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FCC: Cable Rates Rise; NCTA: Data 'Largely Irrelevant' - Broadcasting & Cable

FCC: Cable Rates Rise; NCTA: Data 'Largely Irrelevant'

Average monthly price for expanded basic cable service was $52.97 in 2008, the most recent period for which it has data
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According to the FCC's just-released cable rate report, the
average monthly price for expanded basic cable service was $52.97 in 2008,
the most recent period for which it has data, up 5.9% from the previous
12-month period and compared to a 0.1% increase in the Consumer Price Index.

The commission found that operators' programming expenses
increased by 8% a month from $16.35 in 2007 to $17.67 in 2008. The FCC also
found that for the 14 years it has been measuring cable rates, they have gone
up 134% (6.3% compound annual increase), vs. 39% (2.4% compound) for the
CPI.

But at a per-channel reckoning, the price of cable had only
gone up 11 cents between 1995 and 2009, an increase of 18% and a compound
increase of 1.2% per year.

In a reversal from previous studies, the price of expanded
basic was slightly more, and the increase slightly larger, in areas where the
FCC had determined there was effective competition. For those areas, the price
was $52.96 per month, vs. $52.10 for areas where no effective competition finding
had been made.

The FCC chalks that change up primarily to the fact that the
number of those effective competition markets more than doubled from 3,205
to 7,034, the majority of those due to DBS market share that topped 15%.

The National Cable & Telecommunications Association has
issues. "Since the majority of cable customers subscribe to multiple
services, the data is largely irrelevant because it doesn't reflect the actual
consumer experience," said NCTA in response. "Most cable
customers subscribe to digital cable and other services so they are enjoying a
bundled discount plus have hundreds of channels and other interactive features
to choose from. When you consider that total TV viewing continues to rise year
after year, consumers are clearly demonstrating that they enjoy their video
service."

The study found that operators were offering the triple play
package of phone, net and video to over 90% of their customers, and that 25%
take that package, while 28% take the double play of video and Internet.

There are still few takers for the "family
friendly" programming packages offered to 47% of subs, according to the
survey. Those were created by operators in response to calls for unbundling
family programming from more adult fare. According to the FCC, only one half of
one percent took them up on the offer.

The FCC highlighted the following in its conclusion:

"Expanded basic cable prices increased by 5.9 percent
for the 12 months ending January 1, 2009.  This compares to a 0.1 percent
increase in general inflation as measured by the CPI (All Items). Compared to
the overall average price charged by operators in the effective competition
communities, average prices were lowest (9.6 percent lower) for rival operators
in communities with at least two wireline operators and highest (1.2
percent higher) when a finding was granted based on DBS market share exceeding
the 15 percent threshold established by the statute.  The price of
expanded basic service historically has increased at a compound average annual
rate of 6.3 percent over the 14-year period from 1995-2009, just above the
one-year 2009 increase of 5.9 percent. In comparison, general inflation as
measured by the CPI (All Items) increased at a compound annual rate of 2.4
percent over the same 14-year period."

NCTA's takeaways:

"About two-thirds of customers subscribe to at least
two services from their cable provider," and "[a]bout one-third
of cable customers subscribe to the triple play of broadband, video, and voice services
which includes discounts for purchasing multiple services."

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