What we pay for cable channels

[mnradiofan]

It is an regulated monopoly, in the same way as the examples you mentioned of gas and electric. The regulated monopoly is supervised by a local community board that oversees rates, service, and other issues. The board is there to prevent or control excesses that could happen with a monopoly.

I don't know what "regulation" is like where you live but it seems the only thing the city cares about in my neck of the woods is their franchise fee. There is virtually no oversight for cable at all and none whatsoever for sat.

I have had phone service since before deregulation, and my bill now is at least three times as much as it was during Ma Bell monopoly.

It's tough to make the same type of comparison with cable. The TV portion of my bill is now $75, vs $30 when I started with cable many years ago (15), but when I got cable back then, I had 50 channels vs the almost 200 (with HD) that I get now. Programming quality on many have gone up (of the original 50) but the other 150 are marginal channels at best.

But, the reason its hard to make the comparison, aside from service being better, is that costs are much less tied to inflation for cable company operators. In addition to having to maintain equipment, they also have to pay dearly for all of the programming. And programming costs have gone up quite a bit faster than inflation. Every few years the networks ask for more and more money, eventually that is going to starve the consumer, and could put an end to cable TV as we know it. The nice thing is, they have data plans to fall back on, because nobody is going to cut internet.

There are a number of factors you'd have to take into consideration before making a flat cost-then vs cost-now comparison. In 1967 I paid between $2-$3/month for basic landline phone service. It costs about $22/month now. Most of that increase is inflation ($2.50 in '67 would be a tick over $16 now) but there have also been other costs added. 911 service fees and taxes (which now account for over $6 of my monthly bill).

Other things have not changed. The phone still works every time I pick it up. What's not to like?

 

[Carmine5]

In almost all places cable TV meets the exact definition of a monopoly. In order for it not to be a monopoly anyone could start a cable TV franchise in any city they wanted. This isn't possible. Saying cable isn't a monopoly 'cause of dish and u-verse type deals is like saying the Gas company isn't a monopoly, 'cause you can use electricity to heat your house and cook your food.

In fact the few places where cable isn't a monopoly and subscribers can switch carriers you find lower prices.

They need to break up cable like they did with Ma Bell and force them to allow anyone to use their cable to provide service. Then you'll see prices drop.

Cable is a monopoly only if you insist on getting premium programming by that means and no other. In that case then, yes, you are at the mercy of the cable provider who is servicing the territory where you live and their tiered pricing structure.

But more people are getting their premium channels either by satellite TV such as DirecTV or by means of Verizon Fios. This is occurring where I live. Cable is available only through Time-Warner in my community but many of my neighbors have switched to Fios or Direct TV with OTA for local channels and saving a bundle of money in the process. Time-Warner has been rapidly losing subscribers.

So I would say that cable, once a monopoly, has been seriously weakened this past decade with more and better alternatives and will become even more so as the internet expands into the living room.

c5

 

[ding12]

I haven't done this myself, but one can get Broadband2Go 4G by a provider that's not Comcast or Verizon. The latter two will give discounts if you subscribe to everything but charge a lot piecemeal.

From another company, you can get fast internet alone affordably, and one would have access to Hulu, Netflix on Demand at decent bandwith.

Coupled with network OTA, satellite or online radio, and Netflix, that's a decent amount of entertainment access without cable or satellite, basically without paying into the model of paying for a number of channels you don't care for or watch. Granted if you need live sports, for the time being subscription tv is still the way to go.

 

[TheBigA]

I don't know what "regulation" is like where you live but it seems the only thing the city cares about in my neck of the woods is their franchise fee. There is virtually no oversight for cable at all and none whatsoever for sat.

The franchise fee is what the cable company pays for its monopoly. Along with the other required services. But you're missing my point that cable is run like a local utility, not unlike water, gas, and electric. Those are often owned by profit-making private companies, and have exclusive deals. There have been discussions about competition for utility services, but it's usually impractical, especially in smaller markets.

 

[landtuna]

But you're missing my point that cable is run like a local utility, not unlike water, gas, and electric. Those are often owned by profit-making private companies, and have exclusive deals.

I was referring to regulation. In my area every utility is regulated by someone. City council, state public utility commission, etc. Apparently the cable company is not considered a utility, although it is a monopoly. They are not regulated with regard to their programming or rates.

 

[Goat Rodeo Cowboy]

Apparently the cable company is not considered a utility, although it is a monopoly. They are not regulated with regard to their programming or rates.

That will vary from state to state, city to city. There is at least a pretense of regulation.

 

[TheBigA]

Apparently the cable company is not considered a utility, although it is a monopoly. They are not regulated with regard to their programming or rates.

Don't know about your area, but it may be covered under another commission. If you google "cable TV commission," you'll see a list of local cable commissions, in markets large and small.

 

[imhomerjay]

Can people in the town, generally speaking, get their MTV and their ESPN from another source? Then it's not a monopoly. Suggesting it is is a bit like suggesting McDonald's holds a monopoly in town because the Burger King across the street uses a different method of cooking burgers.

 

[quadraphonic]

When Cablevision came to our town, they were allowed to come here because they bid to be the only cable monopoly.
They got that deal because they had to lay all the cable around town, they wanted to recoup that investment.
You could still get a satellite dish at that point, but they still called it a "monopoly." Maybe there's some nuances to what "monopoly" has come to mean in different situations, but that's what they called it back then, at least in the towns around here.
They're still the only cable company around here, 30ish years later, and every so often they have to renew their charter with the governments around here.

 

[Goat Rodeo Cowboy]

Can people in the town, generally speaking, get their MTV and their ESPN from another source? Then it's not a monopoly. Suggesting it is is a bit like suggesting McDonald's holds a monopoly in town because the Burger King across the street uses a different method of cooking burgers.

Think about the late 1800s. The "Trusts" as they were called back then owned the railroads and owned the production and distribution of petroleum. It is that era that we root most of our thinking about the meaning of monopoly.

A farmer living out in a place like Scott City, Kansas who needed kerosene to heat his home and cook his meals thought he was living under monopoly. Whatever price the combined power of big oil and big railroad decided would be the price of oil he had to pay. Under your view imhomerjay, the fact that he could put a gallon jug on his saddle and ridden 600 or 700 miles to the nearest store selling kerosene that was not priced per monopoly is proof he was not under monopoly. Never mind that his crop didn't get planted or harvested while he road horseback a thousand miles... never mind that his wife and children froze to death because he was not there to scavange firewood of some kind to keep the house warm.... those are minor details in your mindset.

And of course, if his crop did get planted and harvested, he was not under the thumb of the rail monopoly to ship his wheat at whatever price they chose to set. He could always throw a couple of burlap bags of wheat across his horse and make that 1,200 mile trip again and sell his wheat on a more open, thriving market. I'd say in 1,300 trips he could deliver his crop and say to the railroad: screw you!

And I can get a 3G cellphone and download my desired video from Hulu and at a monthly cost of several hundred dollars get some fuzzy video on my TV and I can turn to the cable company and say: screw you!

So. I guess you are right. The cable is not a monopoly. The water company is not a monopoly. The power company is not a monopoly.

 

[TheBigA]

Some general definitions of a monopoly:

Holding a dominant position or a monopoly in the market is not illegal in itself, however certain categories of behavior can, when a business is dominant, be considered abusive and therefore be met with legal sanctions. A government-granted monopoly or legal monopoly, by contrast, is sanctioned by the state, often to provide an incentive to invest in a risky venture or enrich a domestic interest group. The government may also reserve the venture for itself, thus forming a government monopoly.

 

[TexasTom]

For those who don't like the word "monopoly", we can substitute "oligopoly" -- and that one clearly fits. Cable and satellite companies all offer what is essentially the same product in very similar packages.

Aside from that, most of the arguments used against a la carte don't hold up:

For example, the claim that a la carte would be offered if someone could make money with it is not telling the whole story -- the contracts signed with the big programming companies generally preclude a la carte offerings. In other words, if a provider wanted to offer a la carte programming, they wouldn't be carrying ESPN, TNT, USA, Fox News, and the other big channels.

Next is the claim that packages that force viewers to subsidize channels that they don't watch is necessary to provide ample funds to maintain the quality of the programming. Maybe...but I doubt it. A la carte would certainly have an impact on the economics of the industry, but not necessarily in a predictable way. What it would likely do is end the days of ESPN paying $1 billion/year for Monday Night Football and networks like USA and TNT paying $2 million/episode for the rerun rights to broadcast procedurals (CSI, L&O, etc). While that would certainly reduce profits, that's likely all it would do... Somehow, I don't think that Monday Night Football is going to disappear if the rights go for $500 million instead of $1 billion. similarly, the endless CSI & L&O reruns won't disappear because the price that networks can pay for them has dropped.

Finally, for those who complain about cable/satellite rate increases that are always well above the rate of inflation, a la carte is about the only way those increases will be reined in. Because the reality is that right now, programming rights are increasing at a rate well above inflatio, and it is those increases that are driving the overall rate increases. Why? Because cable networks can spend like crazy for programming rights, knowing that the cost will just get passed to subscribers who don't have the option of dumping their channel. And, in fact, making a decision to control the rate increases by not over bidding for programming would end up being a sort of unilateral disarmamant. The bottom line is that there are no incentives for controlling costs in the current system, and plenty of incentives for letting the costs spiral...

It's a system that the media companies love, for obvious reasons. But everyone else is getting shafted

 

[mnradiofan]

For those who don't like the word "monopoly", we can substitute "oligopoly" -- and that one clearly fits. Cable and satellite companies all offer what is essentially the same product in very similar packages.

Aside from that, most of the arguments used against a la carte don't hold up:

For example, the claim that a la carte would be offered if someone could make money with it is not telling the whole story -- the contracts signed with the big programming companies generally preclude a la carte offerings. In other words, if a provider wanted to offer a la carte programming, they wouldn't be carrying ESPN, TNT, USA, Fox News, and the other big channels.

Next is the claim that packages that force viewers to subsidize channels that they don't watch is necessary to provide ample funds to maintain the quality of the programming. Maybe...but I doubt it. A la carte would certainly have an impact on the economics of the industry, but not necessarily in a predictable way. What it would likely do is end the days of ESPN paying $1 billion/year for Monday Night Football and networks like USA and TNT paying $2 million/episode for the rerun rights to broadcast procedurals (CSI, L&O, etc). While that would certainly reduce profits, that's likely all it would do... Somehow, I don't think that Monday Night Football is going to disappear if the rights go for $500 million instead of $1 billion. similarly, the endless CSI & L&O reruns won't disappear because the price that networks can pay for them has dropped.

Finally, for those who complain about cable/satellite rate increases that are always well above the rate of inflation, a la carte is about the only way those increases will be reined in. Because the reality is that right now, programming rights are increasing at a rate well above inflatio, and it is those increases that are driving the overall rate increases. Why? Because cable networks can spend like crazy for programming rights, knowing that the cost will just get passed to subscribers who don't have the option of dumping their channel. And, in fact, making a decision to control the rate increases by not over bidding for programming would end up being a sort of unilateral disarmamant. The bottom line is that there are no incentives for controlling costs in the current system, and plenty of incentives for letting the costs spiral...

It's a system that the media companies love, for obvious reasons. But everyone else is getting shafted

And you don't honestly think that the NFL would choose to end Monday Night Football if it didn't get what it wanted for rights fees? Or that the distributors of said syndicated programming wouldn't just say "you know, thats not worth it to us"? How about original programming like Psych? How cheap can that be produced? And if you don't have wide distribution, ad rates suffer too.

We'd get much less, for much more, under ala carte. Because, regardless of programming costs, there are fixed costs to maintaining a network, customer service, etc. You'd pay those regardless. Thats why I pay a $7 fixed charge for power, whether I use any or not, because there is a cost associated with maintaining a line to my house and a call center to take care of my issues regardless of whether I use the service.

If Ala Carte was a good option for consumers, or a highly demanded one, cable companies would offer it. But it isn't, plain and simple. And if it benefited the consumers, you don't think some city council SOMEWHERE would have conditioned renewal of the contract for service on that?

 

[w9wi]

For those who don't like the word "monopoly", we can substitute "oligopoly" -- and that one clearly fits. Cable and satellite companies all offer what is essentially the same product in very similar packages.

Not that I want to defend the cable industry, but...

In a properly-operating free market, you would expect products and prices to trend towards matching among all competitors.

(you would also expect each competitor to be continuously working towards finding a change that will improve their competitive position, but you would expect once that happens the other competitors would move in the same direction)

Point being, seeing everyone offer essentially the same bundle at essentially the same price is not necessarily a sign of collusion.

Finally, for those who complain about cable/satellite rate increases that are always well above the rate of inflation, a la carte is about the only way those increases will be reined in. Because the reality is that right now, programming rights are increasing at a rate well above inflatio, and it is those increases that are driving the overall rate increases. Why? Because cable networks can spend like crazy for programming rights, knowing that the cost will just get passed to subscribers who don't have the option of dumping their channel. And, in fact, making a decision to control the rate increases by not over bidding for programming would end up being a sort of unilateral disarmamant. The bottom line is that there are no incentives for controlling costs in the current system, and plenty of incentives for letting the costs spiral...

I would suggest cable operators will start looking for ways to keep rates under control when subscribers start refusing to pay the increases. NOBODY is forced to pay for multichannel -- most viewers can get OTA signals. (and many of those who try are pleasantly surprised) Those who can't get OTA can use the Internet, and/or DVDs. (and yes, some people do live without TV!)

Cable (/satellite) operators know a rate increase won't drive off a significant number of customers -- people still value their HBO more than they value their $100/month.

 

[imhomerjay]

Can people in the town, generally speaking, get their MTV and their ESPN from another source? Then it's not a monopoly. Suggesting it is is a bit like suggesting McDonald's holds a monopoly in town because the Burger King across the street uses a different method of cooking burgers.

Think about the late 1800s. The "Trusts" as they were called back then owned the railroads and owned the production and distribution of petroleum. It is that era that we root most of our thinking about the meaning of monopoly.

A farmer living out in a place like Scott City, Kansas who needed kerosene to heat his home and cook his meals thought he was living under monopoly. Whatever price the combined power of big oil and big railroad decided would be the price of oil he had to pay. Under your view imhomerjay, the fact that he could put a gallon jug on his saddle and ridden 600 or 700 miles to the nearest store selling kerosene that was not priced per monopoly is proof he was not under monopoly. Never mind that his crop didn't get planted or harvested while he road horseback a thousand miles... never mind that his wife and children froze to death because he was not there to scavange firewood of some kind to keep the house warm.... those are minor details in your mindset.

And of course, if his crop did get planted and harvested, he was not under the thumb of the rail monopoly to ship his wheat at whatever price they chose to set. He could always throw a couple of burlap bags of wheat across his horse and make that 1,200 mile trip again and sell his wheat on a more open, thriving market. I'd say in 1,300 trips he could deliver his crop and say to the railroad: screw you!

And I can get a 3G cellphone and download my desired video from Hulu and at a monthly cost of several hundred dollars get some fuzzy video on my TV and I can turn to the cable company and say: screw you!

So. I guess you are right. The cable is not a monopoly. The water company is not a monopoly. The power company is not a monopoly.

Welcome to the new century. Glad to have you with us. The thousand-mile trip yarns are irrelevant, when we're talking about a wire running from outside your house to inside your house. No travel required. Whether the "stuff" in that wire comes from the pole on the street (or however your local telephone and cable companies string their cables) or a satellite is immaterial. The vast majority of homes have at a minimum three people who deliver TV service, and in some cases four, five or more. And that doesn't include the "over the top" or cord cutting options some choose to employ.

Enjoy your farmer stories, but realize they're completely and utterly dissimilar.

 

[LKellerIII]

For those who don't like the word "monopoly", we can substitute "oligopoly" -- and that one clearly fits. Cable and satellite companies all offer what is essentially the same product in very similar packages.

Not that I want to defend the cable industry, but...

In a properly-operating free market, you would expect products and prices to trend towards matching among all competitors.

(you would also expect each competitor to be continuously working towards finding a change that will improve their competitive position, but you would expect once that happens the other competitors would move in the same direction)

Point being, seeing everyone offer essentially the same bundle at essentially the same price is not necessarily a sign of collusion.

Finally, for those who complain about cable/satellite rate increases that are always well above the rate of inflation, a la carte is about the only way those increases will be reined in. Because the reality is that right now, programming rights are increasing at a rate well above inflatio, and it is those increases that are driving the overall rate increases. Why? Because cable networks can spend like crazy for programming rights, knowing that the cost will just get passed to subscribers who don't have the option of dumping their channel. And, in fact, making a decision to control the rate increases by not over bidding for programming would end up being a sort of unilateral disarmamant. The bottom line is that there are no incentives for controlling costs in the current system, and plenty of incentives for letting the costs spiral...

I would suggest cable operators will start looking for ways to keep rates under control when subscribers start refusing to pay the increases. NOBODY is forced to pay for multichannel -- most viewers can get OTA signals. (and many of those who try are pleasantly surprised) Those who can't get OTA can use the Internet, and/or DVDs. (and yes, some people do live without TV!)

Cable (/satellite) operators know a rate increase won't drive off a significant number of customers -- people still value their HBO more than they value their $100/month.

Price-fixing is illegal and could be considered "collusion" - but keying your price to your competitor is not illegal. For example, where I live, there are 2 major super-market chains. Their prices are very similar. If representative from each chain met regularly to change their prices in tandem, it would be illegal. But there's no law that says they can't pay attention to each others' prices, and adjust their own prices accordingly. Again - it's capitalism - welcome to America.

I can't prove it - but I'm sure the satellite companies love it when competing cable companies raise their prices. It means that they can raise their prices, too. I've considered switching to satellite a couple of times. When I do a side-by-side price comparison, satellite comes out cheaper by about $8 per month - not worth the effort and trouble to make the change. And so far, satellite does not do On Demand, which I use extensively.

Until one of the satellite companies offers a significantly cheaper alternative on a regular basis (I'm not talking "introductory offers") - or offers On Demand, I'll stick with cable.

 

[ROBGv1]

Where is Comcast Sports Net?

 

[Goat Rodeo Cowboy]

Enjoy your farmer stories, but realize they're completely and utterly dissimilar.

Military people study battles going back thousands of years. Surely in the 21st Century it makes no sense to study some battle from 1,500 years ago fought with swords but those who quality to be military LEADERS have the ability to see parallels.

What a waste of time when Christian people gather on Sunday to hear sermons about the folly of building houses on foundations of sand and parables of men of agriculture reaching into a knapsack to get a handful of grain and fling it out where some lands on fertile soil and some lands on rocks. But they keep repeating those ancient, out-of-date stories because they come alive in the minds of some people who can see 21st Century applications.

Unfortunately, the movers and shakers of Wall Street in the 21st Century saw absolutely no need to pay attention to stories of financial catastrophes in 1929 and earlier times. After all, we know we all sit in little cubicles today with wires to everywhere and what happened in 1929 cannot possibly happen in 2008-2009-2010.

If you cannot connect the dots between a farmer in the 1800s choosing between paying Mr. Rockefeller or riding miles and miles with someone like myself contemplating paying the cable company or dealing with multiple resources and personally managing those resources to evade the monopoly.... I'm truly sorry the educational system did not instill an appreciation and understanding of history into your life.

 

[imhomerjay]

I'm likewise sorry you failed to take advantage of first-grade math class to learn that two, three, four and five are all greater than one. From there, it apppears to have been all downhill.

There are no....zero, nada...dots in your story, which is the underlying problem. Creating silly fantasies about farmers having to ride for days are irrelevant--sorry. (And as for religion, we'll leave that to those that care to partake).

Parallels to history are all well and good when (1) they're accurate and applicable...and that's where your anaolgy immediately crashes spectacularly (like the Hindenberg....see, we can all quote history)... and (2) are examined with a careful consideration of all that is not the same between the circumstances.

 

[tothedj]

This is what cable companies could do...the ones that charge the most per subscriber put them into a package, or let us
choose what we want to see, television viewers should not be held hostage by higher rates each year.