Cable operators charge 31% less per channel for expanded basic networks in markets where they face competition from at least one other cable provider such as Verizon's (NYSE: VZ) FiOS TV, according to an FCC report on cable industry prices.
Click here for selected charts from the FCC report.
The FCC concludes that the significant decrease in price per channel that cable operators charge in markets where they face competition from cable overbuilders shows that "operators in effective competition communities carry more channels on expanded basic than operators in noncompetitive communities." Comcast (Nasdaq: CMCSA) and other pay TV distributors have moved niche networks such as Turner Classic Movies and some regional sports channels from expanded basic to more expensive programming tiers. The FCC data shows that operators are less likely to kick expanded basic channels onto more expensive tiers in highly competitive markets, where they are more apt to market a large package of expanded basic channels to customers.
For the year ending Dec. 31, 2010, cable operators in markets that faced competition from both satellite rivals DirecTV (Nasdaq: DTV) and Dish Network (Nasdaq: DISH), in addition to at least one competing cable provider such as Verizon, offered 129 expanded basic channels to subscribers. In non-competitive markets, cable operators carried 112 expanded basic channels, according to the FCC report.
On average, cable operators charged $17.93 per month for basic cable service, which includes local broadcast channels. In markets that feature competition from both satellite TV and a rival cable operator, the average price for expanded basic was $16.31, according to the FCC report. Rising costs for retransmission-consent will likely increase the average price for basic cable.
Operators charged $54.44 on average for expanded basic programming packages that include channels such as USA Network, TBS, Fox News Channel, ESPN and MTV, compared to $49.51 in markets that face competition from both satellite and a cable overbuilder, according to the FCC.
The FCC disclosed the pricing information in its annual report on cable industry prices, which is a requirement of the 1992 Cable Act. While the data is fairly stale, it could be used by DirecTV, mobile carriers and consumer groups that are lobbying against Verizon's spectrum and marketing pacts with Comcast, Time Warner Cable (NYSE: TWC), Bright House Networks and Cox Communications. The Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights is scheduled to hold a hearing on the Verizon - cable deals Wednesday afternoon.
- Download the FCC report
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