Cable companies find new excuse to raise rates (again)

To the best of my knowledge, deregulation of utilities and services in the USA have generally led to price gouging. The cable industry in particular raised rates over 50% in the first six years since being deregulated in 1996 (source). Even with competition from satellite and phone companies, your living room TV is about the biggest cash cow companies like Comcast, Charter, Cox, Time Warner, and others have ever seen. Sure we’re seeing money flow to new services (see my buyshifting articles for more thoughts on that topic), and Joost (and others) are enabling free, or virtually free TV services. But that’s not stopping the cable companies.

The AP reported today that cable companies intend to increase rates by $2-3/month in 2009, blaming the FCC-mandated digital transition for the hike.

Time Warner Cable Inc. spokesman Alex Dudley said the company agrees with the cable industry’s stance that the FCC cable card rule is a “tax” on consumers.

This is a bad thing. Not just because they want to increase prices, which they are entitled to do, despite being either a network of monopolies or oligopolies, depending on how you look at it. Not just because despite deregulation over 90% of Americans only have a single cable service provider option. And not just because the cable companies have seen fit to exploit their entrenched position to impose rate hikes at a rate of over three times inflation.

Chris Murray, senior counsel at Consumers Union in Washington, said it’s convenient for cable companies to blame regulators when they’ve stalled about complying with the FCC rule for years. Cable operators also have had no problem raising rates regularly for various reasons.

“They raise rates three times faster than inflation every year, for more than a decade,” he said. “Cable companies want to have absolute control. We don’t think they should have it.”

Cable companies have known about the digital transition for years. It’s been delayed time and time again. They’ve had ample opportunities to build infrastructure and save the necessary funds to make the transition painless. Instead, they wait to the 11th hour, and then attempt to pass the buck.

Here’s an easy way to do something about it.  Click here to send a simple email to your legislator on the topic.  Note that this is focused on A La Carte cable, but joining into this campaign will most certainly be the best possible first step down a very important road.  Take 5 minutes, it’s worth it.