. Miller believes their 42% video take rate as they are growing their territory is attributed to a bundled price which is less than the multiple bills that customers are paying for communications services in southeastern New York state.

Seth Tabor, CTO at Santa Rosa Communications in Vernon, Texas, admits that his company waited far too long before deciding to stop absorbing video cost increases.   Tabor said there was a lot of internal concern that as they raised their video rates there would be a big shedding of subscribers, but the subscriber loss was much lower than they expected. Tabor says the new direction has them feeling much better about Santa Rosa’s video business.

At Enhanced Communications located in Sunman, Indiana, COO Kevin McGuire says for their seven thousand plus video customers, regular rate increases have pretty much been a fact of life for quite some time. Enhanced started rate increases about four years ago, and they do so in April of each year. McGuire says they chose April to allow some time to elapse from the holiday expenses that many consumers incur and to analyze the programming increases that frequently come at the beginning of a calendar year. One thing that helps Enhanced, according to McGuire, is the channel stats reporting that is embedded into the Innovative Systems Video Solution. While being stuck with some channels due to contractual obligations, McGuire says that every year they take a hard look at channels that the software proves are not being watched.

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