FCC Misstates Cable Price Hikes, Says NCTA

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The National Cable & Telecommunications Association has asked FCC Chairman Kevin Martin to correct "misstatements" it says were made in the FCC's recent cable pricing report, and to change the way it measures cable pricing.

In particular, NCTA President Kyle McSlarrow, in a January 4 letter to Martin, took issue with the decision by the FCC to no longer provide a per-channel price for cable, which it has done previously while still emphasizing the rate card increases. NCTA says that rate card figure is not a real-world measure given the discounts often offered and the increase in bundled services, where the higher bill is now coverage video, voice and data, rather than simply video service.

The FCC said that the per-channel price was moot since cable did not offer a la carte service, something Martin has been pushing for to allow cable subscribers to weed out programming they might find unsuitable for kids. Cable counters that weeding would kill the economic model that allows niche channels to survive.

McSlarrow recommended a price per viewing hour metric, which would be calculated by dividing the price of expanded basic cable service by time spend watching the cable service in an average household. By that reckoning, which he said NCTA has been pitching for over three years, the price of expanded basic has actually declined in the past few years. "When enhanced basic cable prices are evaluated in a manner that takes such increased usage and value into account," said McSlarrow. "It becomes clear that real prices are moving downward."

On December 20, the commission released the pricing report which concluded that cable rates had gone up by 5.2% in 2006, and 93% since the deregulatory 1996 Telecommunications Act.

The Democrats and Republicans seemed in agreement that rates had gone up dramatically, though Commissioner Robert McDowell, in particular, suggested that the study was flawed for not looking at the increase in cable channels and service or other impacts on price, like programming costs.

Martin has pointed to "staggering" cable prices--that the study found were not lowered by satellite competition--in arguing for helping the telephone companies more easily compete in video and broadband. In fact the study effectively teed up proposed video franchise reforms outlined in that same Dec. 20 open FCC meeting.

NCTA countered then, and reiterated in a letter to Martin Jan. 4, that the price report was incomplete, looked at old data, and in some cases bad data, and needed a revamp.

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