Just one week after Dish announced their plans to raise their subscription fees to consumers, DirecTv has followed suit raising their rates as well. "On Thursday, the satellite service announced that beginning Feb. 7, it will boost monthly subscription fees by about 4.5%. The hike is a response to an 8% rise in carriage fees demanded by cable channels included in DirecTV’s service, Reuters noted." So costs for programming are rising 8% but as consumers we should be happy because DirecTv is only raising their rates 4.5%. Regardless, both are rising too fast.
But here is the problem, inflation is not rising that fast and consumers are not seeing their salaries rise that high either. And worse, the "fiscal cliff" may be here soon and consumers will also face higher taxes resulting in less disposable income. So what is a DirecTv customer, or a Dish customer, or any cable customer going have to do as they watch their costs for service continue to rise?
The choices are pretty obvious and the rate of increases (4.5% by DirecTv as an example) continue to push more families to look at alternatives. There is cord shaving, cutting back on premium channels, taking lower levels of service, to lower their monthly costs. Some might give everyone in the family their own cellphone and drop their hard line phone bill as well. More drastically, families will be more inclined to completely cut the cord and drop their cable service all together. With Netflix, Amazon, Hulu, and others offering compelling content, consumers will pay less while being more selective in their viewing choices.
The facts are clear. Rates for cable are rising faster than inflation and income declines and higher taxes may only exacerbate the cord cutting phenomenon. Fiscal cliff... we are inching closer to the cable cliff.