If you find that your monthly phone and cable bills have been eating into a bigger chunk of your budget, you aren’t alone — in fact, you’re perfectly normal. In an article on upcoming cable and telecom mergers, The Wall Street Journal cites data from the U.S. Department of Labor showing that average household spending on phone, pay TV and Internet rose to $2,237 per year in 2012, a 20% increase from 2007. In contrast, overall household spending rose by just 3.6% over the same period.
On the one hand, some of this added spending can be explained by the fact that many wireless subscribers have now added data plans to their bills because they own smartphones. On the other hand, the fact that spending on these three items grew so rapidly even though it came during the single worst recession since the 1930s makes it hard to attribute solely to the rise of smartphones and tablets.
This matters because the latest round of potential mergers — from Comcast-Time Warner Cable to Sprint-T-Mobile to AT&T-DirecTV — could potentially lower competition in the phone, pay TV and Internet markets even further. And since Economics 101 teaches us that lower competition almost always results in higher prices, these mergers also mean that a 20% increase over a five-year period may be just the beginning.
