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  #1  
Old 05-02-2006, 07:28 PM
Jophiel Jophiel is online now
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Why is cable television so expensive?

After going three years without television, my ladyfriend has moved into my home and decided that she can't live my Little House on the Prairie lifestyle. There was never any question that she'd go satellite since she wanted some Latino package but it gave us a chance to do some price shopping.

Standard Cable (81 channels): $49.99/mth
Basic Satellite Service Company (105 channels + 50 Music channels): $44.99/mth
Competing Satellite Service (120 channels + 60 Music channels): $40.99/mth

I seperated the music channels because I don't know anyone who seriously uses their television for listening to satellite radio but I'm sure they're out there. None of the above include premium movie channels

Why does cable remain so expensive? I know $5/mth isn't a bunch but it's less channels as well. Upgrading to a better package makes the price jump significantly as well. Heck, even the 'basic' cable package which gives nothing but about 20 standard network VHF/UHF feeds you can get for free with an antenna runs for about $25/mth.

I've been watching the prices off and on for the past couple of years because I couldn't justify to myself paying fifty bucks a month for television and expecting market forces to drive cable prices down but, if anything, they seem to continue increasing. What's the story?
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  #2  
Old 05-02-2006, 07:46 PM
groman groman is offline
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Well, cable simply does not have real competition at the moment and there's usually only one cable company servicing an area. Satellite just can't compare, at least in my area. With $50/m basic cable I get local broadcast channels and then some, on demand pay-per-view with VCR like controls, a huge collection of free on-demand content, and a lot of included HD content. Besides most dwellings already have a cable line in the wall.

Satellite is a hassle. You need to put a dish up and make sure you have clear view of the satellite. It's affected by weather. A lot of things are complicated and advanced features usually require a phone line for the uplink. The channel selection is usually worse and getting the very same local channels is sometimes a hassle. In fact, satellite would have to be 4 or 5 times cheaper than cable and have all the same features for me to justify putting up with having a dish and being affected by weather. It doesn't nearly have the same features, and I'm not even mentioning Cable internet.
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  #3  
Old 05-02-2006, 07:56 PM
Jophiel Jophiel is online now
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Quote:
Originally Posted by groman
Satellite is a hassle. You need to put a dish up and make sure you have clear view of the satellite. It's affected by weather. A lot of things are complicated and advanced features usually require a phone line for the uplink. The channel selection is usually worse and getting the very same local channels is sometimes a hassle. In fact, satellite would have to be 4 or 5 times cheaper than cable and have all the same features for me to justify putting up with having a dish and being affected by weather. It doesn't nearly have the same features, and I'm not even mentioning Cable internet.
Just from my own experience, I haven't had any of those issues. The dish was installed free and we haven't had signal problems despite living in a neighborhood full of 60' maples. The recent storms in the Chicago area haven't caused a disruption in service yet. The packages I mentioned have more channels than cable and both include all the basic standards: History, A&E, Nickelodeon, Discover, Com. Central, E!, so on and so forth. I haven't played with any advanced features like Pay Per View but, then again, I'm talking about keeping the price down, not how to rachet it up

Again, just my experience but I don't see the complaints being valid. Maybe the issue is that other people do see it as a problem?
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  #4  
Old 05-02-2006, 08:02 PM
groman groman is offline
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Quote:
Originally Posted by Jophiel
Again, just my experience but I don't see the complaints being valid. Maybe the issue is that other people do see it as a problem?
I don't know, all my friends with the dish have it crap out in a gust of wind or heavy rain probably several times a day and it sometimes takes almost a minute to get picture/sound back.
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  #5  
Old 05-02-2006, 08:45 PM
LSLGuy LSLGuy is offline
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At my last house, the cable died every few weeks and would take several days for then to bother repairing it. And tthis was in the city, not out in the boonies. The problem was neighborhood-wide, not just in my house.

Where I live now my satellite has better picture quality, more channels, less cost and only very rarely loses sync for a few seconds during a riving Tstorm. Zero hassle with billing, unlike the cable co that fouled it up every few months too, even thuogh I have/had a vanilla package and paid on time.

Cable: never again if I can help it.


Bottom line: there are anecdotes all over the map. Both products work, and both kinds of companies love to cut corners to maximize profits.

Rule of thumb: When in doubt on any purchase, always chose the vendor with a close competitor.
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  #6  
Old 05-02-2006, 09:02 PM
spingears spingears is offline
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Quote:
Originally Posted by Jophiel
I've been watching the prices off and on for the past couple of years because I couldn't justify to myself paying fifty bucks a month for television and expecting market forces to drive cable prices down but, if anything, they seem to continue increasing. What's the story?
Well you could fly your own bird, install the programs, uploadig dishes, contract for programming, etc. etc.

Or set up the cable center, string cable, on other's poles for a fee, etc. etc.

Or if you don't want to pay the going rates, do without.

Lots of options, like 'em or not.
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  #7  
Old 05-02-2006, 09:13 PM
Jophiel Jophiel is online now
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Quote:
Originally Posted by spingears
Or if you don't want to pay the going rates, do without.
Sage advice, except that it:
(A) Ignores the fact that I now have satellite service. While I couldn't justify the price, the ladyfriend loves her some TV.
-and-
(B) Does nothing to answer my question about why cable pricing has seemed to increase over time and with growing competition from satellite.
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  #8  
Old 05-02-2006, 11:56 PM
Bag of Mostly Water Bag of Mostly Water is online now
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Quote:
Originally Posted by Jophiel
(B) Does nothing to answer my question about why cable pricing has seemed to increase over time and with growing competition from satellite.
I've been working in the CATV industry for over 13 years and have been pondering this very question for some time. The basic answer is "because they can." People subscribe at these rates, so they have no reason to lower them.

If you want to investigate a good mystery, pick up the latest annual report from any major MSO (Comcast, TWC, etc.). Generally, about 50% of their revenue goes to pay off debt. Most of the rest goes to the program providers -- most of which are owned by the same parent companies as the MSO. On paper, they make little or no money. These reports make for very strange reading.

As a consumer myself, I have developed the following guidelines. If you want...
... only local (analog) channels --> Cable is best (generally about $15/month)
... local (analog) channels + high speed internet --> Cable is probably best
... broadcast TV including premium channels --> Satellite is probably best
... broadcast TV including premium channels + high speed internet --> Satellite plus DSL is probably best, but cable may be competitive
... digital TV including video on demand --> Cable is really the only option, if you want high speed internet, you might as well get this from the cable company too

YMMV.
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  #9  
Old 05-03-2006, 07:15 AM
N9IWP N9IWP is offline
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And don't forget the compromise between no TV and cable / sattelite -- rabit ears / rooftop antenna: $0.00 / month.

I'me guessing cable is getting SOME competitive pressure from sattelite (witness ads exagerating the WX issue). But Cable is usually already strung to customers homes, so makes it easier to get. Whereas sattelite has more of an installation problem. That is one factor.


Brian
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  #10  
Old 05-03-2006, 07:46 AM
Balthisar Balthisar is offline
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I'd do pure cable if there were any Latino packages of if stupid C*mc*st just didn't block the SAP channel that's provided by the networks. Sheesh! What's the use of that? In any case, because I have cable internet, it also means I have the important cable channels anyway. But I still need the satellite for the Spanish.

I have zero interest in digital cable or the mandatory set-top boxes they require -- it's a step backward from cable-ready as far as I'm concerned, and no, cable card won't work on my MythTV system or my TiVo. So… that leaves me with satellite for all but the basic channels.

I've been a steady satellite customer since 1998 -- since even before I needed the Spanish, and back when there was no such thing as cable internet (I was excited about my dual-channel ISDN, though!). I live in snowy, windy Michigan, and while I can't say my satellite experience hasn't been flawless, I can count the number of problems since then in all my fingers and toes. My number of cable problems exceeds that number.

Oh, so why would I ditch the satellite? Well, it's $36 extra per month that I wouldn’t need to spend, since I "have" to have cable for the internet anyway. (if I don't take the cable package, then internet alone is $10 extra per month; plus my MythBox has five tuners so that's at least geeky-cool.)
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  #11  
Old 05-03-2006, 12:58 PM
Spectre of Pithecanthropus Spectre of Pithecanthropus is offline
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In many areas, no cable=no TV, since reception is too poor to be useful. This is actually how cable got started; the main point wasn't to get more channels, but to get any channels at all clearly.

In recent years, our cable bill has definitely gotten more expensive by more than half; but we have added on a number of premium services. The upside of that is that we practically never rent movies anymore since everything comes to cable sooner or later. Before, if we routinely rented about three movies a week for a total cost of $12 or so, that obviously worked out to around $50/month. So we don't mind paying more for cable, because we're getting more.
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  #12  
Old 05-03-2006, 01:45 PM
xizor xizor is offline
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Quote:
Originally Posted by Ex_Chemist
The basic answer is "because they can."
This is the key right here. This link says cable has 59.3% penetration of all TVs in the US. So following the law of supply and demand, they will probably keep charging more and more until this number decreases significantly.
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  #13  
Old 05-03-2006, 02:20 PM
brianjedi brianjedi is offline
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Quote:
Originally Posted by xizor
This is the key right here. This link says cable has 59.3% penetration of all TVs in the US. So following the law of supply and demand, they will probably keep charging more and more until this number decreases significantly.
Except I would argue that cable's pretty much reached every house it's going to in terms of availability at this point. A lot of that remaining 40.7% is either households that can't afford/won't pay cable's prices or live in rural areas where cable simply isn't available. Barring major investment in expanding service or reducing prices, there's not a lot of growth room left.
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  #14  
Old 05-03-2006, 02:26 PM
Merhouse Merhouse is offline
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Though I'm not quite sure what to make of it, all of the ads of the bottom of the page as I was reading this thread were for satellite dishes
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  #15  
Old 05-03-2006, 03:46 PM
UncleBeer UncleBeer is offline
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Quote:
Originally Posted by Jophiel
Why does cable remain so expensive?
Because the plant costs quite a bit to maintain. And right now (meaning a five to six year window centered on today) the large MSOs are spending buckets of money for the equipment necessary to enhance existing services and offer new services. The switch to digital feeds, the uprgades necessary to carry the additional bandwidth demanded by HD signals, VOIP, VOD, IPTV - the capital cost of all this equipment is quite high; and the guys who install, operate and maintain it ain't cheap either.

Other large cost factors are: right-of-way occupation permits; easement acquisition; pole attachments. Pole attachment costs alone are staggering - at a buck or so per pole per year to attach cables to a power company pole, the numbers start adding up fast.

Given the costs of a physical network which simply don't apply to a satellite provider, rather than questioning the price of CATV, the question to ask might be, why are the satellite guys so expensive.

Despite what Ex_Chemist and his thirteen years of industry experience says (I've worked for a consulting engineering firm that works with cable companies for about 8 years now), the biggest content providers (Disney/ESPN, Discovery Networks, Scripps Networks, FOX, Lifetime, etc.) are not affiliated with the cable companies. These content providers get a decent chunk of change from the cable operators every month for every subscriber. I've got a list of price offerings for just about every channel offered today. Fer instance, for the group of small telcos I'm working with right now putting together channel line-ups, I've been quoted $4.51 per month per subscriber for the ESPN package. And even for utter crap like the Home & Garden Television, Scripps wants $0.325 per month per subscriber. Even the off-air channels are getting about thirty to thirty-five cents per month per subsciber. So, purchasing content is quite expensive - despite what Ex_Chemist says.

Quote:
Originally Posted by Spectre . . .[/quote
In many areas, no cable=no TV, since reception is too poor to be useful. This is actually how cable got started; the main point wasn't to get more channels, but to get any channels at all clearly.
Right. Which is why CATV originally meant "Community Antenna TeleVision."
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  #16  
Old 05-03-2006, 04:52 PM
Tastes of Chocolate Tastes of Chocolate is offline
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My parents are out in the boonies. WAY out in the boonies. For them, satellite is the only option.

With the satellite system they are on, all of the TVs in the house have to be watching the same channel. Cable let's me watch a different channel on any TV I care to connect to the cable. If that is true of most satellite setups, it would add to the value people place on cable over satellite.
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  #17  
Old 05-03-2006, 05:44 PM
Jophiel Jophiel is online now
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Quote:
Originally Posted by UncleBeer
Given the costs of a physical network which simply don't apply to a satellite provider, rather than questioning the price of CATV, the question to ask might be, why are the satellite guys so expensive.
I had thought about that and my off the cuff guess was that satellite just needs to be slightly cheaper than cable. As long as cable maintains high rates of arounf fifty dollars, there's no reason for satellite to price themselves more than six or eight bucks cheaper.

Just to answer Tastes of Chocolate, we can watch different stations on different televisions but each one has its own satellite receiver. I remember growing up in the days before every television came cable ready and my friend's family had cable. But the basement television had to watch whatever was being watched in the upstairs fmaily room because they only owned one cable box.

Anyway, interesting stuff Unclebeer.
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  #18  
Old 05-03-2006, 11:23 PM
bouv bouv is offline
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Quote:
Originally Posted by Tastes of Chocolate
My parents are out in the boonies. WAY out in the boonies. For them, satellite is the only option.

With the satellite system they are on, all of the TVs in the house have to be watching the same channel. Cable let's me watch a different channel on any TV I care to connect to the cable. If that is true of most satellite setups, it would add to the value people place on cable over satellite.
I think this is only the case if you have only one satellite receiver. Nowadays, it seems more satellite companies give you three or four boxes with the dish so you can watch different things on different TVs.
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  #19  
Old 05-03-2006, 11:40 PM
Buck Rogers Buck Rogers is offline
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Basic economics of supply and demand.

Competition wise there is satilite, cable, antenna free waves, Signal wise analog and digital.

I would imagine the next decrease in price will take place when all signals are digital and enough competition is in place.

Look what's happened to internet. In 1985 I paid about $20 a month for Compuserve. Aol internet dial up was close to $20 a month not to long ago and they lost a lot of business to cable and DSL. AT&T who just purchased SBC Yahoo is advertising broad band DSL for about $14 a month.

The same things with calculators. I remember in the 1970's a hand held calculator with LED read out was close to $100. Solar calculators with the same functions are fifty cents and/or given away for free.

TV's have really come down in proce since they are made in China.

Be patient, it will all come down in price.

Competition is our friend...
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  #20  
Old 05-04-2006, 07:08 AM
Balthisar Balthisar is offline
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Quote:
Originally Posted by Tastes of Chocolate
With the satellite system they are on, all of the TVs in the house have to be watching the same channel. Cable let's me watch a different channel on any TV I care to connect to the cable. If that is true of most satellite setups, it would add to the value people place on cable over satellite.
If you want digital cable, you're stuck in the same boat. And cable is pushing hard to move everyone to their digital system. If I go to Comcast's Flash-laden site, I've got to dig a lot to find out that they even offer analogue cable, and by time I get there, they're made me feel like a low-class scumbag for not wanting digital service.
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  #21  
Old 05-04-2006, 08:57 AM
UncleBeer UncleBeer is offline
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Quote:
And cable is pushing hard to move everyone to their digital system.
This is a common misconception, or at least more nuanced than it appears on the surface. There's a lot more to this than meets the eye.

One reason cable operators are pushing digital, is because many of the content providers (both satellite and off-air) are making plans to shut down their analog feeds. A fair number of them have already done so. In fact, the FCC is requiring all off-air content providers to offer digital signal by, uhh - I'm not sure exactly what the date is, but it's just a couple short years down the road. At some point after that, there will be no more analog off-air signals (and the satellite content providers will be shortly behind that I suspect). The FCC has plans to reclaim and use that portion of the public spectrum for other purposes (although I don't remember right now exactly what uses those are - probably cell phones, and/or WiFi metro-nets).

Interestingly however, a digital signal consumes less bandwidth than an analog signal, so the cable company can carry more channels in the same amount of spectrum without upgrading physical plant. So this is another reason, and one which provides a direct benefit to the cable company, for "pushing" digital. There's really a three-way convergence of interests here. Even without accounting for the signal quality improvements the consumer, who using only his private little rabbit-ear antenna, will see.
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  #22  
Old 05-04-2006, 11:33 AM
xizor xizor is offline
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Quote:
Originally Posted by UncleBeer
In fact, the FCC is requiring all off-air content providers to offer digital signal by, uhh - I'm not sure exactly what the date is, but it's just a couple short years down the road.
Feb. 18, 2009 is the day that all analog TV signals must be shut off so the government can auction off the spectrum.
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  #23  
Old 05-04-2006, 11:39 AM
UncleBeer UncleBeer is offline
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Thanks, xizor. I had typed 2009 in there, and then realized I wasn't entirely sure that was correct, so I removed it. So there ya go; three years and there won't be any more off-air analog stations.
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  #24  
Old 05-04-2006, 12:28 PM
BwanaBob BwanaBob is offline
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Quote:
Originally Posted by UncleBeer
This is a common misconception, or at least more nuanced than it appears on the surface. There's a lot more to this than meets the eye.

One reason cable operators are pushing digital, is because many of the content providers (both satellite and off-air) are making plans to shut down their analog feeds. A fair number of them have already done so. In fact, the FCC is requiring all off-air content providers to offer digital signal by, uhh - I'm not sure exactly what the date is, but it's just a couple short years down the road. At some point after that, there will be no more analog off-air signals (and the satellite content providers will be shortly behind that I suspect). The FCC has plans to reclaim and use that portion of the public spectrum for other purposes (although I don't remember right now exactly what uses those are - probably cell phones, and/or WiFi metro-nets).

Interestingly however, a digital signal consumes less bandwidth than an analog signal, so the cable company can carry more channels in the same amount of spectrum without upgrading physical plant. So this is another reason, and one which provides a direct benefit to the cable company, for "pushing" digital. There's really a three-way convergence of interests here. Even without accounting for the signal quality improvements the consumer, who using only his private little rabbit-ear antenna, will see.
This wouldn't be so bad, save for the fact that the digital service costs more (at least it does in Cablevision land). And they have the balls to charge you more rent for the box. The bean-counters/suits that run these cable companies need to listen to consumers.

Say I get X analog channels at $60 a month.
I'm hearing that they can squeeze in more channels with digital, lowering the cost per channel.

But instead of offering X digital channels at $55 a month, they'll offer 2X channels at $100 a month. On paper it looks like a deal to the consumer, but the fact is they're pushing another X channels on me that I don't want and don't want to pay for.

A "deal" is when I get the same for less money.

Charging me a reduced rate for something I don't want is not a bargain.
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  #25  
Old 05-04-2006, 12:55 PM
UncleBeer UncleBeer is offline
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Quote:
Say I get X analog channels at $60 a month.
I'm hearing that they can squeeze in more channels with digital, lowering the cost per channel.

But instead of offering X digital channels at $55 a month, they'll offer 2X channels at $100 a month. On paper it looks like a deal to the consumer, but the fact is they're pushing another X channels on me that I don't want and don't want to pay for.
You are misanalyzing the situation. Specifically, you're neglecting the cost to the cable operator of obtaining retransmission rights. You're saying that because digital doesn't require as much spectrum as analog, they should be able to offer either more channels for an identical price, or an identical number of channels for a lower price. Both of these neglect several aspects of the pricing model.

Yeah, cramming more digital signals into the same spectrum has the effect of lowering the cost per channel to transport signal to your house. Kinda, where this comes apart though is, if I'm squeezing more channels in the same space, the cost of obtaining rights to that extra content, and the costs at the headend for injecting those extra signals into the network, are increased proportionally. And about 50% of your bill is the cable company's cost of obtaining content. Those costs don't change just because a digital signal requires less spectrum. And in actual fact, the content providers, in many cases, are charging more for the rights to carry digital programming that they are for analog. Presumably, this higher charge is to offset their own capital expenses for the digitial equipment. And the reason the cable guys get more per month for a digital-capable set-top box, is the higher unit cost; the cable guys are paying more for them, too.

Quote:
A "deal" is when I get the same for less money.

Charging me a reduced rate for something I don't want is not a bargain.
Can't see anyone here making that argument. In any case, this here's is GQ. Your comments are subjective, and thus, not within the realm of objective fact.
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  #26  
Old 05-04-2006, 04:17 PM
Moe Szyslak Moe Szyslak is offline
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What UncleBeer said, plus, although you can squeeze more channels over the same cable with digital, the electronics that are needed to do that represent a significant upgrade cost to the cable operator.
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  #27  
Old 05-04-2006, 04:57 PM
ralph124c ralph124c is offline
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I guess cable TV is a monopoly-and the service seems to get worse while the prices rise. My big complaint:
-the junk on cable: who needs 5 shopping channels?
-the huge number of commercials on cable channels-there are more ads than on broadcast TV
-lousy movies..old stuff is rebroadcast over and over
I remember the original promise of cable ..NO commercials and real choices. The History channel is mostly filler stuff, and SCI-FI gives you such gems as "TAPS"
With cable, you basically get a LOT of unwatchable garbage-its like having two of every item you DON'T want!
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