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TMCNet: You'll pay more for cable TV: Time Warner customers will now fork out $3 to $5 more per month. [The Cary News, N.C.]

[December 30, 2009]

You'll pay more for cable TV: Time Warner customers will now fork out $3 to $5 more per month. [The Cary News, N.C.]

(Cary News (NC) Via Acquire Media NewsEdge) Dec. 30--RALEIGH -- Time Warner Cable, the state's dominant provider, raised its rates this week, an annual occurrence the company traditionally blames on the cost of programming.

Most of the increases will add $3 to $5 to a monthly bill, but the biggest percentage increase is for the entry-level 24-channel Broadcast Cable service (the level below Basic). In western Wake County towns, the service is going up 29percent, from $12.50 to $16.10 a month.


The rate increases went into effect Sunday.

Cable bills are going up nationwide. They have risen 77 percent since 1996, nearly twice the rate of inflation.

In a recent letter to customers, Time Warner says it is the victim of the rising cost of sports and broadcast programming. The cable industry's rationale for raising rates is not universally accepted.

"What other industry can get away with raising rates in the worst recession in over 50 years?" said Carl Howe, director of consumer research at the Yankee Group, a market research firm in Boston. "It just shows the power of having very little competition for what they sell." Time Warner spokeswoman Melissa Buscher said 39 percent of customers will see increases of less than 5 percent. That's above the inflation rate of 1.8 percent.

Time Warner offers cable TV along with phone and Internet services. Those rates are going up as well.

For instance, Digital Cable and Road Runner High Speed Online -- a popular combination -- are going up from $114.90 to $117.95 a month, an increase of 2.6 percent.

Still, more than half the company's customers won't see an increase immediately because they are paying a promotional discount or are locked into a two-year price guarantee. Those customers will switch to paying full freight as their promotions expire.

Buscher said the price increases are also paying for new features. For example, the company added more than 75 high definition channels this year.

"Prices are going up, but you're getting more," she said.

Cable competition is increasing but hasn't reached a critical mass in many markets. AT&T, the telecommunications giant, this year introduced its U-verse cable service in select neighborhoods in the state. Residents also have the option of subscribing to satellite TV.

Still, Time Warner is not immune to the weak economy. The company is counting on subscription rates to make up for other sources of lost revenue. One of the pressure points is a dramatic drop in advertising sales, which fell 19 percent in the third quarter. Nationwide, Time Warner lost 83,000 cable TV subscribers.

But subscription rates helped the company eke out a 4 percent sales gain despite the advertising drop.

Time Warner has 2.1 million customers in the Carolinas, including about 630,000 in the area that covers the Triangle to Fayetteville.

Earlier this month, Time Warner accused cable networks and independent stations of making outrageous demands and increasing costs 300 percent.

As part of a marketing campaign, Time Warner used the Internet, newspapers and TV ads to create public pressure on the programmers to relent on their pricing demands.

Mark Cooper, director of research for the Consumer Federation of America, said the public bickering is a smokescreen.

"They're in cahoots here," Cooper said. "They both make out like bandits, and the consumer pays the price." john.murawski@nando.com or 919-829-8932 To see more of the Cary News or to subscribe to the newspaper, go to http://www.carynews.com/.

Copyright (c) 2009, The Cary News, N.C.

Distributed by McClatchy-Tribune Information Services.

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