Wednesday, February 20, 2008

Cox to Raise Prices

Cox Communications has announced a plan to raise prices this coming April 1st according to a business brief in this morning's Advertiser. As far as I can tell from the brief article it means between a 3 and 10% jump for most subscribers depending upon services taken.

Most video subscribers will see a bump of between 2-3 dollars according to the article. The basic cable package (channels 2-20 in analog) which has had channels and services removed recently, will not experience the same increase. Internet subscribers will also be hit with an increase in the 3 dollar range. That makes for around a 6 dollar jump for those folks who buy both services from the cable company.

Cox claims this is the first price increase in 19 months and claims it is made necessary by channel costs. That makes surface sense of a kind but isn't easy to reconcile with the fact that the number of bandwidth-eating HD programming channels included in the new packages is slated to increase. —Channel costs increase independent of pricing if you provide more channels and use more of your resources in doing so.

There is some unexplained confusion between the information presented in the article and what is offered on Cox's website. For instance, the basic tier is described as being channels 2-20 but the Cox website for acadiana describes that level of service as covering channels 2-23 plus access to 3 more digital channels if you pay an extra hardware fee. Are 3 more analog channels being silently eliminated, effectively but invisibly raising the package price? It sure looks that way.

Subscribers to internet services will get a bump with their price increase, though the Advertiser's write-up is also confusingly written on this topic (though it may simply be following a misleading press release). Consider:
Cox is also boosting the speed of four tiers of its Internet service, allowing customers to connect and upload content more than twice as fast in some cases. Cox's Value tier, it's second least expensive at $26.95 per month, will now offer 1.5 megs per second, a 486 percent increase in speed, for $3 more per month,
There are only 4 speed tiers and the "value" tier (about which some detail is given in the Advertiser) is now $26.95 with download speeds of 1.5 mbps and 256 kbps upload. I don't see how "now" offering "1.5 megs" can mean a 486% increase in either the upload or download numbers. My guess is that the upload speed, which at 256 mbps is pretty pitiful, is being raised substantially. But that is only a guess. If that is all that changes most subscribers won't feel that is worth a 10% bump.

A new expansion is pointed to that might actually be worthwhile:
HD Free Zone OnDemand will go up, allowing subscribers to watch popular basic cable programs whenever they want.
If "basic cable" refers to the basic cable tier, as its context in this article might indicate, then that would be real news as it would indicate that local stations and AOC were going to archive their news and other locally produced shows and allow Cox to rebroadcast them on demand. That would be a great thing for Acadiana and worth applauding Cox for showing some real vision. However, if "basic cable programs" just refers to "regular, widely available on lower video tiers cable shows" then this isn't very interesting and is just a continuation of what is happening without any special price rise. I have to suspect the latter but can wish for the former.....

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In any case, this price bump will surely make it easier for LUS to keep its promises to offer a lower-priced alternative to Cox and AT&T. Prices for Cox are, in the end, driven by national factors and intra-company competition which don't take into account local competition like LUS. The only way to compete on price with LUS will be to make the local Baton Rouge-Acadiana network the corporation's least profitable division. Nobody, least of all local Cox officials, will want to let that happen.

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