Like the swallows returning to Capistrano or Tom Brady going to the Super Bowl, there are some things you can just count on year after year.
Unfortunately, annual increases in cable and internet charges are among them.
More than a few consumers are probably thinking that the middle of a deadly pandemic, with millions of people out of work and the economy in tatters, is a pretty heartless time to boost the price of everyone’s connection to the outside world.
That’s not how Big Cable sees it.
If anything, the country’s stay-at-home misery is an opportunity not just for service providers like Charter’s Spectrum and Comcast, but also for streaming services such as Netflix and Disney+.
Rates for many of the communications and content services we’ve all grown to rely on over the last year have risen recently or will rise in 2021, and there’s little you can do about it.
“It’s unconscionable for cable and internet companies to jack up the price of their services right now,” said Emily Rusch, executive director of the California Public Interest Research Group.
“Internet access isn’t just a luxury during the coronavirus pandemic,” she told me. “It’s a necessity as people work and learn at home.”
Before we go any further, I’ll stipulate that this isn’t just about corporate greed. The cable industry for years has defended its annual price hikes by correctly pointing out that programming costs keep soaring.
But that’s not the only thing going on here. For one thing, pay-TV service providers have watched their revenue decline as a growing number of Americans cut the cable cord and rely instead on internet-based streaming services.
To compensate, and to keep shareholders happy, the industry keeps steadily increasing the cost of broadband internet access — and claiming that the higher fees are justified by ongoing investments in data networks.
That’s a bogus argument.
Mark Cooper, director of research at the Consumer Federation of America, told me there’s no need to expand broadband cable networks.
“They already have plenty of dark fiber,” he said, using the industry term for unused network capacity. That is, even though there’s more online streaming to people’s homes, the networks have more than enough bandwidth to handle the load.
Harold Feld, senior vice president of the advocacy group Public Knowledge, told me the same. “If you want to make your cable network go faster,” he said, “you’re talking about software upgrades. You’re not talking about new fiber.”
So why the higher internet fees?
“All they’re doing is making up for their pay-TV losses with higher charges for internet,” Cooper said.
Pay-TV companies have had pretty much free rein to inflict price hikes on consumers since the telecom market was deregulated in 1996.
From February 1996 to December 2020, Cooper said, cable rates have soared by 250%. That translates to average annual increases of 3.9% — almost double the average inflation rate of 2.2% over the same period.
What’s different now is that, thanks to years of mergers and industry consolidation, many of the companies that provide pay-TV and internet access are also in the programming business.
When they insist, therefore, that they have to raise rates because of higher programming costs, Cooper observed, “they’re just paying themselves.”
Take Comcast, the dominant cable company in Northern California. Its customers will pay about $80 more this year for cable service.
“Rising programming costs, most notably for broadcast TV and sports, continue to be the biggest factors driving price increases for all content distributors and their customers,” said Jenni Moyer, a Comcast spokeswoman.
Comcast owns NBC, CNBC, MSNBC and Universal Studios. It owns cable channels such as SyFy, USA, Bravo and E!, as well as local stations across the country, including KNBC-TV Channel 4 in Los Angeles.
When, or if, the next Olympics are held, Comcast owns the broadcast rights to that, not to mention the Golf Channel and regional sports networks nationwide.
Get your pay-TV or internet service from AT&T? It owns Warner Bros., HBO, Cinemax and cable channels such as TBS, TNT, TCM, CNN and the Cartoon Network.
Customers of AT&T’s U-verse and DirecTV services will pay as much as $108 more this year, depending on their package.
AT&T and Comcast are also among internet service providers that have reintroduced data caps that were lifted at the start of the pandemic. If you go over your monthly limit, extra fees may now be added to your bill.
The leading cable company in Southern California, Spectrum, raised its internet rate by $5 a month in December. The increase didn’t apply to customers who bundle internet access with pay-TV service.
“Spectrum is committed to continuously enhancing our communication products, providing superior connectivity services with the best overall competitive value in the marketplace,” said Dennis Johnson, a spokesman for the company.
Again, industry analysts say there’s no need to expand cable networks — the fiber’s already in place.
On the other hand, Charter added about 2 million residential internet customers last year, compared with just 19,000 new TV subscribers, the company reported Friday.
That extra $5 a month from many of the company’s 27 million internet customers, therefore, represents a hefty chunk of change. (The L.A. Times partners with Spectrum on a nightly TV show.)
A spokesman for Frontier Communications said California customers “may see rate changes” this year for broadband internet and pay-TV offerings. He said only that the increases would be “modest.”
Meanwhile, Netflix, Disney+, Hulu and Sling TV have each announced recent price increases. YouTube TV raised its price by 30% last year.
You stir all that together and you get fast-rising costs for working and schooling from home during a pandemic, and for keeping yourself entertained during off-hours.
Talk about a captive market.
“With COVID has come unprecedented isolation and loneliness for millions of vulnerable Americans,” said Sally Greenberg, executive director of the National Consumers League.
“The last thing companies should do is gouge consumers by jacking up prices for internet and other services that give people a lifeline to family, friends and community.”
Nice try. One thing we can say for sure after decades of price hikes, there’s no shaming this industry.
