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Cable Company Prices - How They are Determined

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Ordering cable television services leads many people to ask: who sets cable company prices, and how do they set them? The rates for cable services are actually more reasonable these days than they’ve been in the past, which is a good sign for consumers, but nonetheless many people experience some sticker shock when they’re ordering new cable television. Having an idea why the prices are what they are can sometimes be helpful, even if it doesn’t cause them to be any lower.

How are Cable Company Prices Determined

In general terms, what you’ll find is that the price for basic cable services in your area is regulated. In every city or county, a governmental organization is put in charge of regulating prices for a service such as television, and this organization – known as the local franchising authority, or LFA – lays down the rule in terms of what cable company prices can be for the lowest tier of service.

The basic service usually includes local networks, basic news stations, and public access channels, and if you order this service and nothing else, you’ll likely find that the pricing is the same through all of your local cable companies because of this LFA regulation. Note that this isn’t always the case – in some areas, where there is competition between companies, for example – the companies are allowed to set prices themselves, and the LFA is only responsible for ensuring they’re fair. In general, though, basic services are at a more or less basic price within a local area.

It’s when you get into the premium packages that the cable company takes over on the pricing, and this is where you’ll find the most variation. Particularly in an area where there aren’t many cable companies competing for business, cable company prices can go largely unchecked, since there is no reason for the company to explain their pricing or how much of it is profit.

Of course, the cable company will usually justify their pricing to the consumer, particularly when the pricing goes up: they will explain the reasoning behind it and show how they are offering more advanced services that are worth the extra money. Sometimes the price may rise because the cable company is putting in new hardware, upgrading cable lines, or offering more advanced channels with better quality. Whether you believe their explanations and think the service is worth the price is entirely up to you. Cable company prices, like any other price in the fair market, are set by the company and ultimately can be accepted, or rejected, by the consumer.

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