Monday, January 28, 2008

Deregulate So Prices Can Go Up

AT&T and VZ have been fighting regulation since the TA96 act, but since 2005 have peppered the FCC with Forbearance petitions. While K-Mart complains about the fact that cable rates have risen sharply in the last 5-10 years, the FCC Commish is blind to the rising prices from the RBOC's.

Cable rates have gone up mainly due to an increase in the number of channels carried as well as the cost of that content. AT&T and VZ now understand that the content is the expensive piece. Disney, TW, and Hollywood still want to make millions per episode. ESPN/Disney pays about $1B per year for the NFL. NBC paid the cast of Friends $1M per episode. Consumers and the distribution system have to pay for those rates.

It's funny that AT&T and VZ don't mind paying to carry the NFL Network, but get very upset about having to carry Google. Google is to the internet what the NFL is to cable -- without it 50% of the folks would not pay you for the pipe.

In today's USA Today, Leslie Cauley has an article about the steep rise in rates for unregulated phone services, like Caller ID and call forwarding. Considering that the COG (cost of goods) for these services is ZERO, you would think the RBOC's would stop trying to bleed the consumer dry. And let's not forget that while you pay $10 for Caller ID on that landline, AT&T provides Caller ID and Voicemail FREE on your cell phone. Go figure, right?

Rate hikes while the economy is slipping is probably not the best move for a company already pulling Business Week points out that Ma and Pa Bell and rolling out U-Verse and FiOS at a chancy economic time. Ma Bell has already made a statement about the economy affecting its revenues. AT&T made $30.3B in the fourth quarter. $30B! That's $10B per quarter. But they need to nickel and dime everyone to increase that, especially if some folks are going to be poor credit risks.

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