Why is it a huge and short sighted mistake? Without data, this statement is unsupportable. As a numbers guy, I'm inclined to believe it's a smart decision. In most jurisdictions, the cable operator has a monopoly. That's why cities offer franchises. If your current customers can't easily switch, then why on earth would you give them a break?

Now, as we start seeing competition from telcos, these "for new customers only" deals go away - everyone becomes a free agent when their contracts are up. We see this in the relatively competitive cell phone market: once your contact is up, you can get a new, fully subsidized phone from your current carrier.