Will cable TV ever get cheaper?
With so many people cutting the cord, you'd think cable TV would now cost less, not more. But experts say that's not likely.
This post comes from Quentin Fottrell at partner site SmartMoney.
The Justice Department is conducting a wide-ranging antitrust probe into whether cable companies collude to restrict competition from online video providers like Netflix, The Wall Street Journal reports. At issue: Cable companies want to cap data downloads among heavy users, which would affect those who've abandoned pay TV in favor of streaming shows and movies over the Internet.
Though more people have "cut the cord" in recent years, analysts say it hasn't resulted in the price cuts many expected. "Cable prices won't go down unless cable investors get hurt, and that will only happen when even more customers cancel their cable," says technology analyst Jeff Kagan.
Some 9% of homes with televisions cut their cable services in 2011, while an additional 11% said they planned to do so, a survey released by Deloitte earlier this year found. (Post continues below.)
But despite this, cable prices doubled over the past decade, Kagan says. Customers have been complaining about price increases for years, he adds. "This is backwards compared to other technologies, but cable television pricing continues to go up," he says.
And prices may double again in the next decade. Keith Nissen, research director at NPD Group, predicts bills will hit $200 a month by 2020 -- up from the current average of $86.
In light of the Justice Department's investigation, cable companies may look for other ways to maintain their revenue and market share, experts say. One option: Do what cellular networks are doing and move toward usage-based pricing for broadband Internet, says Craig Moffett, senior analyst at Bernstein Research.
The shift to usage-based pricing would be good for the cable operators, but bad for consumers who want to watch more on-demand television online, he says. This would also slow the pace of innovation within the industry, he says, and make it more difficult for Apple or Google TVs to get widespread and cost-effective access to cable video feeds.
TV and cable networks also have no interest in lower prices, experts say. "The companies are caught in the middle and have to pay more year after year to networks," says Kagan. (Netflix, Time Warner and Comcast did not respond to requests for comment.)
Cable companies have also responded to the competition with their own new tech offerings, such as apps that allow viewers to watch TV on multiple devices and video-on-demand, says Brian Dietz, a spokesman for the National Cable & Telecommunications Association.
Google and Apple -- which both have streaming video offerings -- may be in the best position to upset the status quo. "These two companies changed the wireless space," Kagan says. "Perhaps they can change the television space as well."
More on SmartMoney and MSN Money:
My bill just topped 200.00 for the first time EVER . ( AT&T U-verse tv ) It has gone up stedily since i got it in 2009. I dropped CON-cast in favor of U-Verse because that was the only other option available. I tried to get sattelite tv but can't get a signal because of all the oak trees in my yard.
I have had on-going connectivity, internet speed as well as billing issues with AT&T and I'm getting tired of it.
I'm going to just get a digital antenna and drop U-Verse all together.
We cancelled ours last month and went satellite. more premium channels, more DVR space and saved nearly 60.00 a month over Time Warner. they didn't care one bit we were leaving after being with them from the day they came to our area.
Is that the company or the employees?
If there’s more than one cable company to choose from in an area the service is much better and the prices far lower.
The problem is that cable companies cut deals with local politicians to get exclusive franchises for a city or county. As a result most folks only have a choice of one cable company in an area, if there were competition prices would be lower and service better.
Some states are getting rid of the franchise agreements, but there seems to be some sort of tacit “you stay out of my area and I’ll stay out of yours” agreement among cable companies, so there’s still no competition.
I lived in an area with a major cable company, and a smaller local one. The next town over only had the major cable to choose from. They had higher prices and terrible service, yet we folks in the town with a choice had lower prices and very good customer service.
Maybe it's time for the family unit to cut the cable cord and go back to playing boardgames/cards.
An excellent way to spend time with the kids, and it makes for a more tight knit family than staring at some stupid tv show that does nothing but dumb people down.
all this charging more for cable has to be a communist plot
in capitalism prices always fall as bussinesses just get better and beter at their jobs and competition lowers prices.
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