If you ask Ian Olgeirson what it’s like to comparison shop for a pay-TV deal, he will tell you that it’s a confusing experience.
“There are times where it’s difficult to figure out exactly what’s included in an offer,” says Olgeirson.
While that’s something TV customers might be able to relate to, Olgeirson is no mere customer. He is a principal analyst at SNL Kagan and follows the pay-TV market. In other words, he’s a professional.
“We certainly are in an era of increasingly complex offers,” says Olgeirson, “It is difficult to gain absolute clarity on a customer service call as to what your bill will be.”
The Federal Trade Commission filed a lawsuit against DirecTV on Wednesday, accusing the nation’s largest satellite TV provider of failing to disclose fees it charges customers above what’s promoted in its advertisements.
DirecTV denies the allegations and says its customers were fully informed of what they would be paying, but the company is hardly alone in complaints about charges.
James Boffetti, who heads the New Hampshire Attorney General’s Consumer Protection Bureau, says pay-TV providers register among the top 10 most-complained-about businesses. The bureau gets about 13,000 complaints a year in total.
The complaints against pay TV providers, he says, tend to follow a general theme. “People have complaints about … the advertising of promotional packages” says Boffetti, “And they don’t find that that’s what they’re actually being charged by the company.”
Boffetti says a lot of complaints get resolved, and are usually misunderstandings between the consumer and the company. It’s hard to draw a conclusion that companies are deliberately deceiving customers, he says. To do that, companies have to be more willful.
“A lack of disclosure about significant terms in a business deal could be unfair and deceptive,” Boffetti says.
Still, the complaints show there is confusion out there about pay TV offers. And Laura Martin, an entertainment analyst at Needham & Company, says that’s partly because pay-TV providers are facing price pressures both from consumers and the very TV channels that they sell.
“Content providers have been investing more in original content, and that is increasing their fees to the cable operators … Telco, cable and satellite, by double digits,” says Martin. “And yet, the consumer is faced with a zero-inflation-rate environment, and therefore he doesn’t want prices increasing. So we’re getting margin pressure in the video part of the business, as programming costs rise faster than prices can be passed through to consumers.”
And that means pay TV providers have to compete in price while also making enough to cover their costs.
All of which comes back to consumers needing to be aware, says Olgeirson, and to do their homework. He recommends asking a pay-TV representative to add up exactly what the monthly bill is going to look like both now and in 12 months before agreeing to sign up for a new service.
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