No competition, no regulation means rising cable bills

When the FCC released its most recent Report On Cable Industry Prices in March 2012, it found bad news for consumers. Cable prices have risen steadily and sharply over the years at three times the rate of inflation.

A recent study from the market research firm of NPD of Port Washington, New York predicts that consumer video prices will continue to rise. In its "Digital Outlook" report, NPD found:

• Average pay-TV subscription for basic pay-TV service (with premium TV channels) in the U.S. reached $86 in 2011.
• Pay TV monthly rates have also grown an average of 6 percent per year, even as consumer household income has remained essentially flat.
• If nothing changes, NPD expects the average pay-TV bill to reach $123 by the year 2015 and $200 by 2020.

The cable industry continued to raise rates in recent years, despite the fact that "A sharp rise in housing vacancies due to the mortgage crisis alone has led to five million fewer U.S. households viewing pay-TV services."

The reason, of course, is that supply and demand have much less effect when a business is an unregulated monopoly. Most cable companies have, if not absolute control, then crushing dominance - as, say, Comcast does in Washington, DC and Time Warner in New York City. The 1996 Telecom Act took away local governments' authority to regulate all but basic cable rates, with the promise that competition would protect consumers.

According to the FCC's most recent report on cable industry prices, prices tend to drop through genuine competition. But now, with Verizon's agreement to combine with cable companies to cross market each others' service, that competition - however spotty - may be ending. In which case, you may not have to wait until 2020 to pay $200 a month for the privilege of watching thousands of commercials a year.

Report On Cable Industry Prices (FCC, Mar. 9 2012)
 
Pay-TV bills continue to increase by 6 percent, year-over-year, as consumer-spending power remains flat (NPD news release, Apr. 10, 2012)
 
Verizon move threatens growth of home fiber ( Speed Matters, Apr. 11, 2012)