Last updateMon, 26 Oct 2020 11am

Cable TV prices went up four times the rate of inflation

By Andy Marken

Even communities with multiple competitors weren't spared.

The Federal Communications Commission today issued a report on average cable TV prices in the US, and to the surprise of no one, it turns out they went up a lot.

"Basic cable service prices increased by 6.5 percent [to $22.63] for the 12 months ending January 1, 2013. Expanded basic cable prices increased by 5.1 percent [to $64.41] for those 12 months, and at a compound average annual rate of 6.1 percent over the 18-year period from 1995-2013," the FCC said.

The basic cable increase was four times the rate of inflation as measured by the Consumer Price Index (CPI) for the 12-month period, and substantially above inflation for the 1995-2013 measurement.

"These price increases compare to a 1.6 percent increase in general inflation as measured by the CPI (All Items) for the same one-year period," the FCC wrote. "The CPIâ•˙s compound average annual rate of growth over the 18-year period was 2.4 percent."

"Expanded basic cable" service is the price of a basic package plus "the most subscribed cable programming service tier excluding taxes, fees, and equipment charges."

Additionally, "equipment prices for basic and expanded basic services increased by 4.4 percent and 4.2 percent, respectively, for the 12 months ending January 1, 2013," the report stated.

"Cable operators" for the purposes of this report include both coaxial cable and fiber services such as Verizon FiOS. The FCC didn't list prices by company, but broke out measurements of communities that have competition vs. communities without competition.

Communities with competitors didn't fare any better.

"Over the 12 months ending January 1, 2013, the average price of expanded basic service increased by 4.6 percent, to $63.03, for those operators serving communities for which no effective competition finding was made as of January 1, 2013," the FCC said. "For the effective competition communities, the average price of expanded basic increased by 5.8 percent, to $66.14."

Technically, a community isn't considered to be competitive unless the incumbent operator has successfully petitioned the FCC for a finding of effective competition. Getting this finding relieves the company of price regulation, which helps explain why customers don't necessarily pay less when they have choices. Additionally, cities and towns "that are exempt from rate regulation provide a greater number of video channels, on average, than the responding cable systems subject to local rate regulation," the FCC said.

A community can be deemed competitive if the incumbent has fewer than 30 percent of households as subscribers, or if a second operator offers service to at least half of the community and has 15 percent of households as subscribers. The competition can come from a second cable operator or another service such as satellite.

"We surveyed operators serving 486 out of the 24,238 communities without a finding of competition and 314 out of the 9,417 communities granted an effective competition finding pursuant to the statute," the report said.

The rising cost of sports programming and other content has probably helped push up prices. Because of bundling, consumers can't simply choose the channels they want. As we recently reported, US homes on average receive 189.1 cable TV channels and only watch 17.5 of them.

Comcast has 'no plans' for internet caps despite testing them

Those statements that Comcast's David Cohen made about possible nationwide data caps within the next five years? He'd like you to forget them, please. As he explains in a follow-up statement, the company has "no plans to announce" such a policy. The company doesn't want to implement plans that hurt your internet experience, he says, arguing that reports took what he said "out of context." With that said, it's clear that Cohen has a narrow definition of what a data cap is. He claims that the company has no caps whatsoever despite running trials where customers are charged extra for usage beyond a bandwidth limit -- at last check, that's still a cap.

The executive is quick to note that these trials aren't necessarily a sign of things to come. If they are, however, you may have to pay extra to get unfettered service; Cohen notes that the company is "looking at" adding unlimited plans to the trials. It's unclear just what those would entail, although the overage-based model from the trials suggests that you'd pay a premium over normal offerings. That's in sharp contrast to Comcast's acquisition target Time Warner Cable, which offers you a discount if you accept a cap. It's entirely possible that Comcast will forego usage-based pricing, particularly if it wants to please regulators worried about attempts to stifle online video, but it's obvious that the business model is at least under serious consideration.



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