THUMBS DOWN: Cable Rates Continue to Climb Above Inflation

Physician's Money Digest, May 2006, Volume 13, Issue 5

Wall Street Journal

Wall

Street Journal

Comcast, the country's largest cableprovider, raised its rates by 6% in March2005 amid industry pricing scrutinyfrom the Federal CommunicationsCommission (FCC). According to the, other cable companieswill follow suit, although at moremodest increases. Cablevision Systemswill raise the price of its standard packageto $46.73—up 1.3%. Cox Communicationsof northern Virginia has noplans to increase its prices this yearbecause it did so in 2004, when its mostpopular package went up 3.9% to$41.99. DirecTV and EchoStar Communicationsrates went up 4% in 2005.Other satellite television operators willalso announce rising monthly rates thisyear. Although cable rates have risenfaster than inflation, hikes have leveledoff since the 1990s, when companieswould raise rates in the high single ordouble digits, according to the . Rate increases haveeven decreased over the past severalyears. The FCC reports that the averagecable package cost was raised by 5.4%in 2003, compared with 7.8% in 2002.As a remedy to the cable pricing problems,a la carte channel ordering hasbeen suggested. Skeptics, however,believe that the unbundling of cablepackages is more about politics and lessabout consumer expense.