Cable prices climb 4 times faster than inflation, even with competition

Average cable TV prices continue to go up faster than the rate of inflation, the FCC said in its latest sampling of rates operators charge for basic cable television service. More surprising, the report found for the third straight year that areas with competition actually saw higher price increases than those without competition.

The most recent report, released Friday, said that the average monthly price of expanded basic cable service, excluding taxes, fees and equipment charges, climbed four times faster than the rate of inflation (5.1 percent compared to 1.6 percent as per the Consumer Price Index).

"The price of expanded basic service has increased at a compound average growth rate of 6.1 percent during the period 1995-2013 (while the CPI) increased at a compound average growth rate of 2.4 percent during the same period," the report stated.

Over 12 months ending in January 2013, the FCC found the average price of expanded basic service went up 4.6 percent to $63.03 for operators serving communities with "no effective competition" but went up 5.8 percent to $66.14 for "effective competition communities."

On the other hand, the results found that "operators in effective competition communities carry, on average, more channels on expanded basic service than operators in communities without this finding."

Thus, even though the price per channel in competitive communities went up 2.6 percent, compared to 1.7 percent in non-competitive markets, the average channel cost only 45 cents compared to 51 cents in non-competitive markets.

In a bit of positive news for price-conscious consumers, the federal agency said that price per channel is actually lower by 0.3 percent on an average annual compound basis in the 18 years between 1995 and 2013.

The increases cannot be laid solely at the feet of ever-increasing content costs, either, since the report found that equipment prices for basic and expanded services both increased with basic going up 4.4 percent and expanded up 4.2 percent.

The trend now appears to be that expanded basic service will cost more in effective competition communities than those without competition, the FCC report stated, calling the difference "statistically significant."

"The three previous surveys also found that the price of expanded basic service in effective competition communities was higher than the price of expanded basic in communities without a finding," the report stated. "Prior to that, surveys found that effective competition in communities in general had lower prices."

FCC cable rates 2014

For more:
- see the FCC
report (.pdf)

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