FCC- Cable rates up in '03, though not as steeply

Saturday, February 5, 2005

WASHINGTON -- Cable television rates rose in 2003, though not as steeply as they did in the previous year, the Federal Communications Commission reported Friday.

The average monthly bill, including programming and equipment, was $45.32 on Jan. 1, 2004, up 5.4 percent from $42.99 on Jan. 1, 2003, the FCC said in its annual report on cable rates. The average bill rose 7.8 percent in the previous one-year period.

The FCC didn't say why rates did not rise as much in 2003. But a separate FCC study released Friday found cable companies continuing to face stiff competition from satellite television services like DirecTV and Dish Network.

About 72 percent of the 92 million households that paid for TV in June 2004 subscribed to cable, down from 78 percent in June 2001. Roughly 25 percent of such homes were satellite TV subscribers last June, up from 19 percent in 2001.

The two Democrats on the five-member commission, Jonathan Adelstein and Michael Copps, questioned the accuracy of the findings and said the FCC should have studied the issue more.

Satellite TV services didn't exist over a decade ago but have ballooned in popularity since then.

That competition has spurred the cable industry to invest $95 billion since 1996 for improvements like digital cable, on-demand video and high-speed Internet access, said Robert Sachs, president of the National Cable & Telecommunications Association, which represents cable operators.

Critics contend consumers still aren't getting their money's worth. The 5.4 percent increase in cable rates over 2003 outpaced the 1.1 percent rise in inflation, the FCC reported.

"What it really says is that there is this persistent ability of cable operators to price-gouge consumers," said Gene Kimmelman, senior director for public policy at Consumers Union, the publisher of Consumer Reports magazine.

Kimmelman said a system by which customers could pick and choose what individual cable channels to subscribe to would keep costs down, instead of the "tier system" used now by most cable operators, which bundles channels together.

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