Two decades ago, something unusual happened.
Consumers were irate about their cable bills, which were increasing at nearly three times the rate of inflation. And Congress actually did something — adopting in overwhelmingly bipartisan fashion the 1992 Cable Act. The law resulted in lower cable bills, saving consumers $3 billion in just over a year’s time.
But this was only a brief respite. Washington soon caught a deregulatory fever, and less than three years after a super-majority of Congress voted to rein in monopoly cable prices, an even larger super-majority voted to let the cable industry return to its price-gouging ways. And return to them it did.
Since 1996, cable bills have continued to increase at nearly three times the rate of inflation. And this trend is only getting worse. Since the 2008 recession, the average annual rate of inflation has been 1.4 percent, but the price of expanded basic cable service has increased by an annual average of 5 percent. And these figures don’t include mandatory equipment-rental costs, which continue to skyrocket.
While no one is willing to take credit for these out-of-control price increases, there’s plenty of blame to go around. Cable channel owners like Viacom, Disney and News Corp., and cable providers like Comcast and Time Warner Cable, are the two factions of a comfortable cabal, one that earns monopoly-level profits from consumers who are deprived of any real choice in the pay-TV market.
Programmers like Viacom force cable companies like Comcast to buy channels in bundles — meaning providers can’t have popular channels like MTV without also carrying little-seen channels like VH1 Soul. Cable companies in turn force consumers to pay for hundreds of channels they’ll never watch.
To make matters worse, cable companies are also the largest providers of broadband service, which a growing number of consumers are using to cut the pay-TV cord in favor of online video programming. To protect their legacy pay-TV profits, cable providers are raising the fees they charge for broadband, and strong-arming the programmers to agree to withhold their content from online video companies like Netflix.
Change may be on the horizon, thanks to the Television Consumer Freedom Act. Introduced by Sen. John McCain and co-sponsored by Sen. Richard Blumenthal, this bipartisan bill could shake up the cable industry and finally give consumers a real measure of control.
The bill ensures consumers are offered an a la carte option alongside more flexible bundled-channel packages, allowing us to pay for only the channels we actually want to watch. This would save consumers money in the short run — and in the long run would help create a more competitive television market both online and via the traditional cable and satellite delivery platforms.