Hargray, Time Warner Cable cite increased programming costs for rate hikes

Beaufort County cable and Internet subscribers are seeing an increase once again in their bills, which service providers say is a direct result of higher bandwidth use and expensive bundling from programmers.

Hilton Head Island-based Hargray recently announced a monthly rate increase of $5 for cable service and $3 for Internet service. In January, Time Warner Cable announced it, too, was increasing its rates this year: up to $3 more for standard TV, a $2 increase for Internet service, $1 higher broadcast TV surcharge, a $2.25 sports programming surcharge fee increase, a $1.50 set-top box fee increase, a $0.50 digital adapter increase and a $2 modem lease fee increase.

The last rate increase for both companies was in early 2015.

“Some of our price changes won’t take effect until the end of a customer’s promotional period; others with January’s bills,” according to an email sent Thursday by Time Warner Cable spokeswoman Nathalie Burgos.

Gerrit Albert, Hargray vice president of sales and marketing, attributed the increased cable rate to programmers’ renewal terms.

“In this industry, programmers are passing along unreasonable increases,” Albert said. “They operate under an all-or-nothing model. As we approach programming, we have increases that are hard to control.”

Albert said Hargray would prefer an a la carte-style model in which customers choose the networks they want to subscribe to, but added programmers exclusively provide networks as one bundled unit at a higher price.

“‘Let our customers purchase what they want,’ that’s a model we support,” Albert said.

Each year, Albert said, Hargray must renew its contract with different programmers. Albert said NBC Universal and AMC Networks in particular had high rate increases this year, which subsequently impacted cost to customers. In December, the National Cable Television Cooperative — which negotiates contracts for cable providers, including Hargray — initially rejected renewal terms by AMC Networks because the rate was too high. NCTC and AMC Networks successfully negotiated a deal in January.

Burgos said in an email that Time Warner’s cable increases were also because of “rapidly rising” programming costs, especially with local broadcast channels and cable sports networks.

Albert said Hargray’s $3 Internet rate increase reflects changing consumer trends.

“This year, we’ve had a 60 percent increase in bandwidth consumption,” he said. “More people are going online to consume content.”

That increase occurred in fiscal year 2015, which began in October 2014 and ended in September 2015. In fiscal year 2014, Albert said the increase in bandwidth consumption was 40 percent. To meet higher demand, Albert said in a letter to customers that Hargray will begin offering 300/30 Mbps speed Internet by the end of the year.

Time Warner Cable said the $2 Internet increase reflects “investments (the company) has made to improve the performance and reliability of Time Warner Cable Internet.” Burgos said the monthly plan price won’t be changed right away for those who have promotional or package pricing.

Burgos also said Time Warner Cable’s new equipment prices reflects the cost of supporting and maintaining digital adapters and investments in set-top boxes.

In addition to the rate increases, Hargray will introduce a new bill format that Albert said attempts to further break down the changes in bills each month. The format was introduced in part as a response from customer feedback, he said.

“If there are any changes to the bill, (the new format) highlights the increases,” Albert said.

He expressed frustration at programmers’ increases, but said the hikes are a necessity.

“We have to stay competitive,” Albert said. “We are local, we are ingrained in this community, but passing along increases is what we need to do as a business.”

This story was originally published February 25, 2016 at 5:05 PM with the headline "Hargray, Time Warner Cable cite increased programming costs for rate hikes."