What you are about to read should not come as a shock to you, especially if you are a subscriber of cable TV.
Comcast Corp, the dominant cable provider in the nation, has raised cable TV rates for the third time in three years The rates will go up about 6 to 7 percent, depending upon where you live. Other cable providers, like RCN, have also raised rates by about 8 percent.
7 percent is double the rate of inflation. Comcast’s prices have risen three times faster than inflation since 2000.
Although cable price increases have moderated in recent years from the double-digit hikes of the 1990s, many research analysts predict that costs will keep going up.
“Operational costs” are the culprits for the rate hikes. “Operational costs” include energy costs, improvements in customer service and network maintenance. Cable companies have millions of miles of outdated lines buried below ground, and are in the process of converting their technology to digital, which will be expensive. Comcast spent nearly $200 million in the past year to maintain and enhance its fiber-optic network in the Bay Area alone.
Cable rates have climbed 40 percent in the past six years, from an average $34.40 in 2000 to the $47.93 just announced for 2006. During that same period, inflation increased 14.3 percent, according to the federal Bureau of Labor Statistics.
Is it any wonder why the sale of satellite tv is increasing?
There are about 65 million homes nationwide with cable TV, a number expected to decline to 61 million by 2008. DirecTV accounts for 15 million subscribers and EchoStar’s Dish Network for 12 million.
Because satellite providers don’t have to pay taxes levied by local governments and feature smaller infrastructures, consumers get more bang for the buck with satellite.
With cable, additional charges are typically assessed for installation and equipment. These charges range from $30 to $80. Satellite Tv offers free instulation, free movie channels, and free upgrades, usually as an incentive to get customers to sign up for their services.
More pros of a satellite dish.
* Digital picture means better quality
* More flexible programming options
* Cost is cheaper per channel
* Good solution for those living in rural areas
According to a J.D. Power study, the average cost of satellite service is about 4% less than cable. Satellite subscribers
save an average of about $2.00 monthly compared to cable.
So, as the rates for the cable companies continue to rise,
you can expect comsumers to continue the migration to