As cable services grow, so do the bills
By Staff
NEW YORK TIMES
February 14, 2014
WASHINGTON - Of the many benefits that Comcast executives said would
flow to consumers from its proposed $45 billion takeover of Time Warner
Cable - more innovation, advanced technology, improved service - the one
it did not mention is probably the one consumers care about most: their
cable bills.
"We're certainly not promising that customer bills are going to go down
or even that they're going to increase less rapidly," David Cohen, a
Comcast executive vice president, told reporters Thursday.
Wittingly or not, it was a blunt acknowledgment of a trend that has been
consistent throughout the history of cable business consolidation:
Prices go up, not down.
According to statistics collected annually by the Federal Communications
Commission, the price paid by consumers for expanded basic cable service
has grown at more than twice the rate of inflation annually over the
past 17 years. Cable companies say that is because they are offering
more services in each package, which causes the overall price to rise.
The per-channel price, they argue, has declined.
"Where we might have had 100 standard-definition channels in a package
more than a decade ago, today you have 250 standard-definition channels,
plus 100 channels in high definition," Cohen, who oversees Comcast's
relationship with regulators in Washington, said in an interview Friday.
"The level of service being provided is night and day."
That means as much or more to consumers as the dollar figure on their
monthly bills, he said.
"I think consumers are going to benefit from this transaction," Cohen
added. "They're going to benefit by quality of service, by quality of
offerings, by technological innovation, and I don't believe there's any
way to argue that they're going to be hurt from a price perspective as a
result of this transaction."
Still, consumer groups and lawmakers expressed skepticism about the
effect of a deal combining the two largest cable providers in the country.
Members of Congress who oversee the regulators that will review the
merger continued to raise questions Friday. Sen. John D. Rockefeller IV,
D-W.Va., the chairman of the Senate Commerce Committee, which oversees
the FCC, said the key element of a review "must be whether the creation
of an even larger video and broadband juggernaut results in greater
choice and lower rates for consumers. This has not been my experience
with previous mergers of this size."
Comcast argues that most of the factors affecting the price of cable
service are not under its control. It points to programming costs, like
the fees paid to networks for the right to carry their content, and the
high cost of providing popular but expensive channels like ESPN.
Comcast's central argument in favor of the takeover is one of geography:
Competition among providers will not be affected by the deal, it says,
because Comcast and Time Warner Cable do not compete in any of the same
markets. Comcast assumed control of the Houston market in 2006.
"Even without a merger, local cable monopolies have unconstrained power
to raise prices," said Susan Crawford, a visiting law professor at
Harvard and the author of "Captive Audience," a book about monopoly
power in the cable and broadband business. "A merger further lowers the
risk of Comcast having to face competition, because it raises the
barriers to entry for a newcomer."
The most recent FCC study on cable prices shows that the average monthly
price of expanded basic cable service, which had an average of 150
channels, was $61.63 for the year ended Jan. 1, 2012. That was up from
$22.35 for the same tier of service in 1995, when the average expanded
basic service had 44 channels. So while the total cost increased, the
price per channel decreased by about 10 cents.
Basic cable service, the tier with the fewest channels, cost consumers
$20.55 in 2012, up from $12.06 in 1998, the earliest year for which
figures were available. That is a compounded annual increase of about 4
percent.
Critics, and "cord-cutters" - people who have given up their cable
service for the Internet - point out that cable packages force viewers
to pay for channels they do not watch, minimizing the value of having
those additional options.
_______________________________________________
Medianews mailing list
[email protected]
http://etskywarn.net/mailman/listinfo/medianews_etskywarn.net
