Decoding Comcast Rate Hikes12/01/2006 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.