Why Do Cable Companies Raise Prices: Cable Costs Explained



If you’re like many cable customers, you likely see an increase in your cable bills year-after-year. At Home Telecom, we know that these costs can be overwhelming and challenging especially during today's tough economic times. We understand the confusion when you’re scanning through your statement and asking yourself why do cable companies raise prices. If you’re like most customers, the only thing that stands out is the total invoice amount.

This year, we wanted to do something different and explain how and why these costs increase each year.

Media Powerhouses Play a Significant Role in Why Do Cable Companies Raise Prices

Did you know that eight media giants control more than 90 percent of the cable market? It’s true! AMC, A&E Discovery Communications, Scrippsnetworks, Viacom, Fox Networks, Disney and ESPN Media Networks, Comcast NBC Universal, and Turner are the big players.

Most people don’t realize that most cable price increases are, in fact, due to the rising fees and costs charged by these large media companies. In turn, smaller cable providers must also pay these increases, which we, unfortunately, have to pass along to consumers. For example, if Home Telecom were a bakery and the cost of flour, sugar, eggs, butter and vanilla increased, the finished product, a cake, would increase.

Even though these media giants continue to use their power and demand more money each year, Home Telecom tries hard to keep these increases to a minimum. We continually work with these companies to negotiate to get the channels you have come to expect with smaller price increases.

Local Station Fees Cause Increases

Unfortunately, if you’re a cable customer, you need to pay for “free” local broadcast stations, such as ABC and NBC. Local stations started charging cable TV providers, such as Home Telecom and their customers, fees to access these local channels. This fee is called the Broadcast TV Surcharge and is a direct pass-through of what the local broadcast stations charge Home Telecom to retransmit their station signals. The average cable or satellite customer pays up to $20 a month for this service.

Adding to mounting frustration, if the local station’s fee demands go unmet, they typically threaten to simply black out their station, directing customers to contact their cable provider to complain. So there are really only 2 results that are possible: missing your favorite shows or receiving a higher bill. Trust us, we would prefer neither of those options, but understand that the cable provider’s hands are tied.

Sky High Sports Fees and Rights

People love sports. Sports make money. Sports executives know this fact, which means that sports channels come with a premium price tag since many of them have exclusive agreements with certain leagues or teams. Networks pay a lot to air sports on TV, which causes your basic cable bills to increase. In fact, over the last decade, cable and satellite bills have doubled due to sports fees.

why do cable companies raise prices

You may find it interesting to learn that the NFL makes about $7 billion per year for cable and broadcast rights to their games. Now, combine those fees with the MLB, NBA, MLS, NHL college and other sports, and you can see how sports fees quickly add up.

You may wonder what causes sports fees to increase year-after-year. First, you have star players and coaches escalating salaries, and some teams, conferences and leagues have their own TV networks and charge providers separate fees. No, we don’t think it’s fair either. Unfortunately, cable providers’ hands are tied.

Home Telecom Fights for Your Rights

We know that passing along fees to you doesn’t seem fair, but remember that Home Telecom takes a substantial hit and absorbs a significant portion of these excess costs as a cable TV provider. Unfortunately, sometimes we do need to pass along these costs to our customers to ensure that we can keep providing them with the service they have come to trust and depend on over the years.

Home Telecom Can Save You Money on Your Cable Bill

Even though our hands are tied due to programming fees, Home Telecom has a way for you to save money on your Set Top Box costs. With HomeStreamTV, you no longer need to have a leased box from Home Telecom. All you need is a compatible device to download the HomeStreamTV app from and you can enjoy anywhere in your home! With Cloud DVR, Restart, and Replay, you will have all the features you want at the touch of your fingertips. Simply making this switch could save you anywhere from $2 to $25 per month just on set top box costs!

Interested in seeing a more detailed breakdown of your cable costs? Visit Your Cable Costs Explained.