FCC report: Cable rates grow faster than inflation

Cable television rates rose faster than inflation last year, says the FCC’s annual report on industry prices. The average consumer’s cable bill— including programming and equipment—increased by 8.2 percent during the 12 months ending July 2002, from $37.06 to $40.11. During the same period, the inflation rate was 1.5 percent.

During that period, however, the FCC said cable operators increased the number of channels they offered subscribers, resulting in a final cost per channel increase of 1.2 percent.

Released last week, the FCC price report found rates were lower in areas where two or more cable customer companies competed for customers. The average monthly charge in competitive areas was $37.84, compared with $40.26 for cable monopolies, a 6.4 percent difference.

Reflecting the FCC’s partisan split, the two Democratic commissioners were critical of the information in the report. Michael Copps officially dissented from report, contending the FCC did not properly follow its congressional mandate to do a thorough analysis of cable rates. Too much of the cable industry’s supplied data was accepted at face value and the FCC “does not conduct even minimal audits to assure the accuracy of these data,” Copps said.

“We hear from consumers who are fed up with continual increases in their cable bills,” Copps said. “When consumers keep getting hit in the pocketbook year after year, we must commit the resources necessary to gather the information so we can make informed decisions to ensure that consumers are protected.“

Commissioner Jonathan Adelstein, the FCC’s second Democratic member, said the FCC failed to conduct the full analysis it has performed in previous years. “To ensure that the Commission’s annual report on cable rates is providing reliable and useful information for Congress and the Commission on the causes of rate increases and on the competitive status in video markets, the Commission should gather more reliable information, conduct more statistical analyses, and consider conducting audits,” he said.

Other reaction was stronger. Sen. John McCain, Republican chairman of the Senate Commerce Committee, said the price hikes “defy logic” and promised to have his committee look deeper into the issue. “The cable industry has risen to new heights in their willingness and ability to gouge the American consumer,” McCain, from Arizona, said.

“Congress clearly needs to step into the cable morass,” said Gene Kimmelman, public policy director at Consumer’s Union. Subscriber outrage, he said, is “starting to bubble to the surface. People are complaining more and more about their cable rates.”

The National Cable and Telecommunications Association (NCTA) defended the rate increases, contending they reflect increased costs to operators. Those costs include technical improvements to cable systems, better customer service, new and improved channels, and additional services.

“Although cable prices have increased, cable consumers are also enjoying increased value for their entertainment dollar,” said the NCTA’s Rob Stoddard. “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.”