Tuesday, December 27, 2011

Cox Raising Rates

The Advocate reports that Cox is raising its rates in the "Greater Louisiana" market on January 15th. That marketing region now includes both Lafayette and New Orleans and an email to the author of the article lead to confirmation that the rate hikes will apply in Lafayette. I'd been uncertain as to how expanding the Baton Rouge market to include Lafayette and then New Orleans would change Cox's pricing policies. For a good while during and after the fiber fight in '04 Cox left rates unchanged in Lafayette while raising them in the then-separate Baton Rouge and New Orleans markets. The consolidation apparently makes that just too embarrassing a policy to continue and Lafayette is no longer benefiting from lower list prices. (That does not mean, of course, that Cox has not continued to cut special deals with customers inside the city limits of Lafayette. Anyone who has dropped Cox for LUS Fiber can testify to the predatory pricing "deals" offered those who express an intent to move away from the national corporation for the local utility.)

Rates rising:

Cox Communication’s across the board video price increases include:
  • Cox TV Starter: Rising from $19.55 to $21.99.  (12.5%)
  • Cox TV Essential: Rising from $56.99 to $60.29. (5.8%)
  • Cox Advanced TV: Rising from $63.98 to $65.98. (3.0%)

Increase telephone rates by $1 per month 


Internet prices will also increase—but the Advocate article doesn't specify by how much. 


Why?
Why raise prices...or at least why raise prices now? On Cox's part the explanation is simple: higher costs. It rightly claims that prices have increased for big national networks like ESPN as well as retransmission fees for local network affiliates like KLFY. But that sort of blame shifting doesn't begin to explain the increases in either the telephone or the internet side of things in which costs are not increasing. It also looks like a pattern of raising prices the most on the cheapest tiers of video and telephone, and perhaps the internet as well—a pattern that is not well explained by the rising costs of national programming.


The Advocate reporter, gratifyingly, doesn't accept the corporation's explanation at face value and asks for a second opinion; this one from a consumer advocate: 

Mark Cooper, director of research for the Consumer Federation of America, said while cable companies’ costs have risen, the firms always increase their margins more than the costs themselves.
“It’s a down economy. They’re the only ones that get that much,” Cooper said. “Their costs didn’t go up four bucks a month. No way. I guarantee you their margins are going up.”

Raising prices in a down economy is a luxury that only a semi-monopolist like Cox can afford; in Lafayette they'll have some rare local competition whose lower prices will now look even more attractive.


Coordination?
The Baton Rouge Business reports that Cox is implementing a interface and HD channel upgrade. That's convenient timing. The new interface looks interesting. 

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