Cable TV Price Increases Have Beaten Inflation Every Single Year For 20 Years (businessinsider.com)

An anonymous reader quotes a report from Business Insider: The pay TV industry is losing customers, but prices continue to climb. In fact, for U.S. cable TV in particular, price increases have outpaced inflation for every single one of the past 20 years, according to a recent FCC report surfaced by CordCutting.com. Every one! In 1995, cable cost $22.35 per month, on average. In 2015, it was $69.03. Now, it does makes sense for prices to go up for goods like cable as long as there is inflation. But cable's increases are more than double that of inflation. On average, cable prices went up 5.8% yearly for the past 20 years. Inflation clocked in at 2.2% per year, on average. Though there has been grumbling about the high prices of cable for quite some time, it has lately taken on a more serious air. That's because there is evidence that the pay-TV industry is experiencing a hiccup -- or the start of a long-term decline. The pay-TV industry lost 800,000 subscribers last quarter, according to the research firm SNL Kagan. "About 82% of households that use a TV currently subscribe to a pay-TV service," Bruce Leichtman of Leichtman Research said in a statement last month. "This is down from where it was five years ago, and similar to the penetration level eleven years ago."

Comments

Hard to believe, but cable used to be AD-FREE

[davide marney]

That was the whole point of paying for TV. No ads! And, boy, was it worth it. Now you've got the worst of both worlds, you pay out of pocket AND they crush you with commercials. Frankly, the reason TV is being taken over by Netflix et al. has everything to do with getting rid of ads.

Re:Hard to believe, but cable used to be AD-FREE

[slew]

That was the whole point of paying for TV. No ads! And, boy, was it worth it. Now you've got the worst of both worlds, you pay out of pocket AND they crush you with commercials.

Frankly, the reason TV is being taken over by Netflix et al. has everything to do with getting rid of ads.

Hardly. Cable (aka CATV or community antenna television) started when people couldn't get good reception at their homes with Yagi (technically Yagi-Uda).
Because the market for original CATV was limited to folks that couldn't receive over the air and due to lots of regulations which prevented most out-of-area transmission (aka superstations), the CATV concept was pretty much saturated until non-broadcast providers came on board (like HBO which charged a premium but also drove basic cable subscriptions). Cable never meant no-advert TV. Your subscription paid for the cable infrastructure. The premium channels always cost more (even if you pirated them, you had to pay for your pirating equipment).

FWIW the advert model works great with a unfragmented audience (most people watch the same channels), but unfortunately as the programming becomes more fragmented, the infrastructure to broadcast all possible channels to your house and you pick the one you want to watch becomes less efficient and the revenue from untargetted adverts (e.g., the historical network broadcast and cable model) becomes less tenable and the extra subscription uni-cast on-demand model becomes relatively more cost effective. This is the real dynamic you are seeing today. As bandwidth becomes cheaper and cheaper, eventually is more efficient to just bill you instead of billing the advertisers and everything will become unbundled.

The downsides of this eventuality are that that high-bandwidth cable that serves most of America is likely to be come quite expensive as the cable companies collapse. In America, if you can't get high-speed internet today, you are likely doomed by this coming reality as the capital incentives to lay new commodity connections (w/o any premium service) is going to be pretty minimal (as Google Fiber has no doubt discovered and retreated from playing this game).

Re:Hard to believe, but cable used to be AD-FREE

[sims 2]

Considering CATV's origins it's surprising that next month we are considering dropping cable at work because we have 20+ tvs on display and not a single clear QAM channel. Suddenlink won't supply us with a single in the clear digital channel at any price but with a decent HDTV antenna we can run all 20+ tvs with a HD picture for the one time cost of the antenna.

Fuzzy cable with 48 channels or HD digital with 4? Your picture quality impacts sales and all the tv's will be tuned to the same channel 99% of the time. What'dya think they're going to choose?

What about internet?

[rsilvergun]

In many school districts it's necessity. The last 4 years of my kid's public education all her homework was delivered online (the district couldn't afford books, budget cuts to go with the tax cuts).

Also given the number of alternatives (online games, video games in general and tons and tons of streaming) there should be _downward_ pressure. That's not a sign of a healthy economy. That's a sign of a monopoly without any regulation.

Re:If people keep paying...

[markdavis]

They don't necessarily think it is worth the expense, in some cases they simply have no choice. Where I live, I have no other choice for [real] Internet access, period. So it doesn't matter what they charge, I pretty much "have" to pay it. Not everyone has the option (or desire) to "borrow" (more like "steal"?) Internet access like you can do. In fact, most don't.

TV is somewhat less important [to most people, including me], but if you want quality content that is NOT on Netflix/whatever or over the air, again, you are stuck (think History Channel, Science Channel, NatGeo).

About sports- that is a perfect example of one of the several causes TV is too expensive. I call it the "sports tax." Like you (and many others), I don't give a F*** about *any* sports. And, yet, a sizable amount of my cable bill dollars go directly to ESPN's pockets for their exorbitant licensing fees. And the cable TV companies act like it is a wonderful thing for everyone that we have access to 26 sports channels, and the golf channel, and 20 home shopping network channels, and 30 reality-tv-junk channels, and 18 non-English channels, and etc.

Last time I complained to Cox about their latest series of price hikes, they had the nerve to tell me how wonderful a value their service is because it covers all the people in my house at no extra charge! I told them "Yeah, because, since I live alone, I guess should be terribly happy I am subsidizing it for all those multi-person households; such a great deal for me."

Thank you Captain Obvious

[p51d007]

Explains why there are a lot of cord cutters. That, and about 75% of what you are forced to subscribe to is JUNK.

Re:Thank you Captain Obvious

[UltraZelda64]

So what you're saying is, 25% of forced paid content is actually good? Wow, you are being really generous.

Re:Thank you Captain Obvious

[Solandri]

Actually this one is pretty simple. In 1995, there were 139 cable programming services (channels). By 2002 there were 280. The current list is over 1000 channels (though a bunch are east/west variants of the same channel).

So basically we're paying 2x more for cable than 20 years ago, and getting 7x more content. Or in other words, the price per channel is less than 30% what it was 20 years ago. (Of course as you say, a lot of those channels are junk. So what we're paying per quality channel is debatable.)

Re:If people keep paying...

[amicusNYCL]

I'm just running on a borrowed internet connection.

How does that work? Do you return the bandwidth when you're done using it?

Re:If people keep paying...

[Rockoon]

They don't necessarily think it is worth the expense

If they are voluntarily paying it, they do.

in some cases they simply have no choice.

Gun to their head and all that?

If you think its over-priced, then don't pay for it. So long as you continue to pay for it, it cannot actually be over-priced in your view unless there is that gun to your head.

We have laws against putting guns to peoples heads. Perhaps you should call the police.

Re:If people keep paying...

[markdavis]

>" If they are voluntarily paying it, they do."
>" Gun to their head and all that?"

OK, let's see how your logic works for:

1) Electricity
2) Gas
3) City water
4) City Sewer

They don't have a "gun to your head" to pay for those, so it must be voluntary, right? I mean, you CAN live without any of those.... burn candles and wood, get bottled water, crap in a pail. Some services are necessary for reasonable modern living, and Internet is becoming one of those.

Lots of other stuff too..

[bored]

Housing, schooling, medical. It may not have gone up each year but averaged over any length of time their numbers are significant. Which makes one question the fundamental weighting of the inflation indexes.

My own personal inflation indexes are probably 3x what the published one is. Particularly if one breaks out the "wants" vs "needs". In the US its basically impossible to be a nomad or farm public/common land. So, I need a house, I need gas to drive to work, and I need to eat something that isn't McDonalds. If it weren't for the fact that I'm now one of the "privileged computer engineers" I would be living paycheck to paycheck unable to afford a new dishwasher when the old one broke. The particularly damming thing, is that because of this basic cost of labor/etc many things in the US have become so expensive that hiring someone to fix a car/reroof a house/etc can easily cost days of my inflated pay rates. (A new root installed by 4 guys on my house in two days can cost more than 2 months of net salary). Retail rents in front the wamart in the not so great part of town can easily exceed $15 a square foot.

There are people getting insanely rich from all this, its just none of us actually working for a living.