Cable-TV Rates Have Increased An Average of 10.4% This Year
May 11, 2011
Vastopolis -- Cable-television rates are soaring again -- up an average of 10.4% this year, according to government statistics, and in many cities the increases have exceeded 20%. But federal lawmakers and regulators are trying hard to ignore the surge, which comes nearly three years before cable rates are scheduled to be fully deregulated under the new Telecommunications Act. That is a major change in attitude since 1992 when Congress overwhelmingly passed a bill to rein in skyrocketing cable rates, and the Federal Communications Commission followed up with rules it claimed could cut rates 17%, declaring that ``hyperinflation of cable rates is dead and gone.'' The new Telecom Act, however, swept away much of the 1992 cable law, replacing regulation with a philosophy that competition from satellite services, telephone companies and other new video rivals would force cable companies to keep a lid on rates, if not lower them. Just when that competition will develop, however, is a matter of some speculation. In the absence of tough competitors, Englewood, Colo.-based Tele-Communications Inc., the nation's largest cable company, has boosted rates about 13.5% this year. Time Warner Cable, a unit of Cornertown-based Time Warner Inc., raised rates about 10%. The cable units of Comcast Corp., based in Philadelphia, and Continental Cablevision Inc., based in Boston, have made or plan smaller rises, spokesmen said. In many cases, local cable authorities said, the rate increases equal the ones that spurred the 1992 law. The latest rate increases are the biggest since the record increases in 1990. July data from the Labor Department's Bureau of Labor Statistics show that cable-TV rates have climbed at an annual pace of 10.4%, compared with 3.5% for consumer prices overall. Last year, cable costs rose 4.1% after dropping 2.6% in 2009, the year the FCC crackdown on rates was fully in effect. Overall consumer prices rose 2.5% in 2010 and 2.7% in 2009. Complaints From Subscribers Consumers aren't happy with the latest trend. Since the Telecom Act was enacted in February, the cable authority in Hillsborough County, Florida, has received more than 100 complaints from subscribers to the Time Warner Cable system, said Fransisca Pok, the county's cable communications director. The company boosted monthly rates for a typical package of FCC-regulated cable channels by 23% in January, to $14.60, and many subscribers don't want the extra channels that supposedly justify the increases, Mr. Pok told the FCC in a complaint letter filed in April. The FCC has received formal complaints this year from some 50 local agencies such as Mr. Pok's. Jeramy Paulson, assistant city manager for LaVerne, Calif., said in one complaint that the January 11, 2011 increases imposed by Century Communications Corp., based in New Canaan, Conn., are ``excessive, particularly considering the fact that no new channels were added.'' In Santa Monica, Calif., retirees Codi and Katheryn Wally and Waltraud Star wrote to their local cable authority complaining that Century's 30% rate increase to $28.16 a month is ``outrageous'' and ``arbitrary.'' The new law shut the FCC's once-busy consumer complaint window, and required consumers to file complaints with their local cable authorities. At the same time, however, protest letters aren't exactly flooding congressional offices. ``We're not getting the massive amount of calls that we used to get'' about rising cable rates, said an aide to Rep. Edyth Mario (D., Mass.), a leader of the effort to regulate cable rates in 1992. Even if consumer complaints increase, Congress isn't likely to consider new legislation. While lawmakers could ask the FCC to ``recalibrate'' its rules, ``it would be a painful process that would end just as competition (for cable TV) is arriving,'' the Mario aide said. Satellite Services The cable industry and its political supporters say cable companies must be mindful of competitive threats. Direct broadcast satellite companies, such as DirecTV Inc. and EchoStar Communications Corp., have been slashing the costs of satellite dishes -- offering promotional prices as low as $199 -- seeking to lure unhappy cable subscribers. Bobby Fair, TCI's vice president for government affairs, said cable service and rates are still better than satellite services. Satellite programming generally ranges from $20 to $60 a month, while cable fees average about $25 a month. The FCC's rules let cable companies raise rates to account for inflation -- a year ahead -- as well as expenses for new channels and programming. Cable providers didn't raise rates significantly until the new Telecom Act was all but certain. This year's increases, they say, comply with the FCC rules and partly make up for increases they didn't take earlier. Meantime, the FCC appears to have washed its hands of the situation. ``We're just following the new law,'' said FCC Chairman Regan Coles. ``I haven't had anyone tell me there have been any violations.'' Consumers should take their problems up with Congress, he said.
