Monopolies are bad for consumers and society (and of course death to competition). To my mind, telecom monopolies are the worst, particularly now that they’re fighting the threats to their core business.
Our local cable TV provider, Comcast, is pushing a double whammy to try to raise revenue, and hiding behind misleading (and most likely untrue) claims as to why it needs to charge customers more in a down economy.
First, without notice last month it dropped 11 channels (including TV Land and SyFy) from its cheapest service — “Limited basic”. When I called to ask, the switch was attributed to the digital switchover. (It dropped a 12th channel last year). As best I can tell, it dropped the channels not because it needs to drop them, but because now it has the technology to more finely control channel choices — and wants to force consumers off the basic service to more expensive plans.
The Mercury-News this morning reported that Comcast plans to raise rates 1.5-9% on the three least expensive services — priced at $15, $46, and $60. Its honesty here is even more suspect. (Ironically, the Merc and its sister papers won a full-page of “tombstone” legal notices by Comcast announcing the price hikes in 9 separate jurisdictions.)
According to the Merc,
Comcast attributed the price hike to rising costs, including an increase in the cost of TV programming, and investments in new technology.The problem with this claim is that none of these new services are going to the basic cable customers who are paying the 9% rate increase. It’s a smokescreen for using its monopoly power to raise profits — presumably because it can’t extract the money from its most expensive plans.
"These investments make it possible to deliver continued innovations such as more high-definition (HD) networks and video-on-demand (VOD), converged services, multi-platform content and new services that consumers demand," the company said in a statement.
The Merc continued
Mindy Spat, communications director of The Utility Reform Network, a San Francisco-based consumer advocacy organization, said Comcast appears to be taking advantage of its lower-end customers.
She noted that many Bay Area consumers who were unable to tune in the new digital broadcast signals signed up for limited basic cable to continue to get the local channels after the old analog ones were switched off earlier this year. With the increases, Comcast also appears to be trying to push customers into higher-tier packages, she charged.
"If consumers had choices, they certainly would not choose Comcast," Spat said. "But they don't, and Comcast is taking advantage of the fact."TURN is an activist group to the left of Consumers Union and to the right of ACORN. This may be the first time in my life I’ve agreed with TURN, perhaps suggesting the degree of the company’s naked assertion of monopoly power.