Municipal franchising of cable TV is supposed to serve
consumers’ interests, but consumers hardly feel well-served: Cable garnered
lower customer satisfaction scores than the Internal Revenue Service in a recent
survey. Consumers complain most often about cost and service
This dissatisfaction is understandable. Although the Consumer
Price Index increased by 2.52 percent annually between 1991 and 2006, the price
of cable increased by an annual average of 3.47 percent in that period. Not
surprisingly, rates were measurably less in communities with competition in
cable services. According to government figures, the monthly cable rate was 15.7 percent lower in competitive markets compared to those without competition.
Cable industry executives insist that rates are rising
because customers are getting more for their money. Therefore, in our survey of
15 communities in Southeast Michigan, the state’s most populous region, we
calculated changes in cable rates on a per-channel basis. The average of the
increases over 15 years was nearly 67 percent. In fact, cable rates in these
communities have on average experienced an annualized rate of increase that is
nearly 38 percent above the annual inflation rate from 1991 to 2006.
Consumers are indeed getting more channels in their cable
packages. But it is important to note that customers have little choice when a
cable operator decides unilaterally to add channels and charge more for them.