Comcast cable costs jump $48 per year, thanks to increased fees

It’s late in the year, which means, inevitably, it’s time to play a game of “How much are cable companies jacking up prices?” This year the early award goes to Comcast, who is raising its Broadcast TV fee from $5 to $7 per month, while its Regional Sports Network fee is rising from $3 to $5 per month. That works out to an extra $48 per year and comes on top of an additional 3.8% rate increase for broadcast TV and Internet service.

Comcast and Charter have both been sued over their fee structures in the past few months, largely on the same grounds. Customers complain that the prices shown on the website and quoted in service contracts don’t actually include fees, and the fees are adding up (Chartered has an $8.75 additional monthly fee, with Comcast now sitting at $12). Comcast is also accused of false advertising regarding its $4.99 monthly “comprehensive” fee, which is supposed to cover the cost of any required technician visit, but isn’t actually comprehensive. In addition, both companies are accused of labeling fees to imply that they are mandated by law, when in fact this is often not the case.

Comcast’s base rate increase of $5 per month is just the latest in a string of price increases that are rising much faster than inflation from the cable industry. The chart above shows long-term cost increases from cable prices compared with the rate of inflation over the past 20 years. Inflation has been historically low through much of this period, but cable TV prices have grown much faster, and companies have shown no self-restraint when it comes to piling on fees and cost structures. The following data from the FCC’s national surveys show long-term trends.

The chart shows both the average compound growth rate per year (5.2% for basic service, 4.8% for expanded basic) and the relevant growth over the same 5 and 10-year periods for the CPI (2.4% and 2.5% respectively). In the past, cable companies have argued that the more appropriate metric for measurement is the cost per channel, which reflects the idea that having more channels leads to better consumer outcomes, since people have more options regarding the content they receive. Data from Nielsen, however, suggests otherwise. In 2008, the average consumer received 129.3 channels and watched 17.3 of them. In 2013, the average consumer received 189.1 channels and watched… 17.5 of them. A more recent report from Citi, released in 2015, showed a similar trend going back as far as 1994.

The number of channels that people watch has crept upwards far, far more slowly than the number of channels they receive from cable companies — implying that the “value” of these additional channels is effectively zero. Cable companies, of course, are well aware of this, but cling to an outmoded metric precisely because it allows them to make spurious claims about improving “value.” While the cable industry has lost some small number of subscribers, the losses haven’t been enough to offset the tremendous profits of nickel-and-diming people. Comcast added subscribers in the first part of 2016 and the cord-cutting momentum may have slowed as digital services and the need for multiple monthly subscriptions has proliferated.

Consider the situation from Comcast’s perspective. It added $5 to every service plan and increased service fees by $48 per year. It’ll roll these changes out in staggered fashion, but even if we assume they’ll be in overall effect for just nine months out of 12 across the US on average, that’s 22.3 million customers * $5 * 9 months = $1.003 billion in additional earnings. The $12 in additional monthly service fees is another $2.4 billion in profits for a company that provides no benefits or advantages to its consumers in exchange for their higher bills.