FCC

FCC: Expanded Basic Cable TV Rates Climbed 5.4% In 2010

8/14/2012 12:44 PM Eastern

The average monthly price of expanded basic cable TV rose 5.4% in 2010, to $57.46, according to the FCC's annual report on cable industry rates -- while for the third consecutive year, the commission found that cable rates in "competitive" markets were higher.

The Federal Communications Commission, in the report released Monday, noted that the overall increase in cable rates was higher than the 1.6% in the Consumer Price Index (CPI) for 2010. From 1995 to 2011, the price of expanded basic service increased at a compound average annual growth rate of 6.1% whereas the CPI increased at a CAGR of 2.4%.

On a per-channel basis, however, the cost of cable TV has risen slower than the pace of inflation, according to the FCC. In fact, the price per channel for subscribers purchasing expanded basic service decreased by 2.1% for the 12 months ended Jan. 1, 2011, to 57 cents per channel. Over the past 16 years, the increase in price per channel was 0.9% annually.

The National Cable & Telecommunications Association declined to comment on the report. In the past, the trade group has called the FCC's cable rates survey findings "largely irrelevant."

In competitive markets -- where a rival cable, satellite or telco provider provides a sufficient alternative to incumbent operators -- the cost of expanded basic averaged $58.47 for 2010, up 5.7% year over year.

According to the FCC's analysis, one reason for the higher cost in competitive markets is that the price for expanded basic service from satellite operators DirecTV and Dish Network is 5% higher than the noncompetitive average. Moreover, the commission's report said, while expanded basic prices grew faster in effective competition communities, price per channel was significantly lower (6.2% less than noncompetitive markets) because operators in those markets offer more channels.

In noncompetitive markets, cable operators offered an average of 120 channels in their expanded-basic lineups in 2010, up from 112 a year earlier. Those in effective-competition areas offered 130, versus 117 in 2009.

Customer-premises equipment lease fees also increased in 2010, according to the FCC survey. Set-top and DVR rentals averaged $7.12 monthly for expanded-basic service, up 4.6%. In noncompetitive markets, CPE prices rose 5.4%, to $7.05 per month, while they increased 3.7% in competitive markets, to $7.22 per month.

The FCC's report on 2010 cable TV pricing is available here. The study is based on a survey of cable operators serving 485 out of the 25,508 noncompetitive communities in the U.S., and 315 out of the 8,508 effective-competition communities.

The FCC is required under the 1992 Cable Act to publish an annual statistical report on the average rates that cable operators charge for basic cable service, other cable programming and cable equipment.

Last month, the FCC released its 14th video-competition report, which detailed the rise of satellite, telco and online video providers but stopped short of declaring that such alternative providers were enough to keep cable prices in check.

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