Consumer groups launch pricing campaign - Broadcasting & Cable

Consumer groups launch pricing campaign

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Consumer groups Wednesday officially launched their bid to reregulate cable
prices.

Gene Kimmelman, head of the Consumers Union's Washington, D.C., office, called on
Congress to turn cable-rate regulation over to the states or to require a la
carte sale of individual cable channels outside of the barebones basic tier.

"It's time for Congress to come back in" after allowing upper-tier rates to
rise unchecked since 1999, he said.

Kimmelman complained that the Federal Communications Commission's latest video-competition report, released New Year's Eve, understated rate hikes by
showing only a 6 percent increase through the year ended June.

For calendar 2002, hikes were closer to 9 percent, Kimmelman added.

"FCC chairman Michael Powell is coddling price-gouging cable monopolists and
it's time to put an end to it," he said.

Consumer Federation of America economist Mark Cooper attempted to debunk
cable's explanations for the hikes.

Cable says the increases are needed to cover increased programming costs and
to pay for infrastructure buildouts bringing high-speed Internet services.

But if covering programming costs were to blame, net profits wouldn't rise,
Cooper said.

Instead, net income has climbed $8 billion since passage of the deregulatory
1996 Telecommunications Act.

As for infrastructure buildouts, revenue from advanced services is coving
that bill.

Instead, he blamed the high prices cable companies have paid to acquire each
other in the recent merger wave -- upward of $5,000 per subscriber.

Cable companies paid these "phenomenal amounts" in order to gain enough
market power to protect monopoly pricing, he added.

The National Cable & Telecommunications Association strenuously dismissed the consumers groups' attacks as "misleading
and factually inaccurate" for failing to account for the full costs of
programming, labor and buildout costs.

The NCTA also noted that cable rates rose at a faster clip while regulated than
during the past three years since pricing oversight expired.

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