With talk about how a la carte
pricing of video can reduce consumer costs, I offer a rebuttal. First video consumers should understand that
if they select the most expensive networks, such as ESPN (at about $6.04 a
month), they may not see a significantly lower out of pocket cost despite the
sizeable reduction in available channels.
Clever!
But there
is a more important factor that most consumers and the media do not
understand. Ventures like Comcast can
reduce or eliminate their financial harm in subscriber “cord shaving” by increasing
billing line items and by raising the cost of a “naked” broadband subscription
having no additional video service.
Despite
having to be on its best behavior as the FCC considers the proposal to acquire
Time Warner, Comcast inserted a new line item ostensibly to help recover its
cost of retransmitting broadcast television channels. Of course basic cable rates already cover
this costs, because broadcast signals constitute the vast majority of the
available channels in this tier. In my
market Comcast just DOUBLED the rate even though it surely did not incur a
doubling of its costs.
Comcast
also increases the broadband subscription price when customers don’t also take
a video service.
By
inserting various billing line items, Comcast and other cable companies want
consumers to think the costs are a mere pass through. Many are not a tax or government imposed fee and
in a competitive marketplace a venture might have to absorb such costs.
The most egregious
example of billing line item abuse comes from the electric utility serving
central Pennsylvania. West Penn Power
charges me for a smart meter I do not yet have.
But the most obnoxious charge is a “Consumer Education Charge” which the
company defines as “a monthly charge for ongoing consumer education concerning
your bill, shopping for electricity, energy efficiency and conservation.” It’s
annual $6 tuition charge for something they probably don’t want me to know
about in the first place. So why not charge
consumer for having to tell them about electricity conservation.
