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Originally Posted by sterlingice
I would be really surprised if they weren't almost exclusively pass-through costs. Cable has been facing pressure from satellite and that has done nothing but grow over the past few years and encroach on their monopoly. Inherently, you'd think the costs would drop in the face of increasing competition and better technology (ala DSL costs over the past few years in the face of Cable competition) to try and retain or even grow market share, but that hasn't been happening. Then again, there are many externalities like business mergers decreasing local competition and the like which also have affected this.
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If we were seeing true competition with perfectly equivalent products, then i think this would stand to reason completely.
However, there is the power of incumbency, and it's every bit as strong in marketplaces as it is in politics.
Here, what we may be seeing is the fact that people who are open to a change in their TV service delivery being changed (getting a new company, paying for setup, learning new channels, getting a new remote -- all the things that add up tpo "change" here) may have already done so. Those would would be willing to go for a better deal have done so. That leaves behind those who really aren't interested in buying a dish or getting their service from some other source generally -- they just prefer to stick with the source they have.
If that's true, then the cable companies are essentially dealing with a market for their own product that is increasingly price-insensitive. And if so, then it stands to reason that they can (and perhaps even should, in the name of maximizing profits) start to increase prices -- since they will find the loss of customers to be smalle rthan the increase in revenues from those who remain. In a market where there is very little marginal cost associated with more customers (within a service area already covered by infrastructure) this becomes prety simple math. Your self-selected group of loyal customers won't go without your service and aren't likely to leave you for a cheaper alternative ... so go ahead and screw them with rate increases.
This is a competing, and also perfectly logical, explanation for what might be happening in this emerging semi-competitive market.