FCC report sparks cable-rates debate - Broadcasting & Cable

FCC report sparks cable-rates debate

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The perennial argument over cable-rate increases reached its annual peak
Tuesday with the release of the Federal Communications Commission's yearly report
on cable-industry prices.

The average monthly rate for cable subscriptions increased 8.2% from $37.06 to
$40.11 over the 12 months ended July 1, 2002.

That’s above the average 7.1% annual increase of the past five years.

The average price of a basic-tier subscription rose 3.7%, from $13.93 to
$14.40.

The report traditionally leads to a round of invective from consumer
advocates, key lawmakers and cable competitors for hikes that have been well
ahead of the inflation rates, and this year’s study is no different.

"Cable rates increased an unbelievable five-and-a-half times faster than
inflation," said Senate Commerce Committee chairman John McCain (R-Ariz.), noting that the Consumer
Price Index increased 1.5% during the past year. "The cable industry has risen
to new heights in their apparent willingness and ability to gouge the American
consumer."

The cable industry’s primary trade group defended the increases, which, when viewed
on a cost-per-channel basis, rose 1.2%, slightly less than the inflation rate, and
which are helping to pay for digital upgrades and the addition of Internet service.

"Cable customers are enjoying greater choice and quality in basic channels
plus additional optional digital-TV services," said Rob Stoddard, spokesman for
the National Cable & Telecommunications Association.

The average number of channels rose from 59 to 62.7, an
increase of 6.3%.

Adjusted for inflation, that means the per-channel rate fell by approximately
two-tenths of one percent, according to the FCC.

The Consumers Union used the FCC report as an opportunity to reiterate its call
for a la carte pricing that would allow customers to keep their bills down by
selecting only the channels they want rather than buying tiers with a set
selection of channels.

"Clearly, Congress needs to step into the cable morass and help protect
consumers from cable price gouging," CU director of public policy Gene Kimmelman said.

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