Smaller cable companies may see more unpaid service bills, credit agency warns

Credit card and money
Some cable customers may not be able to pay their bills. (utah778/Getty Images)

Nearly 28% of National Cable Television Cooperative member companies’ customers have “deep subprime” credit rankings, meaning they fall into the lowest 12% of the consumer population.

So said Massillon, Ohio-based SubscriberWise, a credit reporting agency, in a release touting just how economically challenged some NCTC operator subscribers may be.

“This revelation is a tough pill to swallow,” said David Howe, SubscriberWise founder and president, in the statement.

Sponsored by Dell Technologies

Whitepaper: How to Elevate Your Content Delivery Workflows With Dell EMC PowerScale

Learn how Dell EMC PowerScale helps meet surging viewer demand while reducing costs with a single centralized platform for the ingest, processing, and delivery of the content your viewers love.

SubscriberWise says 27.78% of NCTC operator customers have Fair Isaac Corporation credit scores (FICO) in the “Level 7” and “Level 8” range. According to SubscriberWise, this indicates a high risk of these subscribers not being able to pay their cable bill over a two-year contract.

“In other words, these are consumers who are in a financial crisis and—despite the best intention to pay as agreed—these individuals will disproportionately fail to meet their obligations as evidenced by the deep subprime scores calculated from extremely adverse credit reports that contain substantial and serious delinquency,” Howe said.

Howe says the analysis is important “because from a risk and selling standpoint, the deep subprime consumer represents more than the hundreds of dollars of potential write-off from unpaid programming and unreturned equipment.

“Unfortunately, it’s also a data-driven fact that prospects who originate in the very bottom rungs of the adult credit consuming population, they correlate significantly with high negative churn, statistically higher rates of fraud and predatory behavior, increased burdens on the call center, and other high-risk scenarios that translate into disproportionate revenue losses and operational inefficiencies across the entire MSO,” he added.

Howe said the data isn’t an indictment of economically disadvantaged customers. It’s an opportunity, he explained, to make a “proactive, not reactive” decision.

Editor's Note: A previous version of this story included wording and an image that did not accurately characterize individuals with low credit scores or the analysis offered by SubscriberWise.