Is it time to put down the remote and cut the cord? If cable prices continue to rise exponentially then that could be the trend among households in financial disarray in the future that can’t afford a luxury like cable television.
The Federal Communications Commission (FCC) published a report (PDF) late last week in which it discovered that cable prices are outpacing inflation four to one. Here are the federal agency’s findings: basic cable prices rose 6.5 percent to $22.63, expanded basic cable jumped 5.1 percent to $64.41 and increased at a compound average annual rate of 6.1 percent between 1995 and 2013.
Expanded basic cable was than DirecTV ($63.99) and Dish Network ($59.99).
The listed figures included traditional coaxial cable and fiber services but omitted fees, taxes and equipment charges – these did soar, though, by four percent. In addition, the data consisted of cable companies that operated in areas without any significant competition: communities without competition experienced 4.6 percent cable price increases, while communities with competition saw cable prices grow 5.8 percent.
“These price increases compare to a 1.6 percent increase in general inflation as measured by the Consumer Price Index (CPI) for the same one-year period. The CPI’s compound average annual rate of growth over the 18-year period was 2.4 percent,” the FCC stated in the report. “We surveyed operators serving 486 out of the 24,238 communities without a finding of competition and 314 out of the 9,417 communities granted an effective competition finding pursuant to the statute.”
Although consumers are receiving more channels each year, they only view 17 out of the average 189 channels available on their television.
Despite surveys suggesting that people are watching less television, data from the Bureau of Labor Statistics Time Use Survey, the average time spent watching television is more than five hours, while 56 percent pay for cable television and two-thirds have three or more television sets in the home.
With new services like Apple’s iTunes marketplace, Netflix and the WWE Network, a growing number of consumers are taking part in a trend called “cord stacking.” This means that more consumers are maintaining their cable subscription but also adding new digital subscriptions like Netflix to their monthly list of expenditures.
However, even though consumers are spending large sums of money on cable and Internet, customer satisfaction has fallen again, according to the American Customer Satisfaction Index (ACSI). ISPs declined 3.1 percent to 63/100 and subscription television dropped 4.4 percent to 65.
“The Internet has been a disruptor for many industries, and subscription TV and ISPs are no exception,” said Claes Fornell, ACSI Chairman and founder, in a statement Tuesday. “Over-the-top video services, like Netflix and Hulu, threaten subscription TV providers and also put pressure on ISP network infrastructure. Customers question the value proposition of both, as consumers pay for more than they need in terms of subscription TV and get less than they want in terms of Internet speeds and reliability.”
Comcast and Time Warner Cable were the worst-performing companies on the list.
