NEW YORK ( TheStreet) -- The recent decline in pay-TV subscriptions has more to do with higher prices than cord cutting according to analyst Craig Moffett of Bernstein Research.

The second quarter of 2010 marked the first time in pay-TV history that the industry saw a loss in subscribers. The number of pay-TV subscriptions dropped 216,000 in the second quarter, followed by third-quarter declines of 119,000. The Convergence Consulting Group projects that by the fourth quarter of 2011, the number of cord cutters will reach 1.6 million.

As programming costs rise, pay-TV companies boost their prices to offset the pressures and maintain margins.

Moffett found that Dish Network ( DISH) will implement an average 11% increase in its rate in 2011, which is "by far the largest of the companies in my coverage." With this price hike, the company is also promising a two year freeze to its customers.

"Dish has, in essence, taken three years of increase at a single stroke," Moffett said. "We find the strategy to be a curious one, as it maximizes risk of sticker shock (and therefore churn) at a time when the economy is likely at its weakest, and leaves Dish without the flexibility to reflect cost increases in pricing thereafter."

Time Warner Cable ( TWC) will see a rate increase in the 7% range, while Comcast's ( CMCSA) increase is in the 4% range, Moffett said, based on a small sample size of customers. DirecTV ( DTV) will bump its price by 4% while Cablevision ( CVC) will take the "smallest percentage increase at 3%," he said.

"Rising rates speak to the relatively stable competitive dynamics within the Pay-TV space," Moffett said in his Jan. 10 research note. He said that the major risk of the constant rate increases is customer affordability among the entire sector. He believes a more likely explanation for the recent loss in subscribers is the steadily increasing prices.

Still, many cable providers are offering what the industry has dubbed "TV Everywhere" in an effort to prevent customer migration.

TiVo ( TIVO) CEO Tom Rogers believes that cable companies should deliver on-demand content to combat the possibility that cord cutters are leaving the pay-TV ecosystem. "It's all about giving people what they want, when they want it," Rogers said in a presentation at the 38th annual UBS media conference in December.

Analyst Marci Ryvicker of Wells Fargo views TV Everywhere as a possible "game changer." Ryvicker noted that after attending the Consumer Electronics Show in Las Vegas this year, she believes that on-demand offerings could be more than a "retention tool."

"What was new to us at CES was how many industry experts described TV Everywhere as both a way to acquire new subs and generate incremental revenue (via advertising)," she said in a Jan. 10 research note.

Based on her visit to CES, she believes "the most successful model will be one that is free (i.e. ad based) and that does not require the purchase of additional hardware."

"Bottom line, this is going to take a long time but could be exciting," Ryvicker said.

-- Written by Theresa McCabe in Boston.

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