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Cable Technology Feature Article

January 15, 2013

Rogers Hikes Voice, Broadband and Video Prices

By Gary Kim, Contributing Editor

Consumers obviously are not fond of price increases. Customers of Rogers in Canada will not be happy to learn that prices are climbing for 2013. That is not surprising, at least for video entertainment services, since video prices climb annually.

More noticeable is that Rogers also is hiking prices for voice and high-speed access services, by amounts that exceed the rate of inflation, which fell from about 2.3 percent to 0.8 percent in November 2012.

In fairness, the nominal increases, in actual Canadian dollars, are not so large. For a triple-play customer, paying for voice, video and data, typical costs might climb $8 a month, or about 6.7 percent more than the 2012 charges.

It might be a judgment call whether that is out of line, or not. Still, the percentage increases are getting attention.

Phone (News - Alert) Essentials up 7.0 percent
Phone Favorites up 5.2 percent
Phone Deluxe up 4.6 percent

Cable Basic up 2.9 percent
Cable Digital Plus up 5.7 percent
Cable VIP up 2.9 percentInternet Lite up 7.8 percent

Internet Express up 6.1 percent
Internet Extreme up 4.8 percent
Internet Extreme Plus up 4.2 percent

It is hard to justify the price increases strictly on the basis of inflation-based cost pressures. There could be other reasons, though. Rogers is investing in faster networks, as are other cable operators and telcos.

Some will say the price hikes are in excess of what Rogers is investing. Others might argue, though it is harder to justify, that prices historically have been too low, and that Rogers is just “playing catch up.”

The perhaps-notable change is that broadband and voice prices are increasing at a substantial rate. For an industry that has worried about voice and access prices on an apparently unstoppable decline, those increases are helpful.

Whether the typical consumer response to higher prices--buy less--emerges, and how strongly, remains to be seen. If history is any guide, the demand curve will not shift too much, at first. But no industry can avoid supply and demand dynamics indefinitely.

Sooner or later, people will buy less of a product whose price is climbing significantly, and substitute other products whose cost is less.


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Edited by Brooke Neuman

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