Think your $150-plus monthly cable bill has gotten out of control? You're not alone.
Earlier this summer, U.S. Sen. Claire McCaskill (D-Mo.) launched a website for consumers to share their TV billing horror stories. Within 10 days, her office received 428 responses, mostly complaints about the rising cost of TV and broadband services. Several people criticized inconsistent charges, unexpected bill increases and new fees for services they didn't want.
"Consumers in every corner of the country share common experiences about fending for themselves against confusing, deceptive billing practices by cable, satellite and other pay-TV companies," McCaskill said in a Sept. 16 statement while introducing an amendment to the Satellite Television Access and Viewer Rights Act. The new directives would give the FCC more authority to update and enforce customer-service guidelines for cable and establish similar rules for satellite operators.
But cable and satellite officials say there are reasons for some of the high fees. "There's no doubt that prices have gone up, but the number of hours Americans watch cable have also gone up," says Brian Dietz, vice president of communications and digital strategy at the National Cable & Telecommunications Association (NCTA). "The quality of programming has increased significantly as well."
However, some signs indicate that U.S. households are starting to pull back from multi-channel subscriptions. According to research firm SNL Kagan, the combined cable, satellite and telecommunications (such as AT&T's U-verse and Verizon's FiOS) companies collectively lost 251,000 subscribers in 2013, its first full-year decline. (The decline is mostly from cable, which shed 2 million subscribers in 2013, while satellite and telco were up.)
SNL Kagan warns that the dip could illustrate "longer-term downward pressure," even as the economy improves. But no one's heralding the age of mass cord-cutting just yet: Service providers still boast a combined 100 million subscribers.
What's keeping your bill so high? Might the industry eventually see consumers flee to other platforms? We answer a few burning questions.
How much do I pay for channels, even the ones I don't watch?
On average, about 40 percent of your bill goes to programming fees (with about half of that devoted to sports). "In Los Angeles, you're charged as much as $25 a month for sports," says CBS CEO Leslie Moonves. "But only 25 percent watch sports." That was at the heart of this year's dispute over the new Los Angeles Dodgers TV channel, SportsNet LA. Time Warner Cable, which owned the channel, was asking other area systems to pay just under $5 per subscriber for the channel — which led to a standoff. DirecTV, Dish and other competitors refused, which means most of the L.A. market couldn't watch the team this summer
Here are the 15 most expensive channels on most systems, per subscriber:
Regional sports networks (average) $3
NFL Network $1.22
Disney Channel $1.21
Fox-owned stations $1.01
Fox News $0.99
CBS-owned stations $0.90
NBC-owned stations $0.87
ABC-owned stations $0.83
Fox Sports 1 $0.68
Will we ever be able to buy channels a la carte?
That's unlikely. "I understand that people feel the bundle is too big," says FX Networks CEO John Landgraf. "But a la carte doesn't make any sense. Consumers think they would pay less, but everything would have to get so much more expensive when it was de-packaged that you wouldn't end up paying less; you'd just end up having [fewer channels]."
Will premium channels ever be available outside of cable?
Premium channels like HBO, Showtime and Starz cost around $15 each (though they can be purchased at a discount when bundled), but you must subscribe to a basic-cable or satellite package to even get those options. To avoid that charge, you could appropriate off someone else's HBO Go password (HBO usually looks the other way). But a legit premium channel offered away from cable or satellite could happen. On Sept. 17, Moonves told investors that CBS-owned Showtime might eventually be sold as an online offering. "There are ways of going direct to consumer in different packages," he said. "Maybe we make it easier for consumers to get Showtime without a lot of the other stuff." AT&T also made headlines last week when it announced a limited-time one-year offer for a $39-a-month bundle that included broadband Internet, HBO and Amazon Prime.
Will cable TV eventually be available on the Internet?
Several companies are cutting deals to make a subscription-based TV service on the Web a reality. Dish Network recently secured rights to Scripps Networks Interactive programming (including HGTV, Food Network and Travel Channel), as well as Disney Channel, ESPN and others, for an Internet TV service. Sony is developing a cloud-based TV service, signing a deal with Viacom for rights to carry 22 channels (including MTV, Comedy Central and Nickelodeon). Apple, Google and Intel are also believed to be interested in launching their own services. Viacom CEO Philippe Dauman calls it "a new era for television."
Will cord-cutting become the norm?
Services like the aforementioned could attract younger viewers, including those who have quit cable or satellite and others who never subscribed to begin with. But NCTA's Dietz says there's no evidence yet of widespread cord-cutting. "The cable-video subscription business has declined," he says, "but most of those customers have moved to satellite or one of the telco providers. Cable is trying to respond and keep their customers satisfied by offering more ways that they can watch on different devices in and out of the home." Landgraf notes that the current model is tied to households, yet the younger generation doesn't watch TV that way. "The industry has to come up with different models, ones that are more portable and more tied to your user identification rather than your home address."
Why does the equipment cost so much?
Multiple cable boxes and remotes (as much as $12 a month for each set), protection plans (around $8) and even access to high definition channels or a DVR (sometimes $10) combine to make your monthly bill even higher. Landgraf points out that the cable, satellite and telco companies must rely on complicated technology and, in some cases, old infrastructure to deliver TV to homes. "People feel that, with [streaming services like] Netflix, they're only buying the programming," he says. "With cable, people think they're paying too much for programming, but what they're paying for is inefficient technology that is necessary at the moment to deliver the level of quality they want. The technology will improve, and it will get cheaper."