HDTV Almanac - Competition Does Not Lower Cable Fees

The Federal Communications Commission released a report this month with the descriptive yet cumbersome title of “Report On Average Rates for Cable Programming Service And Equipment.” The results come from a study of cable television service fees in different markets. The data was divided into two groups: communities where there was no meaningful competition (aside from satellite) and those where there was a competitor (either cable or phone company). The data is a snapshot taken in January 2010, so it’s not exactly current, but the results were a bit surprising all the same.

In the “competitive” communities, the price of “basic” cable service was about the same as with the “non-competitive” markets. But when it comes to “expanded basic” service, the price was actually slighty higher in the “competitive” markets. This result gets even more interesting when you calculate the “cost per channel” for the different companies; those in “competitive” markets had a lower cost per channel.

What this means is that the cable companies in competitive markets lard their offerings with more channels, so you get more for your higher fee. I’m not too sure that it’s a bargain. It reminds me of the story about two little old ladies on a week-long cruise. They share a table at dinner, and about halfway through the trip, one looks at the other and remarks, “The food on this ship isn’t very good, is it?” To which the other replies, “No, I suppose not. But they do give such nice large portions!”

I suspect that large portions will not be enough to satisfy subscription television customers much longer.

Posted by Alfred Poor, March 23, 2012 6:00 AM

Re: HDTV Almanac - Competition Does Not Lower Cable Fees

paulk2 • Mar 24, 4:31am
In Palm Harbor FL we have brighthouse, verizon FIOS and Knology available and the prices are definitely lower than nearby single-provider communities. Often the single-provider is brighthouse and even though it's the same system, the prices are far higher.
It also helps to play one against the other for even better savings.
Even with 3 providers, I still use Directv thanks to NFL Sunday Ticket. FIOS is the best for internet. Poor Knology is just hanging on....

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Competition Does Not Lower Cable Fees

The Federal Communications Commission released a report this month with the descriptive yet cumbersome title of “Report On Average Rates for Cable Programming Service And Equipment.” The results come from a study of cable television service fees in different markets. The data was divided into two groups: communities where there was no meaningful competition (aside from satellite) and those where there was a competitor (either cable or phone company). The data is a snapshot taken in January 2010, so it’s not exactly current, but the results were a bit surprising all the same.

In the “competitive” communities, the price of “basic” cable service was about the same as with the “non-competitive” markets. But when it comes to “expanded basic” service, the price was actually slighty higher in the “competitive” markets. This result gets even more interesting when you calculate the “cost per channel” for the different companies; those in “competitive” markets had a lower cost per channel.

What this means is that the cable companies in competitive markets lard their offerings with more channels, so you get more for your higher fee. I’m not too sure that it’s a bargain. It reminds me of the story about two little old ladies on a week-long cruise. They share a table at dinner, and about halfway through the trip, one looks at the other and remarks, “The food on this ship isn’t very good, is it?” To which the other replies, “No, I suppose not. But they do give such nice large portions!”

I suspect that large portions will not be enough to satisfy subscription television customers much longer.

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Cable and Satellite Complaints Rise

The FCC tracks the complaints it receives about various services under is oversight, including television, radio, and telephone. In the third quarter of 2011, complaints about cable and satellite services increased more than 15% over the prior quarter, though it is worth noting that the number of complaints about “billing and rates” issues were essentially flat with only a 1.5% increase. The billing and rate complaints still accounted for the largest portion of all complaints, with more than one third of the total.

Perhaps the canary in this coalmine are the numbers for “Satellite Television Extension & Localism Act” complaints. This category bloomed by nearly 44% over the prior quarter. Behind the esoteric title lies a festering problem in the television industry: retransmission rights. Subscription television services have to license the content from local broadcast stations, and cannot negotiate with a station outside the local market for the same content. Broadcasters — and their networks — are looking to replace revenues lost in other areas, and see cable and satellite subscribers as a worthy source. So they withhold their content until they get the fees that they want. The result can be a blackout for the subscribers until the negotiations are settled. In some cases, the blackouts can last weeks or even months. Senator John Kerry weighed in when it appeared that DirecTV subscribers in Boston might not get the SuperBowl, and other retransmission disputes are drawing high-profile attention as well. Expect this to be a controversial issue throughout 2012.

And just to keep this in perspective, all of the cable and satellite complaints combined did not equal half the complaints received about broadcast television. So we can rest assured that there are still people watching the over-the-air channels.