Cable Bill Too High? Here's Why, And How To Get A Discount In 7 Easy Steps

Time Warner Cable 2014
The Time Warner Cable logo is displayed on the back of a van in New York. Reuters

Type “how to negotiate with” into Google and the top suggestion, understandably, is “the irs.” But below that, cable companies and telcos start to dominiate like “verizon fios” and “optimum,” for Cablevision’s TV and broadband service.

We’re accustomed to negotiating for a car lease or a job offer, but cable service has truly turned us into a nation of negotiators, in part short of housing, car payments and insurance, cable is one of the biggest monthly household expenses. That's partly because of bundling: it's often not just cable you're buying but broadband, phone and perhaps even cell phone service. But that's also why your cable, telco or satellite TV provider will do almost anything to keep you from disconnecting. They're not losing one customer, but three.

Pay-TV providers are desperate to reduce "churn," the turnover in their customer base, which averages 30 percent per year across the industry. "Churn" takes three forms: people who move, people who disconnect for another provider, and people who cut the cord altogether. Cable operators can't do much about customers who move, but they'll do almost anything to stop the other two types of "churn."

If you take multiple services, you're the most valuable customer because cable companies make a lot of money on broadband and phone, but not so much on video, due to escalating programming costs from networks like ESPN, TNT and Disney Channel. The only way for the broadband companies to stay profitable is to retain their current customers in all three services. "If they are taking more than one product that gives you more leverage," said cable analyst Ian Olgeirson at SNL Kagan.

The average bill for basic cable was $64.41 a month in 2013, up 5.1 percent from the year before, according to the latest figure from the Federal Communications Commission. If you're bundling that with broadband and phone, the monthly bill is more likely to be in the $130 to $170 range. But the good news is almost anyone can get significant dollars cut from their monthly bill; all you have to do is ask. 

But first, like all good negotiators, it pays to come prepared. Remember: these people do this all day and are ready for just about any story you throw at them. Here are some tips before you call:

Do some research. Stop throwing out flyers from competing cable, satellite and broadband companies. They are generally offering screaming deals to new customers. Those rates should be the starting point for your negotiation.

Ask nicely. Tell the agent your bill is too high and you’re looking for ways to lower it. if you’re ordering multiple services -- TV, phone and broadband, for example -- there are probably ways to package that more cheaply, and agents have leeway to give discounts.

Know what you want. If lowering your bill is the primary motive, then start there. But if you’d like to add services like premium channels or higher-speed data, its possible you can get those thrown in at no extra cost. I recently called Verizon FiOS prepared to drop premium channels, but they ended up cutting $30 off my monthly bill and left the service intact.

Be willing to commit. Your willingness to commit two a two-year deal is your biggest bargaining chip other than disconnecting. If you've rolled off a two-year contract or are close to ending one, that's when the cable company is most motivated to deal, provided you're willing to re-up for another two years.

Read the fine print. One typical trick is they’ll offer a discount that expire after one year, meaning your bill goes up in year-two of the deal. That's unacceptable so make sure the rate stays the rate for the duration of the agreement.

Play hardball. If you’re getting no satisfaction say, "Thanks, I’d like to disconnect." That should get you transferred to a retention agent, whose job is to keep that from happening. Retention agents are highly-trained and skilled employees with one mission: keep you as a customer. Check out a copy of the handbook for Comcast retention agents obtained by The Verge to get a sense of how they operate

Go nuclear. If all else fails, disconnect and allow competition in the marketplace to work. Switching is a big pain (waiting for the cable guy) but you’ll get a fresh start with a new provider and a low rate for two years, when you get to do it all over again.

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