[TWIAR] FCC: Cable TV costs still surpassing rate of inflation

[Greg Williams]

http://www.statesman.com/business/content/auto/epaper/editions/today/b
usiness_f3b0eb56a4c2703300d0.html

WASHINGTON -- Cable TV customers saw their rates rise an average of
8.2 percent last year. The jump in rates for programming services and
equipment marked the fifth consecutive year that cable prices had
sharply outpaced general inflation, a trend that some consumer
experts say reflects an industry monopoly. 

The Federal Communications Commission reported Tuesday that for the
12-month period that ended July 1, 2002, monthly charges increased an
average of 3.7 percent for basic service, 10.8 percent for expanded
programming and 12 percent for equipment rental. 

That pushed the average total rate to $40.11 last year, a 31.8
percent increase over five years, compared with a 12 percent increase
in the Consumer Price Index in the same period. 

"Cable rates are going up way above the inflation rates," said Adam
Goldberg, a policy analyst for Consumers Union. "Congress needs to
step in and take some action to keep cable rates down." 

Cable companies counter that although subscribers are paying more,
they also are getting more. The average number of channels offered
grew by 25 percent during the past five years. 

The FCC study also found that on a per-channel basis, the cost to
consumers actually dropped by 0.2 percent from July 2001 to July 2002
as operators added more channels. 

"Compared with taking a family of four to a single movie, concert or
professional sports event, a month of basic cable remains a superior
entertainment value," said Rob Stoddard, senior vice president of
communications and public affairs for the National Cable and
Telecommunications Associa- tion. 

Cable operators also blame higher cable bills on the rising costs
operators are forced to pay for programming. 

Several operators, including Cox Communications Inc., have testified
in Washington hearings against Walt Disney Co.-owned ESPN's annual 20
percent rate increases. Cox Communications, the nation's
fourth-largest cable television provider, is owned by Cox Enterprises
Inc., the corporate parent of the Austin American-Statesman. 

"Cable prices reflect a variety of increasing costs facing cable
operators," said Stoddard, who also noted that operators invested
more than $15 billion in system upgrades during the survey period. 

Still, critics were quick to jump on the rate increases. 

"The cable industry has risen to new heights in their apparent
willingness and ability to gouge the American consumer," said Sen.
John McCain, R-Ariz., chairman of the Commerce, Science, and
Transportation Committee. 

McCain said his committee will continue to focus on this issue. 

FCC Commissioner Michael Copps criticized the agency's report, saying
the commission had not done enough research in its analysis. 

"When consumers keep getting hit in the pocketbook year after year,"
Copps wrote in a statement, "we must commit the resources necessary
to gather the information so we can make informed decisions to ensure
that consumers are protected." 



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