First, a few channels disappeared. Then, a few more. Finally, there were none left in New Orleans. Next up are Baton Rouge and Lafayette.
After issuing warnings for months, Cox Communications pulled the plug late last month on its New Orleans subscribers still using analog cable service, a transition that requires them now to rent small boxes for each of their TVs — the same fate Baton Rouge and Lafayette subscribers face next month.
The phaseout is happening for all Cox subscribers, from Virginia to California.
As of last fall, about a quarter of Cox’s Louisiana subscribers had analog service, meaning they received cable programming without using a cable box.
Cox has described its shift away from analog as a win for consumers, who can now receive additional programming — going from about 25 channels before the switch to about 65 now — and have access to features such as an interactive channel guide.
To ease the switch, Cox is making the necessary equipment — called a “minibox” — available free for the first year. After that, customers will have to pay a monthly fee of $2.99 per box, or about $36 a year.
That additional cost has upset some consumers and industry experts, who view it as another money grab from an industry that has steadily tacked on extra costs for nearly two decades.
“You just have to sort of shake your head and marvel that that’s a revenue stream that people are willing to pay,” said Geoffrey Parker, a professor of management science at Tulane University.
The average monthly price nationally of expanded basic service rose by more than 5 percent in 2013, reaching nearly $65, according to a 2014 report by the Federal Communications Commission. From 1995 to 2013, the report found, cable bills climbed at a compound annual rate of more than 6 percent.
Though the new cost won’t hit subscribers’ wallets right away, some industry experts wonder if the latest charges may lead some TV viewers to cancel their cable subscription, joining a fledgling movement of “cutting the cord.” That trend has gained traction in recent years among technology-savvy consumers who instead are able to stream favorite channels or programming over the Internet.
If they do, they’ll have company: In November, the research firm MoffettNathanson reported that U.S. pay-TV providers lost 357,000 subscribers in the third quarter of 2015, following a second quarter that saw 605,000 subscribers ditch their subscription service.
From Cox’s point of view, the analog service was not efficient, and ending it could free up much-needed bandwidth for additional services like new high-definition channels or on-demand programming.
With their miniboxes in place, former analog subscribers receive some popular basic channels, such as the SEC Network.
Cox declined to disclose how many customers it has in Louisiana, citing competitive issues.
In New Orleans, the first wave of channels disappeared in December, with the full switch-over Jan. 26, said Steve Sawyer, a Cox spokesman.
In Baton Rouge and Lafayette, waves of channels already have disappeared, with the full slate set to go March 8 .
Depending on a consumer’s subscription tier, they’re eligible for one or two miniboxes free for a year. Discounts also are available for customers enrolled in Medicare.
“It’s literally color-coded with how you hook it up,” Sawyer said of the boxes. “All you need is a thumb and a forefinger because you’re really just putting in two cables.”
Though the equipment comes with no upfront cost for the first year, some experts speculate that having to make any adjustment could put cable’s rising costs into better focus for some subscribers.
That could push them to consider other alternatives, such as buying a Roku or Apple TV device that lets them stream programs over a TV or pay a lower cost for a few selected channels. Others may consider buying an antenna — likely for a price that’s less than a month’s cable bill — to pull in local broadcast stations in high definition.
“People will see that things have changed a lot, really, in the last few years,” said Parker, who is co-author of an upcoming book about how market platforms can rapidly change. “If you think about the alternatives, with Netflix, you can now get Amazon Prime, you can get Hulu, so you have a ton of content, more than anyone can actually watch, at a fraction of the price.”
Cox’s most basic service starts at about $32 per month.
At the same time, Parker believes Cox’s analog customers aren’t the company’s biggest spenders because they’re hanging onto the lower-priced plans. “That’s a fairly large number of people, but it’s likely not to be their most profitable customers, so at some level, they’re probably not as worried about that,” he said.
Not everyone is sure that the monthly cost of the new equipment is going to generate much subscribers’ remorse.
“The cost of cable TV service itself is a lot more than that, so people have probably already made their decision mostly based on that,” said Kenneth Walsh, an associate professor at the University of New Orleans’ management and marketing department.
Follow Richard Thompson on Twitter, @rthompsonMSY.