Comcast Cable Prices Rising? Small Providers Accuse Company Of Forcing Price Increases

Comcast has been accused of a number of practices that have resulted in consumers paying more money for their cable package, but the latest complaint against the telecommunications giant comes from an strange source: other cable operators.

The American Cable Association (ACA) issued a Federal Communications Commission filing asking the commission to investigate the increasing demands made by Comcast in TV programming contract negotiations that would force its smaller, rival operators to raise the price they charge for cable TV subscriptions.

The dispute between the ACA, which represents about 800 small- and medium-sized cable operators through the United States, and Comcast stems from the conglomerate's hold over regional sports networks that are marketed with NBC branding—a subsidiary company of Comcast.

During contract negotiation, Comcast has attempted to redefine its “minimum penetration policy,” which requires TV providers to ensure a cable network will be distributed to a certain percentage of subscribers. Typically, basic tier cable subscribers are excluded from those calculations. Such packages, often referred to as the “lifeline” tier, provide primarily basic network broadcast offerings.

Comcast wants end the practice of exempting those basic tier subscribers and start including them in its calculations for minimum penetration testing. Doing so, the ACA argues, would require smaller cable providers to up the prices for the lifeline tier or even make the offering financially infeasible all together.

“Comcast-NBCU has insisted on including a minimum penetration requirement that does not incorporate a lifeline exclusion and on setting the penetration rate at a high enough level such that these members are no longer able to broadly sell a broadcast basic or lifeline tier service at their existing prices,” the group wrote in its filing.

“A [cable provider] in this position must ultimately either raise the price of the broadcast basic tier to dampen demand for this service or essentially cease to offer a true broadcast basic tier that does not include cable programming networks,” the group said. “Either outcome will obviously harm consumers.”

Because the issue stems primarily from regional sports networks, the ACA members could also choose to decline to carry those sports channels, but doing so would risk more losses for the cable providers as fans of local sports teams turn to other alternatives to see games.

Stuck between a rock and a hard place, the ACA members have asked the FCC to investigate Comcast’s actions, which are not in violation of any rules but are, according to the ACA’s filing, “both anti-competitive and anti-consumer and is not in the public interest."

The challenge to Comcast’s questionable negotiation practices comes at a critical time for small cable providers. The merger of AT&T and content provider Time Warner—the company that owns networks including HBO, TBS, TNT and CNN—will likely put providers in a similarly difficult situation as they negotiate new contracts to carry that programming.

Additionally, a merger condition placed on Comcast when it purchased NBC in 2011 that protected small cable companies with an arbitration requirement is set to expire in January 2018. The conditions required Comcast to agree to submit disputes over prices, terms and conditions of programming agreements to arbitration to determine a fair market value for the programming when a private agreement cannot be reached.

Without the condition, the ACA warns that a company like Comcast could charge artificially high prices for its own programming in order to force smaller rivals to raise their prices charged to consumers.