The untimely price hike of cable and internet providers will leave subscribers in a worse situation. With the pandemic forcing establishments to close down, more people are struggling to pay their bills. Work from home setup and online learning is dependent on a reliable internet connection, which means they cannot easily unsubscribe from their plans.
AT&T already imposed a price hike for DirecTV satellite service by $108. For Comcast, its users will have to pay them an extra $78 as they started their price hike last month. To save more money from overpriced cable television companies, many consumers already cut the cord to switch to streaming services such as Netflix. Unfortunately, these streaming services will also charge higher fees this year. Hulu already started a price hike of $10 a month.
Director of Research at the Consumer Federation of America (CFA), Mark Cooper, said cable tv and internet providers have been doing this price hike every January. He also said it is not always about inflation, and there is nothing we can do about it. These providers have been doing it religiously for the past two decades, just like a tradition. However, this yearly price hike is a continuous debate over the industry’s regulation and competition.
Willingness to pay
Consumers are willing to pay unreasonable prices for the sake of their favorite shows. According to a recent report conducted by DecisionData.org, an average household bill of $217 per month for cable TV is more significant than other utility bills combined. Unfortunately, cable bills are mostly the same whether a single person or a family of six is using them.
Finding a way to reduce costs for water and electricity bills has always been normal. However, there is not enough discussion on cutting costs regarding one of the most expensive utility bills a household pays. Unfortunately, internet access became as crucial as water and electricity in one’s home. The million-dollar question would be, who will take responsibility for these uncontrolled overpriced fees?
Cable companies emphasized the rising fees they are paying to carry TV networks like Disney, ABC, and ESPN. Even Hulu, Netflix, and other streaming services need to pay to have these networks available for their users. On the other hand, media companies that own TV networks such as NBCUniversal, Viacom CBS, and Warner Media are also facing the same problem. They will need to pay higher fees in creating and producing shows.
The Telecom Act of 1996
The Telecommunications Act of 1996 enabled the industry to raise its rates without government intervention. According to CFA’s Mark Cooper, starting from February 1996 to December 2020, there was an increase of 250% in cable companies’ rates. He also mentioned that there are only two possibilities where consumers can defend themselves from price hikes, regulation, or competition. Right now, we do not have both.
Essentially, prices should get lower instead of higher. Cable companies offer broadband, and they get more than half of their profit from their broadband services, he said. If we were to think about it, it should be enough to make a good profit out of it. Hopefully, policymakers can do something to fix the unruly annual price hikes.
Possible future changes
Consumers will have a difficult time determining how much they will pay every month. As we know, the advertised fees are never accurate, considering the hidden costs and add-ons these providers charge. Fortunately, the telecom industry may take a different course with the Television Viewers Protection Act. This law took effect last month, requiring cable TV providers to show a detailed breakdown of fees, taxes, and extra charges.
Under this protection act, new customers can also cancel their cable TV contract without paying anything, as long as it is within the 24-hour window. There is also a Federal Communications Commission program called Lifeline. This program provides around a $9.25 monthly discount for low-income households, and some may even be given a free phone if they qualify. The federal program can greatly help low-income consumers to afford broadbands and stay connected online.