April 20th, 2009
As economy plummets, cable, satellite TV bills are on the rise
When the country fell into a severe recession in the second half of 2008, prices dropped nearly across the board in response to consumers becoming reluctant to spend money on anything beyond basic necessities. But according to a new study conducted by research firm Centris, the cable/satellite TV industry was one of the rare ones where consumers paid more than they did in the sunnier times of 2006 and 2007.
Cable subscribers ponied up 7.5 percent, or $5, more than they did in the second half of 2007 on their bills—which averaged $71 per month. Satellite bills climbed even more—nearly 9 percent. Centris doesn’t attribute the increases to the providers’ greed; instead, it says consumers added more programming packages and services like DVRs and HD channels. Consumers may be choosing to spend a few extra bucks for stay-at-home entertainment, rather than spending more on nights out they may no longer think they can afford.
A New York Times article, however, paints a different picture when it comes to cable industry tactics regarding the pricing of its Internet services, especially the charges it hopes to levy for higher-speed options. While Time Warner Cable has backed off (at least temporarily) from attempting to add extra fees to the bills of heavy Web users (especially those uploading and downloading large media files and watching online video), the article says that Comcast and Time Warner plan to charge much more for faster connections based on Docsis 3 technology. Due to the lack of competition these companies face in many areas, they can charge far more for slower speeds than a Japanese consumer can receive for less money:
Comcast has introduced a new 50-megabit-per-second service at $139 a month, compared with its existing service that costs about $45 a month for 8 megabits per second. Time Warner just announced it will charge $99 for 50 megabits per second.
By contrast, JCom, the largest cable company in Japan, sells service as fast as 160 megabits per second for $60 a month, only $5 a month more than its slower service.
But, as Comcast’s CTO told the Times, a heavy Internet user doesn’t necessarily cost the cable companies more than a lighter user, and Docsis 3 technology actually helps lower the costs of providing Internet service to subscribers even more.
The FCC may step in to address this situation, increasing regulations and possibly even placing price controls on cable rates. Is that the best way to deal with the issue? What other ways can rising rates be slowed? Are you adding more TV services instead of going out in response to the economy? Let us know your thoughts in the TalkBack section.
Sean Portnoy spent several years as an editor at Computer Shopper magazine, most recently serving as online executive editor. See his full profile and disclosure of his industry affiliations.
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