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How much will you pay for cable TV?
Citing increased costs for sports programming and the price of installing new digital hardware, cable television companies serving Whidbey Island are increasing or are considering increasing the price islanders pay for their programs.
So, do you still want your MTV?
Across-the-board increases of over 9 percent went into effect for AT&T Broadband on Jan. 1, boosting the price of most standard cable packages over $40 a month for the first time and taking even basic cable into the $15 range.
On top of this, the industry does not see the increases slowing. An average increase of $2 per month for most cable customers has been the damage during the past two years. But if the cost of programming and new cable services, such as Internet access and digital telephone, continue to rise, the largely unregulated industry may ask for more next year.
Steve Kipp, a spokesman for AT&T Broadband, said recently that Washington state was particularly hard hit in the rate increase. Overall programming costs for AT&T in the state are up 16.5 percent, he said. Sports programming alone took a 33 percent jump. Compared to a 5.6 percent increase in customer bills for AT&Ts entire cable network, Whidbey Islanders are paying more than most.
Kipp said that should not happen as much in the future.
We want to make sure our pricing is consistent, he said.
AT&T is one of two cable companies that have franchises in Island County. The other, Millennium Digital Media which serves Clinton, Freeland, Greenbank and Oak Harbor has not yet announced any rate hikes for 2002. But, said Millennium spokesperson Angela Higman, programming costs are pressuring her company as well.
We have to pass along some of that cost to the customer, she said.
While that argument is the one the cable companies agree upon, not all their customers are buying it. Jan Thompson, a Clinton resident who has been a cable subscriber since 1993, said she saw the price of cable start to jump in 1997, long before sports programming became such a big deal. During the past four years, she has seen the price of her 43-channel, limited basic package increase 74 percent to $34.86.
Most of what she finds on those channels, she said, are reruns. Why programming costs should be up with that kind of content, she does not know.
Thats outrageous, she said. I think this is kind of a scam.
In their defense, the cable companies can point to improved service that has come with price increases. AT&T recently added the Food Network to its lineup, and brought the Weather Channel back.
Another improvement, digital cable service, has both AT&T and Millennium launching more channels and high-speed Internet service in their various cable packages. AT&T even offers digital telephone service through its broadband network.
But without regulation, the only practical limit on prices is that created by the market. Tim Sweeny, a spokesman for the Washington Utilities and Transportation Commission, said not even his agency has dominion over cable providers. Since a federal law that regulated the cable industry expired in the late 1980s, cable companies have made their own choices about pricing and service. The only public agencies that have any say in how the cable companies operate, he said, are the Federal Communications Commission and franchisers. In Island County, the franchisers are the cities of Langley, Oak Harbor and Coupeville, and Island County itself. The FCC also has regulatory authority over basic cable packages.
These agencies have only a small degree of authority. The FCC can handle complaints about service, while the cities and county decide only to grant or deny franchises. Franchise fees are 5 percent of gross revenues for a particular franchise area. In Langley, for instance, AT&T paid $14,708 for its 2001 franchise, in addition to the 6 percent utility tax it passed onto Langley cable subscribers.
Television watchers do have choices that could prove to be a limiting factor for continued cable price increases. The continued expansion of digital satellite television is making that option more popular each year. This year, satellite company DirecTV will put up all the local channels in the Whidbey Island area, eliminating a disadvantage it once had to cable companies.
Satellite companies are also keeping their prices a little lower than cable companies. At the Radio Shack store in Freeland, dishes and hardware are selling for about $20, down significantly from the $1,000 price tag they had a few years ago. With a basic, 105-channel program package starting at $31.95 and movie packages running about $8 cheaper than similar packages offered by local cable providers, digital satellite is gaining market share.
Danny Horton, manager of the store, said cable programming angst is bringing many of his digital satellite customers through the door.
I would say the majority of the people coming in are the ones who want to change from cable to something else, he said.
AT&Ts Kipp said his company is competing with satellite with its digital network.
Since Sept. 11 especially, were seeing an increase in cable television subscribers, he said.
Kipp said he does not know whether AT&T Broadband will raise its prices again in 2003. Millennium is expected to make a decision about the current years pricing sometime this spring. Dish Network, another satellite television network, announced this month that it will add $1 to its three basic programming packages.