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Chadwick: TV Monopoly Pricing and Monopolistic Malfeasance

TV
Photo by: William Hook
TV

Lo and behold a couple of weeks ago, some of the channels on my TV stopped working. I realized it when I tried to watch MSNBC’s "Morning Joe", a simply must have for me first thing in the morning - great guests, good politics and economics and lots of humor. Clicking around, I realized that I had also lost a lot of other channels and none of them did I think of as premium rate channels.

They included A&E, Lifetime, Bravo, the History Channel, C-Span and some silly paid programming channels. I couldn’t make rhyme or reason of the selection, but one thing was certain – I am sure that those channels come with the basic coverage. The odd thing was that a couple of other televisions I have did not have any missing channels. But I’m not a big TV watcher, so I didn’t pay much attention to this difference in reception.

I called my local cable company, Cablevision —the only cable company that services my area—and explained the problem, thinking they would simply fix it all remotely. Instead, they told me that they were eliminating analog channels and in order to get those channels back, I needed to have a cable company card inserted into the television. The two televisions that were unaffected by this ‘outage’ had cable boxes, they explained when I queried as to why some televisions were working just fine.

“And how much do the cards cost?”, I asked. $2 per month rental. Well it seemed a small enough price and I really wanted "Morning Joe", so I arranged for them to come to the house and install the cards. When they arrived, they informed me that the TV’s were too old and there was no place for a card, but they could solve that problem if I just rented a cable box for $6.50/month Or they said I could buy new TVs with card slots and I could just pay $2/month.

So regardless of what I did, they had me. The difference was $50 per TV per year, which I did not want to give to them, so I went out to Costco and bought new TV’s. At the rate of $50/year, the payback would be about 4 years, and the new TVs were lightweight and full of all the new bells and whistles.

Back came the cable company serviceman to install the cards, only to inform me that these new TVs did not have a card slot. In fact, calling around to Wal-Mart , Best Buy and P.C. Richards, I came to find out that no retailer carries those TV’s any more.

I returned the TV’s to Costco and faced the fact that the cable company had me – if I wanted "Morning Joe" I would have to pay $6.50 for the privilege each month, a total of $75 per year. Pure profit for the cable company and no place for me to turn to find a more economic solution because my cable company has a monopoly in southwestern Connecticut. Dishes simply don’t work well where I live.

Where is the Government in all this? Consumers in need were supposed to be helped in the switch from analog to digital with Government assistance to buy a new TV, but did the Government know that part of the analog to digital plan was to allow the cable companies to raise their incomes by $75 per year for every television out there not already with a cable box?

In the midst of a recession, the sudden increase in expense for so many people is an insult and for many I am sure unaffordable. I am sending this blog to Richard Blumenthal, the Attorney General in Connecticut.

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Patricia W. Chadwick has had more than 35 years of investment experience. She is the founder and president of Ravengate Partners LLC, a consulting firm that provides advice on financial markets and global economics.