Nearly All Tech Hardware And Services Get Cheaper Over Time -- Except For Cable TV
from the televised-revolution dept
With a few exceptions (hearing aids, collectibles) as technology evolves, prices for these services drop. Unless you're the cable and broadband industries, cozily ensconced in a bubble of regulatory capture. The US Bureau of Labor Statistics tracks prices for broad categories of goods and services over time, and as Business Insider notes, a quick look at the eighteen year trend of technology goods and service pricing shows cable relatively alone when it comes to product pricing rising steadily over time:
So yes, cable prices are rising faster than pretty much any other technology. And note most comparison data doesn't even include all of the sneaky fees and set top or modem rental fees cable industry likes to bury below the line to artificially keep advertised rates lower, so things are actually worse than 90% of analysis you'll read. Data from SNL Kagan suggests that cable companies' average revenue per user grew from $119.24 in 2010 to $161.12 this year - an increase of more than 35 percent. Should you ask a cable exec why this is, they'll tell you it's because of the exceptional value cable TV offers, ignoring that cable has some of the worst customer service in any U.S. industry.
Of course the real reason for this smorgasbord of rate hikes is what I affectionately like to refer to as "wink wink, nod nod" competition, where an entire business ecosystem agrees to keep prices artificially high for the benefit of everyone, but are never held accountable for price fixing or antitrust issues thanks to the magic of regulatory capture and campaign contribution. The FCC's study actually found that even when there's so-called TV sector "competition," the downward pricing pressure was negligible:
"Over the 12 months ending January 1, 2013, the average price of expanded basic service increased by 4.6 percent, to $63.03, for those operators serving communities for which no effective competition finding was made as of January 1, 2013. For the effective competition communities, the average price of expanded basic increased by 5.8 percent, to $66.14."And again, that's because these companies aren't competing -- they're blowing sweet kisses at one another and paying politicians to look the other way. Some folks might recall that this was all supposed to change when the phone companies entered the TV industry back around 2006 or so. AT&T (U-Verse TV) and Verizon (FiOS TV) promised dozens of states that, in exchange for passing new statewide franchise laws written by the phone companies, we'd see an amazing flurry of new TV competition. Of course what actually happened is these franchise "reform" laws were little more than phone company wishlists that gutted regulatory authority and all remaining consumer protections. The end result was higher rates than ever.
And yes, the absurdly high price of programming (especially sports programming) plays a huge role in soaring, often bi-annual rate hikes. But it can't be understated that everybody in the delivery chain (from broadcaster to cable operator to local regulators) happily abuses the dying cash cow that is cable TV, whether it's programming rates, set top box rental costs, local franchise charges, or bizarre new fees. There are no innocent parties when it comes to your bloated cable TV bill, and all of the parties currently feeding at the trough behave like it's a party that's simply never going to end.
Of course there's another good reason that cable rates continue to skyrocket: people keep paying for it. In fact statistically, about 80% of the people reading this sentence throw $100 or more at their cable company every month for a massive bundle of horribly uninteresting channels they never watch. For many people, especially once they're getting three or four (wireless, TV, fixed-line broadband, voice) billed services from one provider, it basically comes down to being too lazy to deal with paperwork and phone calls. Other times users just realize the hassle of switching won't be worth it since the company they'd switch to would be just as bad as the company they're leaving.
On the bright side, there's a twenty-three-mile-wide asteroid headed right for Jurassic-era legacy cable executives. Unfortunately, while the traditional cable TV cash cow will be killed amidst a cacophony of legacy wailing during the upcoming cord cutting revolution, the regulatory dysfunction, campaign finance corruption and duopoly power that built the cable TV monstrosity will remain. And these companies are simply going to switch their attention from price gouging you for an ocean of horrible channel bundles, to price gouging you for what's increasingly a necessary utility: broadband (a market that sees even less competition than television). And they're going to do it in one singular, spectacularly obnoxious way: broadband usage caps.
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Filed Under: cable tv, competition, innovation, pricing
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80%
I get the feeling this statistic doesn't apply to Techdirt readers.
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Re: 80%
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Re: 80%
I have Dish, and I spend more than $100 a month on it. It's annoying, but I've tried to cut it down, but I have a wife and mother who happen to like radically different channels than I do. And, the ones we like, aren't cord cuttable yet, unfortunately. :( Science Channel (Me), SyFy (Me), NASCAR (Mom), MLB (Wife), SOAP (Wife), as examples.
At the very least, I've always had good customer service from Dish (I quit Comcast over horrible customer service a decade ago).
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Re: 80%
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Re: 80%
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Chart entry is BS
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Re: Chart entry is BS
I'm just surprised that your 1.5Mbs service has remained static for 10 years. But then, I can choose from 5 major providers, and countless smaller operators.
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Re: Re: Chart entry is BS
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Re: Re: Re: Chart entry is BS
So like you, although I have 60Mbs, I rarely see anything faster than 12Mbs. In practical terms though I'm not too bothered because my VPN maxes out at 10Mbs...
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Re: Chart entry is BS
Your decision to only subscribe to 1.5 Mbps service appears to be of your own making if you have cable available. It's not too surprising the rate for 1.5 Mbps service has gone up considering the cost of maintaining that line has gone up in 10 years.
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Re: Re: Chart entry is BS
Because that's what people in Federally-funded cable rollout areas are being asked to pay up-front.
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Re: Re: Re: Chart entry is BS
Secondly, what federally funded cable areas? Cable operators have traditionally not received any money for rollouts.
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Re: Chart entry is BS
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Re: Chart entry is BS
I know, I paid way more for the TV I bought in 2008 than for the one I bought in 2000. Clearly the chart is bogus.
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Re: Re: Re: Chart entry is BS
I believe you have missed my point. The person I was responding two claimed that the chart is incorrect because it doesn't match his experience. I was sarcastically exclaiming that the electronics one was also not correct because I paid more for a TV in 2008 than in 2000. This single data point invalidates the data chart just as much as any other single data point.
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Just think of all those artists that will be made redundant. Job hunting will be difficult if they worked for a channel with fewer viewers than the average YouTube channel.
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I used to pay almost $50 per line a few years ago.
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Only to offer bigger screens. If it weren't for that I'm sure they could make a tiny cell phone.
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Not saying there is anything wrong with a regulating body ensuring the safety and quality of health related products. Just that these bodies tend to have an ulterior motive, to limit competition, and there are often back door dealings involved with those that benefit from the limited competition.
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Incompetence is not being able to do your job right, which isn't quite the case here; they could, they just chose not to.
Suppose the question of terminology comes down to, 'Does it still count as incompetence if it's willful?'
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That's not to say business interests, like anyone else, can't provide their opinions on what they would like to see changed and why. Perhaps they can provide good logic behind why they would like to see a particular change and decision makers can base their decisions solely based on said logic. Just that the decision decision makers make should have absolutely nothing to do with who funds what campaigns or revolving door favors or back door dealings and kickbacks or any way that decision makers personally gain from those decisions due to the businesses that gain providing them with something in return for their decisions. The problem is that there are way way way too many conflicts of interests involved in decision making and the legal system. That's corruption. When decision makers base their decisions on how they personally gain (or how their campaign benefits) instead of choosing to exercise their decision making position in the public interest.
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Hearing Aids
Hearing aids follow an interesting cycle. They cost about 4K for pair with a three year warranty. New models come out every two years or so. When the warranty expires, I can pay $80 - $100 a month for an extended warranty or buy a new set. Essentially, no matter what option I choose, my son or I will be paying an average of $1200 a year for the rest of his life.
AARP has an interesting article about the cost:http://www.aarp.org/health/conditions-treatments/info-05-2011/hearing-aids-cost.html
From the article:
Cost to manufacturer is $1760 (including a $1320 cost for research)
Additional cost to retailer is $2640
A hearing aid manufacturer has different figures:
https://audicus.com/why-does-a-hearing-aid-cost-six-times-more-than-an-ipad/
Both estimates make some assumptions are off. With a lack of competition, though, I expect very little to change.
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Re: Hearing Aids
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DIY Hearing Aids
http://hackaday.com/2013/12/15/diy-hearing-aid/
Martin Ling had a team in Edinburgh working on it, but that was three years ago and I heard nothing from them.
I'm sure that some team could come up with something. The issue that I am uncertain can be overcome, is that there is not huge demand (in sheer numbers) for aids. In other words, there is not a way to gain cost benefits by mass-producing them.
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Re: Hearing Aids
Can't you keep using them and buy a new set if they break?
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Wait til they break
I don't want my son to be without aids for two to three weeks. A day or two, even a week is not a big deal. Longer than that, and there are noticeable effects.
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Medical Pricing (to pinakidion, #16)
http://www.oobject.com/12-extreme-examples-of-medical-scaffolding/wristjack/6612/
It's a simple strut, basically, with three or four worm gears. No more complicated than something you could get in the hardware store for ten dollars. However, it cost $2000 in 1997, and I daresay it would be more like $4000-$6000 now. Well, I lived with the damn thing for ten weeks, and when it finally came out, the Orthopedics resident asked if I wanted to keep it as a souvenir. I shuddered slightly, and replied: "Give it to the deserving poor!" He didn't catch the P. G. Wodehouse reference, but he said that there was an arrangement to ship used medical equipment to hospitals in the third world. That seemed an excellent idea, and that was what we did with the Wrist-Jack.
Medical pricing is like that.
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Re: Medical Pricing (to pinakidion, #16)
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Where's the Cellphone Data charge rates?
You see, in the past, data was free and voice calls were exorbitant.
In the past, text messages were considered to be "pages", and unlimited paging was built into the costs of the cell plan.
I could page to my heart's content with no additional costs.
Why is that you say? Because pages/texts used less than 1 to 2 seconds of voice data. It basically didn't cost the cell companies anything to carry them from sender to receiver.
Then "texting" became the rage and my cell company tried to re-label what I'd had grandfathered into my plan until I complained to my state's AG, who put them in their place at the time.
Time passes and now voice, which still uses far and above more data than typical web browsing is "unlimited and free" with the overpriced "Data plans".
If someone were to call somebody, and keep the call going for an entire month, the amount of "data" transferred during this "voice" call would exceed the amount of typical data plan usage by a significant margin.
Let's do some math.
An average audio codec uses approximately 45Kbps (kilobit per second). Now, since we know from our early modem days that "kilobit per second" is actually measured as kilobit - 1000 bits per second and not the exabinary 1024 bits per second, that gives us 45,000 bits per second. Divide this by 8, and we get around 5625 bytes per second. Now take that 5625 bytes per second and multiply that by 60, 60 again, 24, 365.25 (have to account for leap-years) (5625 * 60 * 60 * 24 * 365.25) gives us 177511500000 bytes. 177,511,500,000 or roughly 177 gigabytes of data per year, or 14,792,625,000 or just under 15 gigabytes per month.
Let's think about this. If "cellular data bandwidth" was so costly, would they give away up to 15 gigabytes of this precious commodity per month for free?
Hell No! Which is exactly why they don't do that at all.
They mask the cost of the voice data by embedding that cost into the data charges for your data plan.
That's why an unlimited everything plan that should cost about 5 bucks a month costs 50 or more. (I'm not counting discounted data rates where after xx it gets throttled plans because that just limits the total amount of data that could be used and the math gets even trickier).
Since the cellular voice, text, data is all just pure digital data that is only carried by the cell towers at two locations - the transmitter and receiver towers, everything between them is standard Internet connectivity.
That basically means they are charging 50 bucks a month for what amounts to a wireless Internet plan for both customers, unless the destination of the call is a land line, where it's even less expensive for the wireless company(ies) involved.
In other words America, our cell companies are raping us more than our cable companies are, except for where the cable companies are the cell companies. (Hello AT&T)
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Re: Where's the Cellphone Data charge rates?
http://www.cisco.com/c/en/us/support/docs/voice/voice-quality/7934-bwidth-consume.html
I took an average of them all, as I was not certain which was used by the different cell companies.
So the data rates could actually be damned close to double what my calculation showed. I'm doubting they'd be less or our voice quality would really really suck (more than it sucks already).
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Re: Where's the Cellphone Data charge rates?
I don't think data and voice are carried in the same way. If they have unused voice capability, they can't use it to deliver your email.
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Cable Television Is Not a Tech Service.
Cable television behaves very much like other Geographical Right-of-Way services. Specifically, if they are run as substantially unregulated business, disaster usually ensues. I don't think you can understand ComCast unless you first understand the Freedom Industries/West Virginia American Water poisoning case, in Charleston, WV, and the Lac Megantic train explosion in Quebec, in which 43 people were killed by a runaway oil train.
In the long run, to have these kinds of services run in the public interest, they have to be run by the government. In most places, the water _is_ provided by a government agency, which takes pride in moving its water intakes upstream in search of cleaner water, to the extent reasonably feasible. Railroads are a bit more complicated. When there is a commitment to providing passenger service, public agencies are usually set up, eg. Amtrack and a bunch of municipal commuter agencies. The big freight railroads, notably the BNSF and the Norfolk Southern, tend to develop an esprit de corps, rather like the military, and to hire a lot of military veterans. However, the Lac Megantic accident occurred on the Montreal, Maine, and Atlantic, a spun-off short line, where cost-cutting was the order of the day.
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I pay about 6 bucks a month for a VPN now. I'm sure as more people cut the cord, they will keep raising prices and blame it on the cord cutters, thus fueling their own eventual demise.
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If they're going to lie, the least they could do is come up with more believable lies.
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Monopoly
When consumers have no alternate choices, companies will gouge the consumers for as much as they can get away with.
Cable is one of the few businesses that have a government sanctioned monopolies that would be illegal for other types of business.
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Re: Monopoly
Why does this sound so damn wrong?!
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hmm
7.9999999999999999
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I'm tired of the cable companies monopoly
AffordableTV.online
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