Consumer group says cable deregulation hasn't lowered rates

Thursday, July 25, 2002

The Associated PressWASHINGTON -- Cable rates have shot up far more than inflation despite the government's effort to deregulate the telecommunications industry and foster competition, consumer and industry groups say.

Consumers Union, which publishes Consumer Reports magazine, says rates have risen 45 percent since 1996, when the Telecommunications Act passed, ordering the deregulation of the cable industry.

But industry officials dispute those numbers because deregulation didn't actually begin until 1999. The National Cable & Telecommunications Association says cable rates increased about 17 percent during the three-year period of deregulation.

Either way, the numbers dwarf the rates of inflation during that period. From December 1995 through March 1999, between passage of the act and deregulation, prices rose 7.5 percent, according to federal labor statistics. From March 1999 to June this year, inflation was at 9 percent.

Competitive pricing -- leading to lower cable rates -- was a key goal of the hard-fought legislation. But the Consumers Union says that hasn't happened, in part because cable companies have tried to dominate the market and edge out competitors like satellite television.

The group, which bills itself as an unbiased consumer service, called on Congress to shift oversight of cable companies to local regulators, much like telephone companies.

Otherwise, the cable industry is vulnerable to abuse.

"When you look at the price hikes and the broken promises to compete, it is clear that there needs to be stricter public accountability in the cable industry," said Gene Kimmelman, director of Consumers Union's office in Washington.

The cable industry said infrastructure, programming and other costs have forced all providers to raise rates.

"The report unfairly singles out the cable industry and ignores the pricing pressures faced by all multichannel providers, including (direct broadcast satellite), which have been forced to raise their prices as well to compensate for increased programming costs," said NCTA spokesman Marc O. Smith.

Citing press reports, the Consumers Union says that in the last year alone, basic cable rates in Atlanta and Austin, Texas, have risen 10 percent. In Boston and Chicago, prices are up 12 percent. Reno, Nev., viewers are paying 15 percent more.

Consumers Union rejects the industry claims that the increases reflect rising costs. The group said revenue from other sources, such as increases in advertising, digital cable and new broadband Internet service, more than cover the costs.

------On the Net:

Consumers Union: http://www.consumersunion.org

National Cable and Telecommunications Association: http://www.ncta.com

Federal Communications Commission: http://www.fcc.gov

Bureau of Labor Statistics: http://www.bls.gov

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