Thanks to Saturday's New York Times article on cable rates, there was a rash of cable bashing going on this weekend. Blogs all over the place, especially from Silicon Valley, piled on.
In one of my first posts, I admitted that I read certain blogs even before I read the New York Times. I guess one reason for that is because they're all to be taken with an equal amount of skepticism -- not just the blogs but the Times too.
I'll be the first to admit that there are some things we cable operators deserve to be bashed for -- we could do a lot better at answering our phones, and solving problems on the first try. I've even written about some of them and how we at Insight are focused on them. But I really do not believe the cost of cable stands among the bash-able.
It is true that the retail pricing of cable has risen over the past 12 years. However, over half of our customers have begun to take advantage of our discounted bundling opportunities. They buy a combination of television, Internet, and phone service from us and they are offered deep discounts, often resulting in the price for their service being lower than it was a decade ago.
So, yes, the retail price of our video product has risen, but so has the cost the programming we deliver. Indeed, just look at cable operators' operating cash flow margins. Most companies report their margins in the mid 30% range -- considerably lower than it was 20 years ago.
And we are looking forward to even higher pricing pressures. Local broadcasters are demanding higher and higher retransmission consent payments for the right to have their free over-the-air channels conveniently placed on a cable or satellite system making it easier for our customers to view them. For that, we all owe a special thanks to the 1992 Cable Act.