FCC study shows cable pricing outpaces inflation 4:1

May 16, 2014
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FCC study shows cable pricing outpaces inflation 4:1

With Comcast’s proposed merger with Time Warner Cable, part of the FCC’s concern is plan pricing. Though a Comcast executive couldn’t tell the FCC prices would go down, he did suggests the price hikes would slow. A recent study by the FCC shows that may be necessary, as cable bill pricing outpaced inflation by four-to-one.


Over a 12-month period, cable rates increased four-fold the rate of inflation in the US. The average price of basic cable went up 6.5% to $22.63, while expanded basic service rose to $64.41, a 5.1% jump. Compared to inflation, that’s a massive increase.

Using the Consumer Price Index (CPI) to calculate inflation, the FCC note that over the 12-month study, cable lapped inflation four times. Over 18 months, it was still over double:

These price increases compare to a 1.6 percent increase in general inflation as measured by the CPI (All Items) for the same one-year period. The CPI’s compound average annual rate of growth over the 18-year period was 2.4 percent.

The findings also exclude taxes and other fees, so the actual difference may be more severe. The FCC also appreciated both coaxial and fiber services, and gave both a competitive look as well as one at markets lacking multiple providers.

Companies like Comcast point to the excessive cost of licensing sports programming, but the FCC is likely to disallow that when prompting providers on best practices for protecting the consumer. If anything, this study proves stemming the tide of increasing cable cost is necessary, merger or not.

Source: FCC

Via: Ars Technica


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