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:
nothing but netflix here and that’s getting cut at the end of the month! I don't think i should have to pay to watch people in their 20's or 30's drink till they pass out then not remember the next day. Australia did a study last year and scientifically proved reality tv makes people's IQ drop.
Of the many scams which nobody seems to be aware of, like the absurd cost of prescription glasses, cable has to be among the top.
The market is changing. Customers want to pick and choose their content. The old model won't work anymore. When networks and cable companies realize this, if they come up with an affordable model that allows us to choose our programming, then they will be able to sell more packages again. Those may be cheaper, but there will be a hell of a lot more of them. I'm a recent cord-cutter due to unemployment. You know what? I don't miss it that much. I might go back when I get a job if the price would go down, and stay down.
Copyright © 2014 Microsoft. All rights reserved.
ABOUT SMART SPENDING
LATEST BLOG POSTS
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'