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Cable Companies Jack Up Broadband Prices

It's a cutthroat world out there, especially in cable television-- though maybe not for the reasons you think. In fact, what's going on behind closed doors at cable companies may be even more shady than the plot of a House of Cards episode. What's happening? Well, if you thought you were going to save money by cancelling your cable and switching to any of the various online streaming options, you may be wrong. Cable companies have caught on to this widespread migration from cable to internet, and they know just what to do: charge more for broadband to make up for it.

 

For Comcast, this comes in the form of a reported 9.6% increase in broadband services revenue, despite that percentage being higher than it's reported growth in customers paying for broadband services for the same period. In a similar vein, Cablevision also reported 6% increased earnings from broadband services, even though it actually lost customers during that very timeframe. How is this happening?

 

Logic and arithmetic say there's no way to earn more money from fewer customers-- unless, of course, the cost of services is rising. Herein lies the biggest problem: lack of competition. Cable companies are free to make up missed revenue from cable packages by exponentially increasing cost of other services, i.e. broadband, because there's simply no alternative for most customers. If they did, customers would be leaving in droves. With no other options and internet access more and more of a necessity, customers are forced to accept price jumps, and generally with no tangible incentives or rewards to show for their increased monthly bill.

 

This is where the biggest limitation facing cord cutting Americans is found. Even if fed-up consumers do manage to effect change and kill off the bundled TV model many have come to know and abhor, there may not be any changes in cost to show for it. With a huge hole where market diversity should be, cable companies are free to regain lost profits from people saying no to cable by raising the internet bill.

 

Luckily, there are many places and companies moving in a direction to combat this. Several cities in Colorado, for example, have voted on measures to allow for local governments to offer their own broadband services. Voters in the cities of Boulder, Cherry Hill Village, Red Cliff, Wray, and Yuma, as well as those in Rio Blanco and Yuma counties, have decided they want the option of broadband offered by local governments. This is exceptionally exciting in Colorado, as in 2005 Colorado Senate Bill 152 was passed, which limited local governments from competing with the private sector in broadband services. The recent vote shows that consumers reject the favors paid to Internet service providers' profit margin.

 

Another step toward a diversified broadband market is the continued opposition for a Comcast-Time Warner Cable merger. As recently as Wednesday, December 3rd, the Stop Mega Comcast coalition was founded in direct resistance of the merger, stating it would give too much power to one company over the nation's internet infrastructure. Indeed, if the merger is allowed, the combined company will control about 35 percent of broadband coverage in the United States. Up until this point, Time Warner Cable and Comcast have been each others' largest competitors-- though they did tend to keep out of each other's markets-- meaning a merger would all but eliminate meaningful competition in broadband services across the country. The Federal Communications Commission is still reviewing the merger, expecting to have a decision as early as March.

 

Either way, the facts of the matter are pretty simple. Cutting the cable cord just isn't enough to save money; with no competition, cable companies are free to wreak havoc on wallets everywhere.

 

Section: 
tv