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Competition Still Not Lowering TV Prices
Nearly every operator in Detroit raising prices, despite U-Verse
by Karl Bode 04:07PM Monday Feb 11 2008
Despite promises that TV competition from the baby bells would result in some kind of price-utopia (frequently promised by lobbyists in order to get favorable regulation), we recently noted how prices continued to rise in the Boston area. The Detroit News finds much the same thing in the Detroit area, where AT&T is the only TV provider that won't be raising rates there this Winter (and that's likely only because they haven't offered service long enough there yet, given they've raised prices elsewhere). According to the paper, TV hikes are ranging from 3 to 6.5%:
The increases -- 6.5 percent for Comcast, 6 percent for Charter Communications and Wide Open West, 4.3 percent for Bright House Communications, 4 percent for DirecTV and 3 percent for DISH Network -- compare to an inflation rate of 2.85 percent in 2007. The hikes will show up in February bills, except for DirecTV subscribers, who will pay more beginning in March.
The paper notes that From 1995 to 2005, average U.S. cable rates rose 93%, while the Consumer Price Index saw a 30% jump during the same period. As they do every times we see one of these reports, the providers insist that the price increases "reflect the increased value of our services."

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Sandy, UT

2 recommendations

Prices are because of who?

Most of you blame the last mile provider for problems that are inextricably tied to the supplier of those TV signals. Until there is recognition of single suppliers and regulation of how much broadcasters charge, and limits on how much they can increase those charges annually blaming the last mile provider for all the price increases is ridiculous.

Frankly ala-carte services would do some to cut the price by weeding out all the stupid channels very few people watch. But the fact is that the channels themselves are single source providers. You can't buy ESPN from 5 different companies, and if you want ESPN you have to buy all 12 channels of ESPN and put ESPN in your main block of channels. Not only that but you HAVE to pay what they are asking and you have to pay for the channels for every subscriber regardless if they want it or not. The current market has created 100's of channels that no one watches. Really how many people do you know that watch ABC Family? But it's a forced purchase for Comcast and everyone else if they want any ABC channels.

Until we get regulation forbidding the companies producing the content from forced bundling, forced purchasing and some reasonable price controls on the providers all we are going to do is squeeze the last mile providers, limiting their ability to spend on capital improvements. Although Comcast is certainly responsible for most of the increase (a result of being a publicly traded company that focuses only on the next 3 months) they do have increased cost from their providers.

The best solution is to lock the content providers in on maximum pricing, force unbundling of channels, void any contract terms that require payment on a channel even if the customer doesn't subscribe and void any channel placement requirements in the contract. Next you require last mile providers to apply the lowest price in the state or within 500 miles to everyone within that zone where competition doesn't exist. This would eliminate preferential pricing in competitive zones while they use their monopoly to recover the lost revenue by charging customers in the monopoly area more. Finally you use some local regulations to force full build out, maximum phone wait times, a complaint tracking system and maximum response times for repair or installation in the areas without competition.

But we won't see anything like that under a republican leadership that thinks competition exists when you have the choice between nothing or something.

Data Ho
Rockville, MD

3 recommendations

reply to openbox9

Re: Plain econimics

Funny, how when it comes to digging up the neighborhood, cable companies love to assert their right as a utility to plow through whoever's property they choose to. But when it comes to selling service, it's suddenly not a utility anymore, but a luxury.


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reply to Mizzat

Even more plain economics...if you don't want to pay for the luxury/optional service, don't pay for it.