Time Warner Cable customers will start to see their bills go up in mid-January, the company has confirmed.
Broadcast TV fees, which offset the cable provider’s costs to access local affiliate channels, will rise $1 to $3.75 per month. Surcharges for cable sports programming will jump $2.25 to $5 monthly. Meanwhile, monthly cable modem rentals will increase $2 to $10.
“Our new prices reflect our continued investment in the performance and reliability of our networks and equipment, along with the rapidly rising costs of programming, especially local broadcast channels and cable sports networks,” a Time Warner Cable spokesman told Fortune on Tuesday.
Costs for local broadcast channels is up 85% since 2013 while sports programming is up 116% since 2008, the company said. It added that it has spent $2 billion on upgrading its network this year.
Time Warner Cable, which owns several regional sports networks, is just the latest television provider to lift its prices. Satellite broadcasters Dish (DISH) and DirecTV (DTV) both announced this month that they would raise rates for some of their services. AT&T’s (T) U-Verse customers will also see some rate hikes.
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Like Time Warner Cable, all of the companies blamed the rate hikes on the higher programming costs. They say they are merely passing that cost on to customers.
Up until 15 years ago, local broadcast affiliates owned by companies like CBS and ABC would only rarely charge cable companies for their content, the providers say. In recent years, however, those networks have started charging under the theory that their programming is valuable.
Major broadcast networks did not respond to requests for comment about their fees or declined to do so.
Meanwhile, sports programming has also become a big cost center. Channel owners are able to command high prices because of sports fans who have a huge appetite for major sporting events and sports newscasts. In negotiations with cable providers, sports channel owners have significant leverage. An increase in the number of regional sports networks has also helped to inflate costs.
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Cable company critics, however, are not entirely convinced by the argument for the price hikes. They say the providers should provide more transparency.
Cable providers typically list any taxes and surcharges on customer bills. But the companies fail to do so while marketing cable packages. Customers who neglect to read the fine print can therefore receive bills that are higher than what they expected. In 2010, the Federal Communications Commission proposed a remedy, but it never passed.
In addition to the previously mentioned price hikes, Time Warner Cable plans to increase the cost of Internet access for most customers. Five of six tiers will rise $2 per month (the exception is the lowest tier that costs $14.99 monthly). The company is also setting a uniform price of $11.75 for its monthly cable box rentals. Depending on where you live, that could mean as much as a $1 increase or $1 cut.
Time Warner Cable (TWC) also plans to raise the price for Cinemax and Starz from $12.95 to $14.99 monthly. However, a Time Warner Cable spokesman says that those costs will only apply to customers who pay for its television service only. Customers who get a bundle from Time Warner Cable, which can include TV and Internet or TV, Internet, and phone, will not see any rate hikes. Time Warner Cable’s Movie Pass subscription, among other services, is also getting more expensive.
Customers who are paying for broadcast and sports programming under promotional packages will not see their bills rise until after their discounts expire. The same is true of those who are getting cable modems under a discount.
