The Cable Industry's Mindless Price Hikes are Self Sabotaging A prominent broadband and cable TV sector analyst believes that the industry's massive new year price hikes are self-sabotaging. As we've been noting, Dish, DirecTV, Cox, Comcast, and AT&T all notably raised rates in the new year, resulting in consumers paying more money than ever for broadband, TV, DVR fees, modem rental, and late fees.

These new year rate hikes are a bit of a tradition in the sector, but they're also a major reason that users are looking to cut costs wherever possible (usually by either cutting the TV cord, or cutting bundled VoIP services and going wireless only). With the slow but steady increase in cord cutting, telecom sector analyst Craig Moffett told Fierce Cable that the lack of moderation in this year's hikes are worse than "self-defeating." "We’ve long since passed the point where programmer price increases are self-defeating," MoffettNathanson analyst Craig Moffett said of the latest hikes. "The biggest driver of cord cutting is that prices are too high. But the solution of too many programmers is to raise prices even faster to compensate. It’s like a car that is headed for a cliff, with a driver that believes the only solution is to step on the gas." Programmers aren't the only culprit in this equation. Cable operators not only pass on those hikes, but include many hikes of their own on everything from broadband and hardware rental fees, to the cost of paying your bill over the phone. Of course Moffett has been arguing that these kind of endless rate hikes aren't sustainable since at least 2010, yet here we are. In fact, according to S&P Global Market Intelligence, consumer cable and satellite TV bills have increased 53% since 2007, to an average of $100.98 per month in 2017. And US subscribers pay more for broadband, phone and television than a long list of other developed countries, thanks to the one-two punch of revolving-door regulators and a lack of meaningful competition in many areas. Even with the rise of streaming video and cord cutting, carriers have still embraced such rate hikes, figuring that if users cut the cord on TV to escape higher prices there, they can simply be hit with higher rates for broadband (most frequently via arbitrary and unnecessary usage caps). In fact, many Wall Street analysts have been arguing that thanks to a lack of competition, there's still plenty of room to In fact, many Wall Street analysts have been arguing that thanks to a lack of competition, there's still plenty of room to raise prices on subscribers (especially on stand alone broadband), so even higher prices are on the horizon. A consumer's only real options? Either cut the cord if you're tired of TV price hikes, or support local owned and operated community broadband networks if you're tired of skyrocketing broadband prices.







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Most recommended from 63 comments



maartena

Elmo

Premium Member

join:2002-05-10

Orange, CA 44 recommendations maartena Premium Member They have to act NOW or die..... The cable companies (and I am throwing in satellite and IPTV companies in this as well) are setting themselves up for failure. Typically what happens, a company "Big Dawg Media" with 7 channels wants to be carried by a cable company and tells them they should carry all 7 channels in a certain package or they won't get them. Cable company agrees, because 1 of the channels is really popular with viewers.



3 years later, Big Dawg Media comes to the cable company and says: Time to renew our contract. Now we want THIS much (increase) for our channels. Cable company agrees (possibly after a short dispute and blackout) because they still have that popular channel. They may have managed to negotiate down the demands a little with a dispute/blackout, but the end result is the same: Customers will pay more.



Another 3 years pass by, and the same happens. But by now, along with all the other companies the cable company has made new agreements with..... the customers are growing weary and are cutting the cord. Now Big Dawg Media wants to control access to their owned channels (no streaming without a cable account) and demands even more money.



And this is where we are right now. Millions of people are quitting cable. But the cable companies keep going for "all or nothing" deals for more money that customers will need to come up with. Instead, it's time cable companies will stand up and say: No. We will take these 2 popular channels, and you can shove the other 5 where the son doesn't shine. Don't like it? Take a hike, we'll remove all 7 from our lineup.



Big Dawg Media can only keep doing that for so long..... They may be able to lose one big cable company, but if they lose 2 of them or 3 (especially if they are competing, such as satellite), they eventually will have no choice to come back to the table and re-negotiate terms for the 2 channels.... (and maybe put the other 5 in a separate package, so the customer can decide whether they are worth it). But no one wants to be the first to do this, because this will piss off investors and shareholders.



The result is that no one has the balls to stand up to the media companies, and cable companies have been reduced to puppies, wagging their tails to pretty please have a good deal with the big media dawg, and wagging their tail with a cute face to the customers to tell them that big dawg media price increases are a good thing for your services.



It's time to do or die, cable companies. Either let us customers pick our own channels, or negotiate for YOU to determine in which package channels will be, not let THEM dictate it for you so you can then claim your poor puppy paws are tied.



If you don't...... well, 2017 saw about 4 million people leave cable, be prepared for another 4 million or so, and start thinking about how many millions it will take..... before you DO grow a pair of balls and stand up against Big Dawg media, without little puppy whines saying how its all their fault.



The proverbial ball is in your court, cable companies. Stop fetching it when Big Dawg Media throws it again, but tell them to shove it and fetch it themselves. kherr

Premium Member

join:2000-09-04

Collinsville, IL 11 recommendations kherr Premium Member Talk about ..... .... stating the obvious .... travelguy

join:1999-09-03

Bismarck, ND 5 recommendations travelguy Member This guy is something Craig Moffett is something, isn't he? For years he's been preaching that MSOs need to raise their prices. Now, all of a sudden, he's done a 180 and saying stop! And people pay attention to him?

SteveV

join:2016-08-21

Williamsburg, VA 4 recommendations SteveV Member What we need is... A "National Cancel Your Cable and Broadband Account Week". Think of the shear an utter panic if 25% of the US population called their providers and cancelled their subs. Ah to dream. Roadkill

Premium Member

join:2008-06-17

united state 3 recommendations Roadkill Premium Member Self-defeating The analyst correctly identifies the price increases pointing out just how stupid the Cable TV/Internet companies are regarding profit. No one has to jump to conclusions or obscure the industry motives regarding money and profit. The industry is flat out, squeezing the consumer for every last cent they can possibly get away with. Even the FCC is making sure the door to more profits is wide open for the concerned businesses to pull cash out of consumers wallets. The trend has to end, but when wil it end? When will wide scaled customer rejection of Cable/internet prices actually occur? Next week, next month, next decade... kucharsk

join:2001-03-30

Louisville, CO 3 recommendations kucharsk Member Just passing on increased costs. They can't just eat the cost increases, so they have little choice.



People whine when DISH cuts of local TV stations, so when they eventually have to give in because locals want more money for carriage, what are they supposed to do? rradina

join:2000-08-08

Chesterfield, MO 920.3 39.3

·Charter

3 recommendations rradina Member Sore Spot There seems to be ample competition in the OTT streaming space. Higher prices for traditional delivery models will probably cause streaming competitors to raise prices too. However, it could also spawn even more OTT streaming competitors to enter the space (i.e. consider the mud Verizon's been throwing at the wall -- one of them might stick!)



Of course we must not forget the HSI providers have an ace up their sleeve on the table. OTT competition needs HSI and big cable will make its money somewhere -- at least they will without increased last-mile HSI competition (looming 5G perhaps?).



A+B = D

A+C = D

B = C



A = HSI price

B = Video price

C = Data overage fees

D = Monthly cable bill