As the familiar holiday song goes, “It’s the most wonderful time of year.” If only that were true in the halls of cable TV companies; you see, this is the time of the year when we are assailed by the media over rising video prices. These reports rarely get into the real issues impacting the cost of TV, leaving readers with a sour taste in their mouths and the wrong impressions of cable providers.

Today, we see coverage in USA Today: “Trying to spur competition and beat back cable TV prices, Federal Communications Commission Chairman Kevin Martin has proposed rules to make it easier for phone companies and others to jump into the video business.” The story goes on to discuss a “cozy duopoly” between satellite and cable and refers to a forthcoming FCC study which purportedly shows a $7.40 difference in the average price of cable TV in markets where a third wireline competitor is present.

While we welcome competition from a fourth, fifth, or sixty-fifth competitor in our markets, there are a few problems with such a rudimentary analysis of potential benefits:

• In fact, there are already three competitors in each market as there are two national satellite providers. In markets where there is another wireline-based provider in addition to cable, there are four competitors. So, cable operators are not enjoying a duopoly (or a monopoly, as some still claim) and the efforts of the satellite competitors to win customers from us is nothing short of fierce.

• The average price of cable in markets where there is a fourth competitor is likely only considering the cost of Expanded Basic cable, delivered alone, with no additional services purchased. The fact is that more customers now subscribe to digital cable, as opposed to analog packages, and in doing so are getting far greater value in the form of ancillary features such as On Demand, DVR and High Definition. There is typically no discussion of this increased value being delivered to consumers.

• Most customers also choose to buy more than one service, bundling their services and realizing monthly saving for doing so. Cable customers who bundle their services can save as much as 10% on their monthly service bills for telephone, Internet and video. Digital and bundling combine to make a simple view of the cost of Expanded Basic cable meaningless to the majority of cable television customers.

• The fact is that all television distributors, whether identified as cable, satellite or telco, buy a wholesale product from the same sources. Over the past three years, Cox’s cost for programming has increased about 10% a year. We simply must pass along some of the expense the form of higher retail prices. We’re not alone in this; in fact, our price increases compare favorably within the industry. A recent JD Power & Associates Study shows that on average satellite customers pay more for their video service than do cable customers. This is not surprising since DBS providers often omit additional charges for extra outlets, local channels and HD services from their advertised prices. It’s also notable that just one year since the launch of their video service, Verizon (which would benefit from the proposed FCC rules addressed in the USA Today article) has already announced a $3 price increase, or 7.5%.

In Cox's Northern Virginia market (our only market that is facing competition from Verizon in video), we find that their service is actually priced higher than ours. The price for their “Complete Basic” service is $42.99, but there is a service fee of $4.99 for a set-top converter, bringing the total to $47.98 for just one outlet. Cox’s Expanded Basic service retails for $43.99 and does not require a set-top converter. With Verizon, you must rent an extra converter for each TV in the home; Cox assesses no additional charges for additional outlets. The short of this is that Cox does not price lower in markets where we face overbuild (wireline) competition.

• A real analysis of programming costs is essential. Cable keeps highlighting the fact that programming costs are the single biggest driver affecting our prices, and headlines are made all year long when cable distributors are at loggerheads with programmers in renegotiating deals. But the high price cable distributors must pay programmers for the right to carry their networks is rarely covered in any meaningful way in these summary stories. Why not ask the cable networks what their average per-subscriber increases are each year? When was the last time you read a story about an increase in gas prices that didn’t consider the price for a barrel of oil?

People need to understand that when their favorite college athlete is recruited by a pro football team and is endowed with multi-million dollar contract, they ultimately pay for this. They need to know that when a former actress on NBC’s “Friends” makes $10 million or more for acting in a feature film, they pay for this not only when they buy a ticket at their local theater, but also when they pay their cable or satellite bill. It’s time that the American public and policy-makers understand the real story and for the press to report more fully.