Davis Freeberg’s Digital Connection

Every year, around November, Comcast likes to increase the cable rates in the San Francisco bay area and this year is no different. Nevermind that over the last four years, Comcast’s increases have easily outpaced inflation. Because they have a near monopoly on the bay area, they are able to raise rates with little fear of competition. They are able to do this largely because the city of San Francisco granted Comcast a four year exclusive license on all cable TV services just a year ago. The price that Comcast had to pay for this exclusivity was a mere .80 per subscriber per month. A small tax compared to last years 6% increase or the $3.30 increase that I’ll be seeing on my own bill come January 1st.

What makes this increase so intollerable is that they are going after the standard subscribers. These are the pesky cable subscribers who refuse to pay for their digital cable package because it is a complete ripoff. If you agreed to pay an insane amount of money for Comcast telephone service, then they don’t increase your fees, but for those of us who want to use prepaid cellphones, skype and cablecards, we’ll now be forced to pay more so that Comcast can pay for VOD services that they won’t even provide to cablecard customers. Just when I figured out a way to get rid of the bogus $5 HDTV charge by using cablecards, Comcast figures out a way to get their money back.

What’s funny about this upcoming rate increase is that no matter how much changes the story still remains the same. Three years ago, when they increased rates, it was because they were planning on making a $400 million investment over the next two years. Two years ago, they justified their rate increase because upgrading equipment cost them $600 million over the prior two years. Now they need to increase rates another 6% because they want to spend $200 million to move their SF headquarters and they need to make sure all of their employees get parking spots.

I guess, if Comcast was a struggling company in a market where they had to fairly compete I’d feel more sympathetic, but meanwhile, Comcast earned $1.2 billion in profits after taxes over the last quarter alone. Comcast may want to defend their decision to increase rates on more upgrades, but the truth is that they realize that they will soon face competition from Verizon and AT&T and they want to juice their monopoly one more time before competition starts setting in.

Normally, I wouldn’t even mind a fee increase, but because of their monopoly over the citizens of San Francisco, I’m left with a choice of either setting up the bunny ears or paying whatever Comcast wants to demand for my TV. Meanwhile, the very board of Supervisors that sold this lucrative monopoly to Comcast for a song is now fighting the implementation of free wifi to the tooth and nail. A move, which would at the very least limit Comcast’s ability to overcharge for broadband access.

The cable market in San Francisco is seriously broken and needs to be fixed. While I don’t expect the local politics to change anytime soon, I can at least take comfort in knowing that the State of California has stepped in to make it easier for competition to flourish. It may take a few years for the telecoms to build out their services, but once we have a choice beyond just Comcast, we’ll see an end to these rate increases and better services for bay area customers.

Posted on November 27th, 2006 by Davis
Filed under: Media, TV