Time Warner Cable is raising cable television and Internet rates by an average of 6.4 percent, including a new fee to cover the rising cost of carrying the local broadcast television stations.
The company blamed the rate increase primarily on the increased costs it faces to carry programming from television networks and cable channels, along with the rising fees – which it said have jumped by almost 40 percent nationally over the past year – it must pay to carry local broadcast stations that consumers are able to receive for free if they use an antenna.
“In the past, those signals were available to us for little or no cost,” said Joli Plucknette-Farmen, a Time Warner spokeswoman.
For the first time, Time Warner is adding a separate “broadcast TV fee” of $2.25 per month that it said will help cover the fees it pays to local television stations to retransmit their programming.
Time Warner’s higher rates will begin taking effect during billing cycles that start March 19 and beyond, but not all Time Warner customers will notice the increase immediately. About 70 percent of the company’s customers currently are on promotional discounts, and the higher programming costs won’t be passed on to them until those discounts expire.
However, those customers will be subject to any applicable increases in equipment fees immediately, Plucknette-Farmen said. The cost of renting a converter box, which is needed to receive Time Warner’s digital television service, is rising by $1.26 per month to $10.25 from $8.99. The cost of each additional box is rising by the same amount.
The company also is raising rates for all of its Internet services by $3 a month.
Retransmission fees have become an increasingly important source of revenue for TV stations and networks. At the same time, they also have become a contentious topic, often leading to highly public negotiations that feature warnings that certain channels may be on the verge of being dropped unless an agreement is reached.
Cable and satellite television providers complain that they are forced to pass along rising costs to their customers. Industry researcher SNL Kagan forecasts that retransmission fees will more than double over the next five years, reaching $7.6 billion by 2019, up from $3.3 billion this year. Broadcasters and programmers say the fees merely reflect the fair value of the shows and services they provide.
At the same time, pay-TV providers also are dealing with a market that is shrinking as more consumers cut their cable cord in favor of getting their programming through online sources, such as Netflix, Hulu or Roku. In its most recent report late last year, SNL Kagan now projects the number of subscribers to remain steady through 2018.
Also adding to the Time Warner increase are the company’s costs to upgrade its network and to add new services. The New York City-based company spent $227 million on its network in the Northeast last year, Plucknette-Farmen said.
Time Warner isn’t alone in raising its rates. Satellite TV giant DirecTV raised rates 3.7 percent earliert this month, and DirecTV packages rose $2 or $3 a month. As with Time Warner, DirecTV blamed the rate increase on retransmission and programming fees.
Verizon Communications spokesman John Bonomo said the company’s prices for bundled packages that include FiOS TV have not changed here.