Cable Operators

Decoding Comcast Rate Hikes

12/01/2006 7:00 PM Eastern

Bernstein Research added up announced 2007 rate increases in Comcast markets and they averaged out to 5.4% for analog video. That’s with 12 markets in so far, absent major systems like Boston, Miami and Chicago. But they range from 3.5% in hometown Philadelphia to 6.8% in Seattle, again for analog video.

As Bernstein had been working with a 3.7% projection (and as overall inflation is currently 1.3%), it interprets these as “sizable” price increases and sees affirmation that “competitive intensity in the pay TV market remains restrained.” Verizon, the report notes, has only 118,000 announced video customers — but it recently announced a 7.6% price increase for FiOS TV. Cable companies that can recoup revenue from high-speed Internet and voice over Internet protocol services in the bundle can afford to take lesser increases: Cablevision competes with Verizon and only took a 1.1% rate increase recently.

And over time, analog video revenue is a smaller part of cable’s overall mix. At Comcast, the revenue share from analog video has fallen to an estimated 48% of the total from 60% as recently as 2002. Comcast’s 5.4% bumps so far are down from the 6.5% average increase in Comcast systems in 2005, Bernstein said. Bernstein also notes that with other video pricing remaining pretty flat — for digital, premium and pay-per-view offerings — the difference between analog video pricing and higher-end digital video packages is flattening. That makes it easier for relatively affluent customers to make the jump to digital.

Want to read more stories like this?
Get our Free Newsletter Here!