The Bureau of Labor Statistics reported this month that cable costs have risen 77 percent — or about twice the rate of inflation — since 1996. However, as the NY Times reports today, few people are dropping cable.
The story focuses mainly on why the Internet hasn’t hurt cable companies as much as it has hurt record companies (I’ll return to this topic in a later post) but my first concern was this question: on the whole, are TV viewers better or worse off than they were a decade ago?
Answer: I don’t know and I’m not sure that any study can say conclusively.
I can’t find the original report on the terrible BLS Web site, so I’m not really sure what the BLS study says.
It may say that the price of a specific package with a set number of channels has gone up 77 percent or it may say that the typical bill has gone up 77 percent.
If it’s the former, customers might be worse off than they were in 1996 (though you could also argue that cable channels have a lot more original programming now than they did 12 years ago, so each one is worth more).
If it’s the latter, then it’s hard to say anything about consumer welfare. Most people get more channels today than they did 12 years ago, and a lot of people now get digital picture and sound, which is superior to analog.
You also have to consider the welfare of people who get HDTV, which is a completely different experience than regular TV.
A better government study, this one by the FCC, says the real price that consumers pay per hour of TV viewed jumped 50 percent in just the 8 years from 1997 to 2005. This comes closer to settling the dispute and proving that TV viewers are worse off, but it doesn’t seal the deal.
If you have more programs to choose from at any given time, you’ll probably get more enjoyment from whatever program you end up selecting and that may justify the price premium. I get at least twice as much enjoyment by watching a baseball game in high-definition.
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