Even the FCC Acknowledges Soaring Video Costs

Even the FCC Acknowledges Soaring Video Costs

Yesterday the FCC released its “Report on Cable Industry Prices,” which is a survey conducted by the FCC based on information provided by cable TV providers and telecom companies that provide video services to their consumers. Interestingly, this survey does not include inputs from satellite TV providers or AT&T U-verse. The results of this survey, while not surprising in the least, highlight the drastically rising costs for video programming and retransmission fees, and increase my disappointment that this FCC has walked away from taking any action at all to further regulate broadcasters on the insane fee increases that do nothing to better serve consumers. There had been a point in time when the FCC chairman had signaled that his team was taking a look at the video landscape and the rising costs associated with providing the service, but ended up simply punting. That move hurts all consumers.

The survey found that the average price for basic cable TV service increased 2.3% to $23.79 for the 12-month period ending on January 1, 2015. That increase was driven largely by the ever-escalating costs for video programming. Analysts have noted that given the overall inflation rate staying essentially flat during that same time period, the increase in retransmission consent fees were a prime driver in these price increases. That is certainly not surprising given the recent shareholder reports that the major broadcasters have released during Wall Street calls, where they literally were boasting about their huge retransmission fee increases and how wonderfully it impacted their bottom line. It appears that what is good for Wall Street doesn’t necessarily make it affordable or fair to those on Main Street, particularly in rural communities.

I never cease to be amazed at how many NTCA members—virtually all of whom offer some type of a video play— hang on to their video service because their customers have few, if any, choices in the communities they serve. Yet the product continues to be a loss leader for them. I myself have turned to having my monthly bill in suburban Washington, D.C., which includes my video, internet and phone bundle, automatically paid for out of my bank account because every month that I would rip open the billing envelope and stare in horror at my monthly fee, I would swear that was the month that I was going to simply go over the top for my video services. (And I still think that if my husband didn’t have such a love-affair with his favorite sports networks, we would do that.)

This is a business model that really begs for review from Washington policymakers as soaring programming costs and fees are simply making the service difficult to offer in rural markets. The study further found that competition helps to keep costs low.

Without NTCA members in the rural markets, there will not only be limited competition, but there will be many consumers with no video options at all.

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