Dave's Radio Waves Commentary: When Cable Companies Get Greedy (March 16, 2004)

Satellite-delivered cable channels have also gotten big, mostly because of the ruthless practices of companies such as Disney and Viacom who demand cable companies carry additional cable channels in order to carry the channel viewers want to have.

The consumers are footing the bills for their right to watch certain popular satellite-driven cable channels, at the expense of paying for channels they don't know exist or don't care to ever tune in to watch.

Sure, we have seen how many channels Cox ballooned to since they started putting in fiber optic cable way back in 1989, but at the price of just having more channels, we're paying the price for the privilege, for the privilege of having channels we just don't need and never watch.

I like the idea of having some 70 channels to watch, but the problem is, most of the channels are those I didn't choose to be on extended basic and don't care to watch by any stretch of nature. I just don't care for all those over-niched specialty channels unless they're either funny, fast, retro, or essential to me.

Digital cable is a plus, but unfortunately, you can't yet tape digital channels directly on your VCR (or digital video disc recorder) without the need of a clunky converter box. We're in the third millenium, and Cox cable is still using Brady Bunch-era patch technology to deliver channels to TV sets and VCRs that can't tune them in independently. Who wants to pay $6 a month for an extra box? For $6, I could get half of HBO!

The cable television industry was deregulated in 1996 in the hopes of prices being driven down by competetion that never materialized in San Diego (except those who live in the areas served by Chula Vista Cable since 1989). Where's the competetion? Why aren't Time Warner, Adelphia, Cox, and others wiring into each others territories? Are they collaborating together to keep cable prices artificially high? Where's the free market system in San Diego?

Rates have soared since 1996. In San Diego County, they have doubled in a decade. Time Warner just raised its rates 8 percent. Cox has raised its rates some $10 in two years. What went wrong? Where is the money going? Cox is just as bad with money as the oil and electric companies, the real estate industry, the health care industry, and the local governments. They're out of control and need to be regulated for the good of the country, or else, just raise the minimum wage to $21 an hour. If the fast food industries cry foul, tell them that it's for the good of the country. This is America. Where's the liberty for consumers from the high cost of doing business? These businesses are greedy and just don't care about the communities they employ and serve.

The average U.S. monthly cable bill in January 1996, the month the telecommunications bill was signed, was $22.60. By last January, it had risen to $41.60, and $48 in San Diego.

So what choices in cable do you have? There are basically four choices:

1. no cable. Just hook up an antenna and watch just seven channels in San Diego.

2. basic cable. It's just a paltry handful of channels (far less than what's available locally) but the price is still regulated by communities with rates around $12 a month.

3. expanded cable. It's a lineup of 70 channels of the cable company's choice. That is unregulated. Since 1996, its price has risen at three times the rate of inflation, imposing monopoly costs on consumers of between $4.5 billion and $6 billion per year, according to an in-depth study just published by Consumers Union.

4. digital cable. Even more channels, but here, there are some ala carte packages, though they come with the Discovery networks and Digital Music Choice whether you want them or not, which is not fair either.

Choice number three is basically a bundle. You either get all of the channels or nothing. The problem is that there is no in-between choice. If Cox can offer basic cable and use a inline filter to blank out all of the other channels in the expanded band, then a filter can be added to delete individual bands of channels, if not individual channels, customers don't care to pay for. Cox can install a filter to take out MTV so that the kids don't view this dreaded channel. Fine. Let's do the same with the expensive ESPN channels and let the customers have filters installed so they don't get the channels they don't wish to pay for, forcing a hand on Disney, ESPN's parent, a message that corporate welfare just won't be tolerated anymore.

This practice, known as "bundling," is what led to the phony Cox-ESPN dispute, which was settled amicably, with consumers picking up the tab. This bundling practice is to blame for driving up the rates in expanded cable. This kind of bundling needs to be outlawed for good. The technology is readily available today. It's time to force the cable companies to offer ala carte for expanded cable in the analog band with filters (the cost to install them should not exceed $30 for one or all lines into a customer's home) to delete the cable channels customers never care to watch while still allowing their TV sets and VCRs to tune in to the rest of the channels they are paying for. That is fair. Cox and the others need to get this going if they want to sell me digital cable and HBO they have constantly hounded me to buy, but I don't have the budget to add more channels until I get rid of the channels I'm paying for but never watch.

Since 1996, the cable companies have used bogus arguments to persuade Congress they are not monopolies: They blame programmers - like ESPN - for raising prices. They say higher rates only keep pace with inflation. They say higher rates reflect the greater number of channels offered (imposed on) viewers. They say satellite television offers competition.

The Consumers Union report makes short shrift of such arguments.

It shows rate increases "far exceed the increase in programming costs."

It shows that bundling, not programming costs, drives rates.

It shows that satellite TV, with only 9 million customers nationwide, offers only "niche" competition, with growth limited by cable's combining of television and Internet services.

It shows that cable's rationale of raising rates to provide more channels is false because most consumers don't want or watch most of the channels available. "The average consumer watches about 17 channels regularly," says the CU report, "but the bundles have four times that number."

Now, lets see what I watch regularily:

6 FOX
7 NBC
8 CBS
9 KUSI
10 ABC
15 SDNC
31 CNN
32 HN
37 FNC
45 Spike
47 Nickelodeon/Nick at Nite
48 COM
49 E!
50 Cartoon Network
59 TV Land

The Consumers Union also dissected the Cox-ESPN battle in the past year. A study shows that 78 percent of cable subscribers would not pay the estimated $2 a month for ESPN they now must pay if they had the choice. These subscribers, says CU, "are paying over $1.5 billion annually for it (ESPN) in the bundle." If Cox or Time Warner object to paying ESPN's escalating costs - which reflect the obscene salaries paid to professional athletes - the solution is simple: let consumers choose. The television sports bubble would burst in an instant. That very much matches the viewing habits of a casual sports fan. I talked about the problem of escalating broadcasting rights fees ESPN must pay the majors and college in order to carry the broadcasts of the ball games, and ESPN is funding it through the high carriage fee charged to cable companies, who have to pass it on to the consumers whether they watch ESPN or not.

But since 78 percent of the cable subscribers don't want to pay for ESPN, why can't Cox just put in the inline channel filters and charge such consumers less money? What would ESPN do? They can convert their channel to a pay channel, charging some $13 a month, and doing the marketing to get people to subscribe to ESPN as a pay service. That sounds fair to me. ESPN and ESPN 2, plus Fox, should be either on an ala carte extended basic package, or made into pay services. The same thing should also be done with The Disney Channel as we're paying for a poorly-programmed channel hardly anyone watches either. Disney was once a pay channel way back when it started in April of 1983.

If the cable companies can't offer ala carte in expanded cable, then the expanded cable band should be regulated. The abuse by Disney and Viacom, charging higher programming fees indirectly to consumers has got to end and must be reversed. Will this cost jobs? Yes it will, the jobs in the cable industry that is. Will it mean that underfunded niche channels will disappear? For the best of the industry, yes it does. Give the cable channels a reason to exist or else change formats, or die. Consumers should not be indirectly funding the cable channels they never watch. It's time that expanded cable be regulated once again, enact some bills to outlaw bundling, and set a maximum carriage price a satellite-driven cable channel can charge a cable company to carry on their system.

Which leads to this question: if there are ads on the expanded basic cable channel, then why aren't they covering the cost of the operations of the cable channel? ESPN has commercials, yes, yet the channel still needs $2.61 a month from over 90 million subscribers just to keep it runnning? That's a lot of bleeding going on with the money. With that many subscribers, ESPN should just charge more money from the advertisers to cover the cost of running the channel.

Cox Communications keeps arguing that their service is often ranked the highest in several surveys. I say horray for the service, but BOO on the high price of expanded cable, and if they want me to add more services, then Cox will have to allow me to customize my channel lineup so that channels I find worthy of being paid for will be on my cable bill, with the rest filtered out and not paid for. That's the kind of service I expect from a cable company with 201st-decade technology readily available to deploy and to help consumers save money.

Cox also touts their "not on satellite" services such as something called a cable digital VCR, whatever that is, I never seen it, not sure if I can use it to tape "Saved By The Bell" for later viewing or what, but it sounds interesting.

Cox also touts their expensive broadband cable, which should be going down, not up, as I type this. What's this? $45 a month? Yikes! Thanks to some TOS violators who use the service as illegal file sharing servers, the price of my bill went up to pay for those culprits. Why can't Cox charge them the higher rates instead of the rest of us? They have the technology to track the daily bit traffic each customer uses. They should offer tiered pricing for extremely high bit users and sock them with the high $100 bills!

Cox also touts that the Padres games are all on cable and not satellite. Hell, they're not on free TV anymore! It's no wonder the Padres are losers; they have a paltry cable broadcasting rights package when they should get a major local TV station to carry the games for a much higher price. Free TV is what brings in the fans. Cable TV will always be a poor bastard to the television industry, hampered by a lack of a broadcast signal and unknown to the majority of the population unless they have cable.

Needless to say, I'm never going to Petco Park. Where's the parking in the Park? Who's the idiot that thought of the idea of driving to a trolley parking lot and taking the trolley downtown? I don't play that game! I'm not driving my car to some parking lot and taking the trolley, then coming back six hours later to see the car gutted out by criminals on some isolated parking lot on 47th and Euclid or some other nowhere land. Screw you, Petco Park! You build a trolley line 500 feet from my house and I'll consider coming to your stupid expensive ball games!

Cable needs to play fair or be regulated once again and stop the abuse on the public with greedy bundling practices. Simple as that.