Cable Rates Continue to Rise

In many places, an annual rite of spring is an increase in cable TV rates. Frequently the increases are in the 3 to 6% range, and definitely above the rise of the cost-of-living index.

As Consumer Reports (May, 2009) states : "Rates for expanded basic tiers...have spiked122 percent since 1955. ....That's three times the rate of inflation." (Most customers have "expanded basic" service.) One of the causes, according to cable companies,  is that their cost for carrying popular networks like ESPN (provided by Disney) continues to increase. And that may be the case, but the lack of transparency among cable providers means that they want the customer to take their argument on faith. Why not allow the customers to see what it costs the provider for ESPN, Discovery Channel, CNN, etc.? Have the popular networks increased their fees commesurate with the increase of cable rates? Are some of the networks provided free to the cable companies?

Consumers, on the other hand,  are of the opinion that the inordinate increase in cable rates is due to the lack of direct competition. In most places throughout the country, the customer has no alternative. There is only one game in town. The Telecommunications Act of 1996 ruled that: 1) basic cable packages would be controlled until cable operators face effective competition (no definition); 2) the rates for "expanded basic" would become unregulated in 1999 (source: OCABR). The problem with this is that consumers are not interested in "basic." They want CNN, ESPN  etc. and that is the "expanded basic" which is now unregulated. These are the rates that have gone crazy. In Findlay, OH, the cost has soared 67% from 1999 to 2007. Dayton customers' rates increased 47 % between 2000 and 2006. In Canton, the increase was 41% between 1999 and 2006. Akron saw an increase of nearly 40% since 2000. (Source: D.S. Katz, Mackinac Center foor Public Policy)

Yet, another example of deregulation helping the corporations at the expense of the consumer!

Hopefully, the FCC will take a second look at what has happened, and pursue a' la carte pricing, which would permit customers to choose the cable-TV-channels they want to watch and only pay for those channels.  

In the absence of true competition, the cable providers should be required to be transparent and allow their customers to choose what they pay for.