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Cable Companies Raising Their Rates; Comcast's Basic Cable Fees Will Rise an Average of 4.5 Percent in the Richmond Area Starting Jan. 1

Posted on: Monday, 5 December 2005, 06:00 CST

By The Associated Press

The nation's biggest cable companies are boosting their rates by single-digit percentages, citing rising costs for programming and investment in new services.

Industry leader Comcast Corp. is raising the rate on its most popular cable package by an average of 6 percent next year in all markets.

The increase will not be as large in the Richmond area, where Comcast has 250,000 subscribers, spokeswoman Lisa Altman said. Basic cable rates will rise an average of 4.5 percent for local subscribers, starting Jan. 1.

"We are not increasing rates for digital cable or high-speed Internet," she said. "This is just our basic, preferred tier."

In contrast, the nation's second-largest cable company, Time Warner Cable, will ask customers to pay on average 3.1 percent more for its expanded basic package and 1.9 percent more for its limited basic plan. Owned by New York-based Time Warner Inc., the company serves nearly 11 million subscribers in 27 states.

The cost for Philadelphia-based Comcast's expanded basic package will rise to an average of about $47.70 as early as Jan. 1, the company said. Nearly all the company's 21.4 million cable subscribers nationwide will see an increase, since the expanded basic plan is the building block upon which digital services are added.

In the Richmond area in 2004, cable rates rose 5 percent. In January, they increased 5.9 percent in Chesterfield County and 9.9 percent in Richmond, Henrico County and other Comcast territory north of the James River. Full standard service costs about $46, and limited basic is $9.50.

Through October, overall consumer prices had risen at an annual rate of 4.9 percent. That figure includes energy prices, which have shot up at a 37.1 percent rate. Last year, overall prices were up 3.3 percent.

Cox Communications Inc., which has 6.2 million customers in 15 states, said that while rates are set by local offices, they likely will go up in several markets in 2006. This year, 80 percent of the Atlanta-based cable operator's markets had a rate increase.

Cablevision Systems Inc., which serves 3 million customers in the New York metropolitan area, will raise its rates an average of 2.3 percent, or $1.45 a month, in 2006.

Bruce Leichtman, president of the Leichtman Research Group in Durham, N.H., said cable TV price increases have moderated.

"It's been regular, but it has come down in recent years with more intense competition from satellite and a more saturated market," he said.

A government report this year said the average monthly rate for basic and expanded basic plans and equipment rose 5.4 percent in 2003 to $45.32, down from a 7.8 percent rise in 2002.

Among cable companies that faced effective competition, rates rose an average 3.6 percent, while those that didn't had an average price increase of 5.6 percent, according to the FCC report.

Cable operators say they are facing rising costs and have to invest in new products and services. Moreover, they say they already offer enhanced value for what consumers pay, such as free movies through video on demand.

Major cable operators, however, aren't increasing prices for their high-speed Internet and phone services, in part because of competition from phone companies and the desire to lure subscribers to those businesses.

AT&T Inc., formerly known as SBC Communications Inc., and Verizon Communications Inc. have been trying to attract Internet users with low digital subscriber line prices. Although the target is mainly dial-up customers, cable operators feel the pressure to keep prices down to keep gaining market share.

Satellite TV companies also have been raising rates in the past three or four years, Leichtman said.

"It would be difficult for them not to," he said. "Programming costs are increasing."

In 2005, Cablevision said its programming costs rose 12 percent.

Dish Network, a unit of EchoStar in Englewood, Colo., and DirecTV, which is 34 percent owned by News Corp. in New York, said no announcement or decision has been made on rate increases for 2006.

But the two satellite TV providers confirmed that they raised rates annually in the past few years.

Source: Richmond Times - Dispatch

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