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Television Businesses The Almighty Buck

Cable TV Prices Rising At Four Times the Inflation Rate 286

Posted by Soulskill
from the what-the-market-will-bear dept.
An anonymous reader writes "A new FCC report (PDF) has found that U.S. cable TV prices are rising at four times the rate of inflation over the past two decades. 'Basic cable service prices increased by 6.5 percent [to $22.63] for the 12 months ending January 1, 2013. Expanded basic cable prices increased by 5.1 percent [to $64.41] for those 12 months, and at a compound average annual rate of 6.1 percent over the 18-year period from 1995-2013. ... These price increases compare to a 1.6 percent increase in general inflation as measured by the CPI (All Items) for the same one-year period.' Equipment prices rose faster than inflation, too. The report also found that the price increases weren't helped by competition — in fact, the prices rose faster where there were competing providers than in areas where the main provider had no effective competition."
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Cable TV Prices Rising At Four Times the Inflation Rate

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  • The report also found that the price increases weren't helped by competition — in fact, the prices rose faster where there were competing providers than in areas where the main provider had no effective competition."

    True, but it notes right in the article that 'expanded cable' is basic + the most subscribed to package, and in areas with competition that the extra $3 buys you more service on average in competitive areas. IE if people get a better deal they're willing to buy more.

    Unclear in the article would be the effects of FIOS service, which is even more tightly bundled with internet services than traditional cable.

    • by Technician (215283) on Friday May 16, 2014 @07:33PM (#47022581)

      The truth is there are a lot of cable cutters. The basic subscription is only to get a break on Internet. DSL and basic phone service is the same thing. My home phone has no long distance plan at all. It is redundant and expensive compaired to my Cell or VOIP which include all of US and Canada as a local call.

      WIth Netflix, Hulu, etc, unless you want the sports package, why would you even have cable at all, other than to get a break on the Internet package.

      Intenet without basic TV is often higher in price or not offered at all, so the basic TV added is close to zero additional cost.

      I've cut Cable TV long ago. I'm not an armchair quarterback.

      When working nights, and infomercials plug up the daytime TV, there is little to watch, except on Netflix. TV seasons, science, etc shows can be watched at your convience commercial free. Cable companies hate that. To keep profits up, with cord cutting, they soak the sports junkies that need real time program delivery.

      • by cdrudge (68377)

        WIth Netflix, Hulu, etc, unless you want the sports package, why would you even have cable at all, other than to get a break on the Internet package.

        Just a guess, but to see current non-broadcast television shows (e.g. Game of Thrones, Mad Men, Walking Dead, etc), sporting events on channels that aren't dedicated to sports (e.g. NBA on TNT), television and financial news talking heads (e.g. MSNBS, CNN, Fox News, etc), plus any shows that you don't want to wait months, years, or never to see on Netflix, Hulu

        • by MightyYar (622222)

          plus any shows that you don't want to wait months, years, or never to see on Netflix, Hulu, et al.

          One interesting side effect of my cheapness is that I've fallen so far behind on TV shows that they are all new to me when they hit Netflix. Because I don't see the commercials, I don't even know about current shows, let alone miss them. I hear about shows a little from co-workers and friends, but honestly TV just doesn't unite the culture like it once did - there are far too many choices for everyone to be watching the same show.

          • by DaHat (247651)

            TV just doesn't unite the culture like it once did

            That might depend upon the culture of the water cooler you hang out at... the fact that Game of Thrones is said to still be the most pirated tv show in history suggests otherwise.

            • by peragrin (659227)

              Game of thrones is the most pirated because HBO won't let it go. in order to watch game of thrones without paying $100 a month for cable(and yes that is what your bill is including the HBO pricing) you either have to wait 1 year and then pay full price for it from amazon, iTunes,etc. or you can pirate it and watch it a couple of hours after it airs.

              HBO is killing themselves by not having even a paid for streaming system.

        • by Darinbob (1142669)

          You just have to decide if those shows are worth that much money. Do you need to spend $75-$100 a month just to get the latest Walking Dead, or can you wait part of a year until the episodes show up on streaming? Are the shows really that important?

          I have found it a bit annoying that not all the movies I want are on netflix. But then I realize that with my satellite I never got a choice of shows anyway. I'd find a movie showing a couple times during one week only and then record it, but that was the cab

      • by ah.clem (147626)

        Agreed. Dropped TWC almost 4 years ago, only have Internet (which might come with some television channels but never cared to look). Still too damn much money, but no other serious option. Netflix and Amazon with a Roku for films are good options (as long as it's a Roku 3 - Amazon and Roku seem to have broken the delivery on the Roku 1 and 2 but of course, that is just my experience and opinion - Netflix is great with a Chromecast, I sure hope Amazon and Acorn get added to Chromecast so I can toss these

      • by UPZ (947916) on Friday May 16, 2014 @09:32PM (#47023037)
        I finally cut the cord last month. I missed TV for the first week, but since then it has turned into a very liberating experience. Now when I come home from work, I have time left to do other things, including chatting with friends and family, working out, volunteering, and becoming more politically active :-) You could not pay me to go back to cable.
      • by Firethorn (177587)

        The truth is there are a lot of cable cutters. The basic subscription is only to get a break on Internet. DSL and basic phone service is the same thing. My home phone has no long distance plan at all. It is redundant and expensive compaired to my Cell or VOIP which include all of US and Canada as a local call.

        I've effectively cut my cable several decades ago. Of course, I grew up in a non-cable house. Whenever I end up in a hotel/motel room I generally flip through the channels but end up on one of the 'how X is made' or dirty job type shows. Which I don't value at ~$50/month.

    • by msauve (701917)
      Not just that, but 40 years ago, basic cable wasn't much more than a community antenna offering better reception of OTA channels. No CNN or MTV or HBO (well, they're technically 42 years old, but had maybe 10,000 subscribers then).
    • by peragrin (659227)

      but they only watch 17 channels. while it isn't always the same 17 channels, I would be shilling to bet on the 200 channels tha the average person gets that if they could have a bundle that only gave them 40 channels that included the ones they want for the same price they would be just as happy with cable as they are now.

      right now cable tv providers are the most hated group. you don't get much choice you don't feel like your paying for something that you use(using just 10% of a service does that).

  • by OutOnARock (935713) on Friday May 16, 2014 @07:14PM (#47022453)
    The quantity of programming has increased with the prices

    ......yet the quality of programming decreases......

    so (quality/quantity) * price is constant?
    • by Ignacio (1465)
      Nope. A bit of research will show that it is in fact logarithmic. There are obvious diminishing returns once you realize that there are five or six channels showing the same episode of the same show at the same time.
    • by mc6809e (214243) on Friday May 16, 2014 @07:33PM (#47022573)

      The quantity of programming has increased with the prices

      ......yet the quality of programming decreases......

      so (quality/quantity) * price is constant?

      I have a friend at BrightHouse Networks.

      According to him (and I suppose he could be lying), it's the price that the content holders are asking that's driving up prices, especially ESPN.

      He tell's me that ESPN gets about $30/customer in an all or nothing deal.

      • by mc6809e (214243)

        He tell's me that ESPN gets about $30/customer in an all or nothing deal.

        Sorry. That's wrong.

        The $30 figure is the amount each actual viewer of ESPN would have to pay if they were forced to pay for it themselves, but ESPN doesn't allow that.

      • by alen (225700)

        it's $35 per customer and it is the content guys driving up the prices

        netflix pays out 75% of revenues for content

        • by Miamicanes (730264) on Friday May 16, 2014 @10:09PM (#47023141)

          I really wish cable/satellite would adopt "Chinese Menu" pricing for their mid-tier, and allow people who don't care about Disney*.* or ESPN*.* to pay the same price, but substitute HBO and/or Showtime instead (ie, pick two out of four... Disney, ESPN, HBO, Showtime... 3 for $10 more, all 4 for $18 more). I believe it would mostly be revenue-neutral for the cable/satellite companies, and would go a long way towards softening the sting of my monthly cable bill by letting me substitute two channels I don't currently pay for, but would LOVE to get instead of two expensive blocks of channels I never watch.

          • by Zebai (979227)

            Comcast trialed this is the Charleston, NC area, or did for many years. You buy a core package for basic service and then you can addon additional packs by category, sports, news, family, movies etc.. Last I heard of it it wasn't popular enough to keep maintaining and is being phased out. Most people were in the category that they didn't pay enough attention or make the effort to save money or chose to save money by discount hopping.

    • by jopsen (885607)

      so (quality/quantity) * price is constant?

      I think you underestimate the influence of profit. Pure simple greed. That is mostly likely what is driving prices...
      Perhaps also, the fall of the US dollar, it's not worth the same...

  • by MacTO (1161105) on Friday May 16, 2014 @07:16PM (#47022469)

    Has there been a corresponding increase in service? By that I mean the number of channels delivered for the given tier, since cable companies usually pay the broadcaster a certain rate per channel.

    (I don't subscribe to cable, so I don't know how things have changed over the decade since I've left home.)

    • Re:Question ... (Score:5, Insightful)

      by Anonymous Coward on Friday May 16, 2014 @07:26PM (#47022521)

      Yes, we can now watch the same advertising on 300 different channels.

    • The rate is meaningless because since 1995, cable companies had to upgrade their system from analog-only to digital, and then also be able to support HD, develop and implement cable-card, develop and implement voip, develop and implement on-demand services, mobile apps, etc.

      All of those things don't have an industry set price, so they pass the price onto you, the customer.
    • There's actually a row in the results table that more or less answers that question: "Expanded basic price per channel."

      That value only went up 2.1%, which is still higher than inflation but not by nearly as much. In other words, more than half of the cost increase from expanded basic came from content additions.

  • Easy solution (Score:2, Interesting)

    by the_humeister (922869)

    Don't pay for cable. There really isn't much on cable tv worth watching that can't be obtained through other legal sources.

    • Live sports is tough to find on other sources. Otherwise I would cut the cord in a heartbeat.

      • It depends on the sport. I'm a nerdy sports fan (we exist!), I split the cost of the Intarweb add-on for NFL Sunday ticket with a friend of mine who has the complete package. My ISP gets me ESPN3 which has a lot of collegiate sports, TNT is doing free streaming of the NBA playoffs, and if you're a basketball fanatic the NBA has pricey online packages that would still come out to far less than you'd pay for a cable subscription. For everything else I have an amplified antenna in my attic hooked up to a HDH
      • If you want to watch it live, you go friend's house or restaurant/bar to watch it.

        Otherwise you watch ESPN after-game highlights which shows all the pivotal moments of the game in 5 easy minutes.
        • by tepples (727027)

          If you want to watch it live, you go friend's house or restaurant/bar to watch it.

          Unless friend is also a cord cutter and you can't go in a bar because you're under 21 or your kid wants to watch with you.

          Otherwise you watch ESPN after-game highlights

          ESPN is cable.

          • by DaHat (247651)

            Unless friend is also a cord cutter and you can't go in a bar because you're under 21 or your kid wants to watch with you.

            Which is why I take my 2 year old to the family section of a local bar to watch college football on certain Saturdays in the fall because I'm not willing to pay for BTN to catch the games which aren't on ABC or ESPN.

      • For those of us who don't watch sports, sports programming is a large part of the cost of cable, and I can't get just the channels want a la carte... everything is in tiers that cram sports into the mix.
      • by Mashiki (184564)

        Live sports is tough to find on other sources. Otherwise I would cut the cord in a heartbeat.

        AM radio? Seems that it covers just about everything you might want, and then there's always shortwave if you can't find it.

      • by MightyYar (622222)

        Get yourself some young kids and a wife with irregular hours at work... you'll completely lose track of sports :)

        • by DaHat (247651)

          Or you can make sure your wife likes the same college sports as you... then have epic battles over the professional level...

  • AT&T land line (Score:5, Interesting)

    by dfsmith (960400) on Friday May 16, 2014 @07:25PM (#47022517) Homepage Journal
    I want to know how come my telephone line has gone from $7/month in 1997 to $32/month today, with no change in service.
    • Maybe because less people have landlines these days, so ever subscriber pays a greater share of the infrastructure costs.

      • Re: AT&T land line (Score:4, Informative)

        by rsmith-mac (639075) on Friday May 16, 2014 @08:13PM (#47022753)

        It's that and a general decline in long distance usage/profits. Before deregulation [wikipedia.org] the bulk of the profits for telephone operation came from long distance, to the point that local infrastructure and usage was essentially subsidized by long distance. Post-deregulation competition quickly drove down profits, and more recently VoIP and other non-POTS communication methods have further erroded profits.

        The end result is that the bulk of the cost of POTS has been shifted on to local; you now pay for the cost of your infrastructure rather than the long distance "whales." Which arguably is how it always should have been, however POTS (and callers) benefited from the network effect so much that POTS likely wouldn't have been as successful if every subscriber was paying their own infrastructure costs from the start.

    • by rolfwind (528248)

      Gotta love all the surcharges. Especially the ones that the company says the government tells them they can charge (but doesn't have to).

      Only data-based landline I have is internet. Don't care how many worthless bundles they throw at me.

    • I want to know how come my telephone line has gone from $7/month in 1997 to $32/month today, with no change in service .

      I think that's your problem right now. If you're sitting there getting increasingly screwed by AT&T over the cost of their telephone service since around 1997, then why the hell are you still with them? What are you waiting for, the two-decade mark?

      Then again, the same could be said of cable TV subscribers. They've been getting reamed for decades, they know they're getting fucked, but they keep bending over more and more every time the company raises their already ridiculous rates. I never even hear

      • You probably live in a big city with actual choices. In my small town, I have ONE CHOICE for cable TV, and ONE CHOICE for internet, unless you count satellite or wireless options. In order to tell them to get screwed, I have two choices: One choice is to do without. The other choice is to pay more for even crappier service. I don't use cable TV, but I do spend way too much for a 10 meg internet connection simply because I have no choices.
        • by mc6809e (214243)

          You probably live in a big city with actual choices. In my small town, I have ONE CHOICE for cable TV, and ONE CHOICE for internet, unless you count satellite or wireless options.

          And why shouldn't we count satellite and wireless?

          I use Fios for internet, TheDish for TV, and I have a cell phone tether plan when I want to use my laptop on the road.

          I agree that satellite internet access is probably a mistake unless you have no choice, but a 4G access point or tethered cell phone is really impressive for somethi

          • by MightyYar (622222)

            You can't use something like Netflix over 4G. At least, not more than a few shows. Even crappy Comcast service gets you 250-350GB.

            • by skipkent (1510)

              I use T-Mobile 4G, and we use it as our ISP at home, we added a line and just use a phone as a wifi hotspot. I get roughly 25mbps of unlimited unthrottled usage. All https and streaming services work even after the "hotspot" quota is reached. Also for general http browsing once the tether max has been reached, use linux FF or have FF identify itself as the linux version, and tmo will think that youre browsing from your phone! Just about the only thing its bad for is gaming with the higher latency.

          • > And why shouldn't we count satellite and wireless?

            Satellite is broadband for the damned & desperate.

        • "One choice is to do without."

          And *that* is exactly the choice I made. I refuse to pay a monthly bill for a garbage service that acts as a medium for ad delivery more than anything. And an overpriced service at that. Not to mention the shitty programming, I'd rather watch paint dry (and as a bonus, that would be a much cheaper form of entertainment).

    • How much is long distance compared to 1997? Used to be long-distance users were subsidizing everyone else's phone bill.
    • by dougmc (70836)

      with no change in service.

      $7 in 1997 seems too cheap.

      Did you get metered service back then? I remember that being an option where you only got X calls for the month and that reduced the price by like 75%.

      Of course, even then you had to not pay extra for caller ID or touch tone (really? touch tone was extra?!?!?!) to get it that cheap. I suspect that there is some change in service between these two figures.

  • In the future... (Score:5, Insightful)

    by Anonymous Coward on Friday May 16, 2014 @07:27PM (#47022531)

    There will be 5,000 channels and absolutely nothing to watch.

    Outside of the baby boomers generation most individuals in my age bracket (28 here) gave up on cable/satellite television due to hyper-aggressive advertising policies, price gouging, and providing little to no value over services that frankly the internet does a better job of. It is simply undesirable to watch/use in favor of essentially anything else.

    • by kheldan (1460303)
      I gave up on cable a few years ago and went back to OTA and never looked back, don't miss it a bit. What I can't get from the local OTA stations I can get from the internet.
  • ... till then my cord remains cut.

  • by erroneus (253617) on Friday May 16, 2014 @07:57PM (#47022691) Homepage

    Said it before, I'll say it again. The worst thing the cable company ever did was refuse to give me free TV with my internet. Been well over five years now and I am more productive and lively. Sure, there are some shows I like. I can watch them online when I want to see them. I don't need TV for anything. Let them raise rates until they fail. We don't need them.

    • by schnell (163007)

      The worst thing the cable company ever did was refuse to give me free TV with my internet.

      WHY the hell would they do that? They pay lots of money for those TV channels. You would not be paying them any money for them. Why, from their perspective, is that bad?

      Maybe did you mean that was the best thing they ever did, since your life is more "productive and lively" with no TV for the last five years?

    • by antdude (79039)

      What about sports like NBA? :P I agree. OTA+Internet FTW.

    • by evilviper (135110)

      I don't need TV for anything.

      "Need" is a strong word. But in general, people who think TV is useless, are themselves guilty of using it poorly.

      Do you know how many hours of science, documentaries, and news is available on broadcast TV channels in a give week? It's more hours than most people can watch... And do you know how much longer it would take to acquire the same information through textual or audio-only description? Certainly quite a bit more, even if it was available, which it isn't.

      Sure, ther

    • by houghi (78078)

      To me the last drop was when they started removing chanels from analog towards digital. A chanel here and there did not bother me. When they took away the BBC from me I started to realize that there were very few chanels left.

      I then thought "Why did I not know so many chanels have already been moved?" and started to analyze what I realy watched and what was background noise.

      I watched tv for about 2 hours per week on weeks when all my favorite shows were on AND I would not go out with any friends. So i reali

  • Anytime you talk about inflation, you have to be cognoscente of the fact that every government on the planet lies about it.
    Their deficit spending, fiat currency, crony capitalism for the elite depends on it.

    Look at Venezuela for example [zerohedge.com]

    Or the US of A. [shadowstats.com]

    I'd be willing to bet that if you price cable services in terms of real assets like oil, gold, silver, food, energy or even a subway ticket in NYC it would be a different picture, averaged out over the long term.

    If you're taking the government's figures

    • by buddyglass (925859) on Saturday May 17, 2014 @09:34AM (#47025183)
      Given the price fluctuations in commodities like precious metals and oil, you would see the cost of cable (indexed to one of these commodities) show similar wild fluctuations. Its cost would seem to increase rapidly in some years and decrease rapidly in others.

      As an exercise, I looked up BLS price data on various basic food items and calculated the annual inflation rate from December 1995 to December 2013. This is the period in which the linked article claims the official rate was 2.4%. Here's what I got:

      Bread, 2.837
      Beef, 3.744
      Chicken, 2.712
      Eggs, 3.147
      Milk, 1.848
      Apples, 2.682
      Bananas, 1.485
      Tomatoes , 0.760
      Orange Juice, 2.448
      Coffee, 1.549

      So if the official rate is a gross underestimate, what gives w/ these annual rates? Or do you just assert that the historical price data is fudged?
  • by spirit_fingers (777604) on Friday May 16, 2014 @08:16PM (#47022773)

    I've been weaning myself off cable in stages. Six months ago I realized that I wasn't watching Starz enough to justify the $40/month charge, so I dropped it.

    Now I'm coming to the realization that I watch Hulu+ and Amazon Prime as much if not more than cable, so now I'm on the verge of cutting my cord to Comcast and just steaming through my pokey old AT&T DSL line. It's not quite fast enough for a 1080p stream, but it looks acceptable to me at standard def on my 55" plasma. So there you go. Comcast has just priced themselves out of my life.

  • We should be able to buy the box with no outlet fees like how it is in canada.

    Yes in the usa you can get a cable card but on some systems like comcast you only save $2-$3 mo over a box due to there high outlet fees.

  • by MrKaos (858439)

    it's mostly crap, with ads.

  • by Irate Engineer (2814313) on Friday May 16, 2014 @09:02PM (#47022929)

    "90% of Everything is Crap".

    This applies to everything, including cable TV.

    The remaining 10%? Well, 90% of that is crap too.

  • They obviously forgot to do the hedonic adjustment to account for the larger screens people are watching on.

  • Not surprised (Score:5, Insightful)

    by finalcutmonstar (1862890) on Friday May 16, 2014 @09:24PM (#47023003)
    Cable tv is loaded with useless channels that the consumer is forced to pay for. Channels that most consumers never watch and/or never heard of come with the package and contribute to the cost of monthly access. Cable providers will never allow the consumer to pick what channels they want so the only solution is to cut the cord and subscribe to services like Netflix and Hulu. The other(not so legal option) is to torrent your favorite shows.
    • Re:Not surprised (Score:4, Insightful)

      by EvilSS (557649) on Friday May 16, 2014 @10:13PM (#47023153)

      Cable tv is loaded with useless channels that the consumer is forced to pay for. Channels that most consumers never watch and/or never heard of come with the package and contribute to the cost of monthly access. Cable providers will never allow the consumer to pick what channels they want so the only solution is to cut the cord and subscribe to services like Netflix and Hulu. The other(not so legal option) is to torrent your favorite shows.

      The majority of the blame for bundling goes to the networks actually. They force bundles onto the cable companies, the cable companies then turn around and pass those bundles on to their subscribers. It also doesn't help that they all compete on how many channels you get as a selling point for the consumer (so blame the viewers a bit for being stupid as well). I wouldn't be surprised if a good chunk of those rising prices are due to the networks as well. They are addicted to the fees they are getting from pay TV services. Just look at the carriage contract fights that have been popping up more and more lately.

      The whole damned industry from producers to the cable companies is a rapidly getting out of control and it's just going to get worse. Allowing mergers between cable companies and content providers was a huge mistake and it's going to end up biting everyone in the ass eventually.

    • by Darinbob (1142669)

      It also seems that if I had to pay per channel that I'd be very very picky, even if cheaper than cable. On netflix that $8 a month is great for all those tv shows and movies, but I'd never pay $8 for just one or two shows. It might be better to offer a plan that lets you get say 8 shows for one price but you get to pick 4 from category A and 4 from category B; then pay a bit more and it's 16 shows, etc. Much more flexible than the traditional choice of basic cable versus extra/plus package versus adding

  • $7.99 per month for netflix, $6 per month for a proxy server so we can watch BBC iplayer and stream live BBC TV...we never even bothered with cable; we haven't even got a digital aerial.

    You don't miss what you don't have in the first place :-)

    Especially the ads :-D

    • An antenna is tuened for a frequency band. Nothing special about a "Digital" antenna. A good antenna that could reduce or eliminate ghosting from multipath will work just fantastic for "Digital" TV. I never upgraded to a digital antenna.

  • http://www.wired.com/2013/07/w... [wired.com]

    Deploying broadband infrastructure isn't as simple as merely laying wires underground: that's the easy part. The hard part - and the reason it often doesn't happen - is the pre-deployment barriers, which local governments and public utilities make unnecessarily expensive and difficult.

    Before building out new networks, Internet Service Providers (ISPs) must negotiate with local governments for access to publicly owned "rights of way" so they can place their wires above and be

  • lol (Score:4, Insightful)

    by Charliemopps (1157495) on Friday May 16, 2014 @10:46PM (#47023255)

    The inflation rate as reported by the federal government is complete shit. It's likely closer to 10%
    The equipment they're talking about is vastly different than the equipment in the previous year. How many people switched from SD to HD in that time? That was one of the peak years for HD adoption.
    Internet speeds across the industry jumped drastically in 2012 due to DOCSIS 3 rollouts. I, personally, went from 15mb/s to 50mb/s over night with no cost increase to me at all.
    In 2012 most cable companies introduced the new pay as you go plans which allowed you to pay a slightly higher rate in exchange for no contract.

  • It is funny that when people observe that almost everything raise faster that inflation, they blame all these providers/producers separately, instead of question reported inflation in first place.
    http://www.shadowstats.com/alt... [shadowstats.com]
    If you look at shadowstats, last year inflation was around 5-%... as observed on cable service prices.

    So real question should be not why cable service prices are rising so sharply, but rather, why CPI cheats? Answers are probably going to be more interesting that "rising cost of equ

  • The current market seems to be driven by a need to see major series as soon as they are released, if not sooner. Why is that? I hadn't heard many of my favourite albums until they were already 20 years old - what makes TV different?

  • by Ralph Spoilsport (673134) on Saturday May 17, 2014 @08:09AM (#47024837) Journal
    Stop watching TV. It's amazing how much more productive and well informed I am once I cut the cable....

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