Cable Viewers Have More Channels--But for a Price
Cable television systems are offering more channels to more viewers, but the price for watching is also going up.
In the two years since most cable systems were freed from municipal rate regulation, their basic service rates have risen substantially. However, stability in premium channel rates, which were never regulated, has moderated the increase in the average overall cable bill.
The consumer price index for the 12 months through November shows that cable TV bills for urban viewers rose 13.3%, while the overall index rose 4.2% during the period. The cable increase during the previous year was 6.85%.
Other trackers of cable prices, however, show different figures.
Paul Kagan Associates, a Carmel-based research firm that compiles nationwide cable prices, says the monthly rate for basic cable rose about 10%, from a monthly average of $13.20 last year to $14.52 in 1988. With premium channels added in, average monthly cable bills rose 5.6% over 1987 to $24.73, a rate only slightly higher than inflation, the firm says.
Those in the industry say that for the two decades before deregulation took effect in January, 1987, municipalities kept basic service rates artificially low. With the freedom to charge what the market will bear, cable systems have added more channels to the basic tier and raised prices.
Sharon Armbrust, a senior analyst at Kagan, said the trend in steep increases for basic service is a “two-year phenomenon” that already shows signs of stabilizing.
“Regular rates will track fairly closely with inflation and perhaps outpace it simply because of the new services” being added, Armbrust said.
“There could be a consumer backlash if charges go up without new services, but cable operators are sensitive to this. It’s a subscription service--you vote every month whether to buy it,” she said.