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For the third time in a year, Time Warner Cable will raise monthly rates for "Basic with Standard,'' its most popular service. This time, the cost will rise an average of $1.70.
The price hikes, which go into effect in January, range from $1.25 (for Whitehall residents) to $2.50 (Middleburgh). In addition, the cost for some converter boxes will also rise.
Time Warner, which announced these latest changes Wednesday, also had rate hikes in August, when Basic with Standard service increased by amounts ranging from $1 to $1.95. Rates for Basic with Standard were increased last January by an average of $1.58.
In the last year, rates have been lowered or remained constant in most Time Warner Cable services besides Basic with Standard, and some channels have been added to other tiers. In the latest rate changes, the cost for Basic service will will go up in some areas, or go down or remain the same in others. Channels are also being added to those with digital service.
Increased costs charged by programmers -- particularly in the realm of sports -- is one of the reasons for the increases, according to Peter Taubkin, Albany Time Warner's vice president of government relations and public affairs.
"In each of the last five years, our programming costs have gone up an average of 15 to 20 percent,'' he said. "If we were to take the increased costs as we get them and pass them along directly on to the customer, there would be a big difference in what we would charge.''
Still, consumer groups express the concern that rate hikes have outdistanced inflation. Mark Cooper, director of research for the Consumer Federation of America, based in Washington, D.C., said Time Warner is "one of the biggest programmers around,'' and that all the subscription increases can't be written off predominantly to increased programming costs. He blames the lack of competition for the hikes.
"The simple fact of the matter is that they know they can pass through all those increases.'' Cooper said. "The only people who raise prices in the middle of a deep recession are the monopolists. They use market power to force those increases through to the public.''
According to the National Cable & Telecommunications Association, an industry advocacy group, cable rates across the country have increased 5.2 percent annually since 1998. Between 1996 and 2000, programming costs paid by cable operators rose to $36 billion -- roughly 75 percent more than the $20.6 billion spent during the previous five years.
A survey released in February by the Federal Communications Commission found that cable operators increased monthly rates for cable and equipment by 5.8 percent during the 12-month period ending July 1, 2000. This is compared to an increase of 5.2 percent for the year ending in July 1, 1999. For the year ending July 1, 2000, cable operators attributed more than 40 percent of their rate increases to higher programming costs.
Locally, rates in January 2000 went up 72 cents to $1.62 per month, and the year before that the cable company raised rates an average of $1.48 a month.
The Basic with Standard package includes broadcast stations and cable channels 2 through 81. (Basic service includes channels 2 through 20.) This does not include digital programming or premium services like HBO.
Taubkin said there are no plans to create a new tier between Basic and Basic with Standard that could be more cost-friendly to some consumers. He said creating such a service could carry infrastructure costs that would wipe out any savings for viewers.
Cable is in a battle with satellite dish companies for customers. Taubkin said there is always an issue with adding channels and services, and increasing fees.
"Our concern always is to provide a product that is one our customers want and is one that brings the most value possible,'' he said. "No question people look at the bottom line rate and we need to be sensitive to the bottom line rate.''
Meanwhile, the monthly rental cost of converters and remotes will change.
Addressable and Digital Converters will increase from $3.99 to $5.60 per month; non-addressable converters will decrease from .88 to .68 per month; and remotes will decrease from .37 to .35. The $1 for the Digital Navigator on additional outlets will be eliminated.
Digital customers will start receiving the National Geographic Channel (Ch. 115); VH1 Classic (Ch. 176) and DIY-Do it Yourself (Ch. 119). In addition, these customers will receive the Hollywood package -- Fox Movie Channel, Flix, IFC and Sundance. This comes at no extra cost to Digital customers with at least one premium service.
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