How high cable rates are everybody’s problem but nobody’s fault

Jeremy Fugleberg

Jeremy Fugleberg

It’s no secret cable prices keep going up. But whose fault is it?

It’d be easy to blame the big boys-the federal government or the supposedly money-grubbing cable companies.

But the truth, as always, lies somewhere in the murky, undefined middle.

The back story

The federal government got out of cable business regulation in 1996, and ever since, prices have shot up. According to Bureau of Labor statistics, rates have climbed 56 percent while inflation has only grown 21 percent.

Cable companies have blamed the higher rates on the rising cost of programming. It’s not an unfair complaint-in a speech this year, Sen. Ernie Hollings, D-S.C., said sports programming costs alone have gone up 59 percent between 1999 and 2002. That cost gets passed on to the consumer.

A la carte programming: the answer to high rates?

So what about people that don’t watch sports? Why should they have to pay for channels they don’t watch?

That’s one of the reasons supporters of pay-per-channel, or “a la carte” programming, give for why cable packages are unfair.

According to those advocates, who include prominent public interest groups such as Consumer Reports, a la carte programming would give the power back to the viewer by only charging for just the channels a viewer wants.

But a la carte programming isn’t a perfect solution either. Cable companies argue giving viewers that option would raise costs just because new technology that would be needed. And minority groups fear unbundling of programming could reduce their access to new viewers.

Satellite TV service: why isn’t it making cable prices come down?

Satellite was supposed to be the answer to high cable rates. With lower prices for more channels, it seems like the obvious answer to cable.

But it’s not. A recent Consumers Union report found that equipment costs and physical problems (subscribers need a clear view of the south sky) keep many from signing up. And the satellite can’t compete in offering as many things as cable companies can. Wired companies offer cheaper per-megabit high-speed Internet access, and can also include telephone service all in one cable.

A 2003 report by the federal General Accounting Office found that satellite competition only only dropped cable rates 15 cents on average. The same reports said head-to-head competition by another company dropped cable bills by $5 on average.

Franchising agreements

Many cities like Brookings sign franchising agreements with cable companies.

Last year Brookings signed a 10 year deal with cable company Mediacom. The city gets a three percent cut of Mediacom’s gross revenues. the deal is not-exclusive, which means another cable company could try to compete. The contract lets other companies come in and compete if they want to.

#1.885813:2857784991.jpg:juicecvrphoto b&w.jpg::Jerry Smith