This article is the archived version of a report that appeared in the May 2009 Consumer Reports Magazine.
Jay Young, 73, had never written a letter to the editor of his newspaper. But he was driven to in December, when Blue Ridge Communications informed him that his cable rates would increase almost 6 percent, he says. It was roughly the same jump he has seen in his bills every year since 2003.
"It's crazy," says Young, who lives on a fixed income with his wife, Sylvia, near Manheim, Pa. Cable rates would stabilize if there were more competition, he believes. But like most U.S. households, the Youngs have little choice in the matter. "You're stuck because they are the only game in town," he says.
Rates for expanded basic tiers such as the one the Youngs subscribe to have spiked 122 percent since 1995, the Federal Communications Commission noted recently. That's three times the rate of inflation.
The availability of satellite TV has had a negligible effect on driving down pay-TV prices, according to the FCC. But in the few communities that are served by a second cable operator, rates were consistently some 10 percent lower.
Verizon and AT&T have begun offering TV service in some areas, but it's not yet an option for most homes.
More transparency among cable providers could also lead to lower prices and better service. Cable companies have blamed rate increases on the cost of carrying popular networks and the price of upgrading infrastructure. Consumers Union, the nonprofit publisher of Consumer Reports, and other advocacy groups believe Congress should require cable companies to disclose the cost of individual channels and equipment and explain price disparities from one community to the next.
Consumers Union has long supported à la carte pricing, which would allow customers to choose their own assortment of cable-TV channels and pay only for what they want. Some cable providers in Canada are already offering à la carte pricing for certain channels.
The latest findings by the FCC underscore the need for a hard look at cable rates. In the absence of competition among providers, the best that policy makers can do is press cable companies to justify their pricing and to let consumers choose their channels.