Granby01033

America’s tightest monopoly is raising its rates again. After raising its rates 4% in February, the average customer will see another 3.6% increase, says the Springfield Republican. And in spite of new competition from fiber optic service from Verizon, costs aren’t expected to go down.

This is an interesting article. Cable companies are a great example of how the free market isn’t so free.

If there is to be any serious competition in Western Massachusetts for Comcast and Charter, both of which operate like monopolies in the communities they serve, it will come from Verizon, which has been expanding its fiber optic service - Internet, telephone and television service - slowly across the state, east to west, moving right into Comcast and Charter neighborhoods. Verizon’s fiber optic service, called FiOS, has so far reached Fitchburg.

Will cable prices cool down in the valley if competition heats up?

Probably not, said Barry M. Orton, a telecommunications professor at the University of Wisconsin at Madison and a cable industry consultant. When cable companies battle, it typically turns into a services war rather than a price war, he said.

“FiOS has come to a lot of areas already, and, generally, the rates don’t go down. FiOS never promises it is going to be a cheaper product. They say they will give a better package,” he said.

“Why don’t (cable companies) drop rates? Because the basic cost is the programming, and the basic costs of that are Hollywood stars and professional athletes. Is the money they are getting going up or down?” Orton asked.

“If Comcast does drop their prices, it will only be for a short period of time to keep someone from jumping to another company, and it will usually be a bundle of services that is offered. You might get a really good price for a year, maybe even two. But in the longer run, prices are not going down,” he said.

Industry analysts said big cable companies are more likely to battle each other in larger cities than in small cities, suburban or rural areas. And that is why there is most often only one cable provider in a community in Western Massachusetts.

–Mb