Comment Re:innovation thwarted (Score 1) 137
The theory is that if you pay for broadband, you are paying for your connection to the infrastructure. So that cost is sent to the "data" side of the house.
The incremental cost for the TV channels they provide you are probably $1.00 (at least their hard costs going to the broadcasters).
Whey they get the bonus is the "number of households" that they can now increase to the advertisers (when they sell ads, they sell them based on how many households they serve). Additionally, they usually get a large amount based on the number of households subscribe to the shopping networks, jewelry networks, etc. On our cable system, we were offered nearly $1.25 per household for HSN.
Add all those up, and you end up with them making a few pennies on you. But ultimately, you become a stickier customer. If you start rely on them for CATV and have all sorts of shows on your DVR, then you won't want to jump to an AT&T, DirecTV, Verizon, etc. Also, if you are a CATV customer, the chances of you upgrading to a better package than not.