Cox Communications said increases in its wholesale television programming costs and the costs of improving its services are behind the rate increases showing up on customers' bills in recent weeks.
The Atlanta-based cable provider raised monthly rates in March in Omaha and earlier this year in other markets. The average bill increased by about 7 percent in Omaha.
“Programming costs are the largest component of your cable bill,” said Stacie Schafer, Cox public relations senior manager. “They're rising at a rate that cannot be sustained.”
Increases depended on the types of services, bundled packages and promotions subscribers receive. They ranged from less than 1 percent for “starter” television, now $24.99, to an 11.7 percent increase for a Latino television package, now $37.99 a month.
Cox's “advanced TV” service, offering 220 channels but not premium channels, rose 10.9 percent to $70.99 a month. An “advanced ultimate” TV service, with four premium channels and whole-home DVR service, rose 11.1 percent to $154.47 a month.
Internet rates also went up by an average of more than 10 percent; a “preferred” package rose 10.5 percent to $62.99 per month. “Starter” Internet service rose 11.1 percent to $29.99.
And while Cox is no longer charging a separate $10 monthly fee for its Contour service, other service fees went up, including a 33 percent increase for the “record-6 DVR,” now $19.99 a month.
Cox's last major price increase here came in spring 2012. Satellite providers Dish and DirecTV also both raised their rates nationwide in early 2014, citing the same programming cost pressures.
The price of cable service increased an average of 6.1 percent a year from 1995 to 2012, according to the FCC, compared with an average annual increase of 2.4 percent in the consumer price index over those years.
Schafer said it is a “constant battle” to negotiate programming fees with cable networks and retransmission fees with broadcast networks. “We'll continue to be an advocate for our customers during these negotiations,” she said.
Schafer said Cox has added several new services in the past year that enhance the value of its products, including the Contour interactive app and channel guide, more HD channels and on-demand programming, greater mobile capability and more DVR capacity. The provider is also spending more on consumer research to ensure investments are in line with what customers want, Schafer said.
“We take price increases very seriously,” she said.
So do some subscribers. Some local Cox customers told The World-Herald they canceled their service or switched to a competitor in response to the March rate increase. Cox is privately held and does not publish information on its earnings or subscriber base.
Schafer said customers have called in response to the increase but said most understand the need to raise rates.
Rising rates nationwide, along with competition from other video platforms, are factors in a declining number of subscribers. Research firm SNL Kagan reported in March that 2013 marked the first-ever year-over-year subscriber loss for the industry, which includes cable, satellite and telecommunications providers.