Cable TV Prices Go Up, Programming Choice Goes Down

This isn't the first time I've delved into the whole “Cable TV Is Too Damn Expensive” kerfuffle and I doubt it will be the last. An article in USA Today about what to do about high cable bills only scratches the surface.

The biggest battle looming between cable companies/telcos and consumers isn't about pricing. It's going to be about programming and Internet access.

Remember this: It isn't the cable companies who decide what you'll pay for video programming so much as it is the content providers (A&E, TNT, FX, Discovery, History Channel, etc). They dictate which channel will appear on what programming tier and there's little the cable or satellite provider can do about it. The providers can also say "If you want our premium channel(s), you also have to carry these niche channels, otherwise you get nothing." About the only thing that is negotiable is the pricing, and the content providers are constantly jacking up the price for what they provide. Is it any wonder the number of video subscribers has been falling as they pay increasingly more for less programming?

While some consumers have wondered why the cable companies can't absorb the increasing costs, it must be understood that these days the profit margin on video is small and shrinking. Absorbing costs will take video from barely making money to losing money, something no business should do. We must also keep in mind that cable companies have a much higher profit margin for Internet and phone service as well as Over The Top services like Video-On-Demand. But why should they use the profits from one part of their operation to support the money-losing part, particularly if the losses will do nothing but grow?

Having an insider's view of what goes on in some cable companies (no, I don't work for a cable company, but my company provides equipment and services to cable companies), a lot of them would love nothing better than to provide a la carte programming as it means they won't have to carry channels that no one watches. That leaves more spectrum available for other, more profitable (and less costly) services, like high-speed Internet.

Of course that might change if ISP's like Verizon and Comcast get their way, being able to severely limit data speeds and the amount of data customers will be allowed to use every month while at the same time jacking up the prices for service that is already overpriced. (The US has some of the lowest speed and highest priced Internet access in the world, and it seems like some providers want to make it even slower and more costly. Call it yet another example of blatant cronyism within our economy, but we won't delve into that now as that could stand as a post all by itself.)

OK, I got a little off topic, but this issue isn't going to go away. If content providers continue jacking up costs, the number of video subscribers will continue to fall, and then the whole vicious cycle will repeat itself until the cable companies either 'pull the plug' on providing video or the content providers go broke. The present business model isn't sustainable and too many people are ignoring it. Unless something changes, everyone is going to lose.