Cablevision Price Drop Analysis

Tom Keating : VoIP & Gadgets Blog
Randy Savicky
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Cablevision Price Drop Analysis

In my Cablevision Optimum Voice blog entry, I ranted about how Cablevision was overcharging $34.95/month for it's unlimited VoIP phone service, which is much more than other VoIP providers. In the comments section of that blog entry, Rich Tehrani disagreed with my assessment stating that Cablevision could get away with this pricepoint if they bundle it with other services.

As a former Cablevision customer a few years ago, I looked into getting Optimum Voice at a discounted rate since I had cable + broadband and they told me "Sorry, it's $34.95/month".

That price point was a couple of years ago. I would have figured the price would have dropped by now, which is why I ranted about Cablevision's expensive $34.95 pricepoint that they announced in a recent press release.

What I didn't realize is that 6 months ago Cablevision announced a triple play of video, voice and fast Internet access for $30 a piece, or $90 a month. Now that is a pretty good deal. If each service was purchased separately, the total bill would be about $130 a month. Though I still wonder if it would be more cost economical to go with the Optimum Double Play package which gives you video plus the choice of data or voice for an extra $29.95/month. If you choose the high-speed data option, you can then go with a third party VoIP provider such as Vonage for $24.99/month ($5/month cheaper) or Lingo for $19.95/month ($10/month cheaper).

Still, the cost savings are pretty minimal in comparison, and since Cablevision discounts all three offerings, in the grand sum total you may be better off going with Cablevision's Triple Play offering. Also, the benefit of having a single bill to pay is an advantage, as well as a single provider to deal with if any issues arise.

I was just reading this Cablevision VoIP story this morning: Techdirt:Cablevision's Bundle Is Working which states that Cablevision's discounted Triple Play offering is working. The most insightful quote that TechDirt says is this, "While some analysts thought Cablevision should go down the old route of squeezing every penny out of users for new services, Cablevision actually realized that this isn't about how many pennies you can squeeze now, but it really is a marketshare war for bundled customers (who are much less likely to leave). The strategy is working" I couldn't agree more. I have been arguing that Cablevision should discount their pricing NOW to get customers NOW. It sounds so cliche, but now is the time. With so many VoIP service providers competing, even with Cablevision's advantage of "triple play", I think now - this year 2005 - is the time to grab as many customers as you can. People hate switching providers, it's too much of a hassle. So even if other VoIP players lower their prices this year, it will take a dramatic price cut from a VoIP competitor for any Cablevision Triple Play customer to want to switch.

Here's a quote from Cable Digital Newsin an article titled, Cablevision Scores with Optimum Triple-Play Bundle. "Although some Wall Street analysts and other MSO executives consider this aggressive bundling strategy too risky and costly, Cablevision officials argue that it's already paying dividends. They point to robust subscriber growth for all three of their main products, as well as strong revenue growth, lower churn rates and other benefits."

In fact, Cablevision reported an amazing gain of 74,143 IP telephony customers in the third quarter which is just after their Triple Play discounted offering was made available. This brings Cablevisions VoIP customer total to 189,000. Very impressive. Let me know your thoughts on the broadband VoIP space and what you think about the VoIP price wars, bundling, VoIP customer churn rates, etc.



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