Cable Rates Went Up Again in 2010, FCC Finds
The FCC’s mandatory annual survey of cable programming and equipment rates found that average cable rates increased at more than three times the Consumer Price Index (CPI) during 2010, the most recent year for which it has survey results. The commission’s report, a congressionally mandated look at average cable prices, was released Monday (http://xrl.us/bnkkuv) and follows a March 2012 release of the 2009 survey (CD March 12 p7). It also brings the agency closer to releasing more current price data. The results once again showed that cable rates broadly went up, even in regions where the FCC has found cable operators to be subject to effective competition.
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The average price of expanded basic service for all the communities the FCC surveyed increased 5.4 percent to $57.46 during the 12 months ended Jan. 1, 2011, the report said. In communities with a finding of effective competition, the average price increased 5.7 percent to $58.47 a month, it said. In such communities, cable operators are not subject to local rate regulation. But in communities with a rival operator, incumbent operators’ prices were 6.2 percent lower than the average among all effective competition communities, the report said. In communities where the finding of effective competition was granted based on competition from a satellite provider, incumbents’ average prices were 2.1 percent higher than the average among all effective competition communities.
The survey also found that most customer premises equipment rental prices increased on annual basis. “The overall price increase for the most commonly leased equipment with expanded basic service was 4.6 percent,” it said. Overall, equipment costs didn’t rise as sharply as programming costs, it said. “We note that equipment may change from year to year and thus the comparison of equipment prices to some extent may reflect quality change."
The survey results “confirm that there is no actual effective competition in the video industry,” said Derek Turner, Free Press research director. “If you drill down and look at the customer premises equipment section, prices are increasing there,” he said. “In the consumer electronics market everywhere else, prices are dropping precipitously. But for some reason cable providers are increasing the price of your cable box.” Where competition exists, it’s not pushing prices down, he said.
Smaller cable operators blamed rising retransmission consent and programming costs for the steady increase in basic and expanded basic service prices. “With broadcasters increasing their retransmission consent revenues by about 25 percent over the last year, and the continued programming fee hikes being sought by RSNs and national cable networks, the only surprise from this report is that cable operators were able to limit” prices increases to the extent they did, said Ross Lieberman, American Cable Association vice president. “Unfortunately for consumers, such rate increases are likely to continue until Congress and the FCC modernize the 20-year old rules and regulations that govern the broken wholesale retransmission and programming marketplace.”