Cable rates draw Hill fire

Key members of Congress are putting heat on the Federal Communications Commission to roll back cable TV rate increases that have occurred since lawmakers passed legislation reregulating the industry last year.

In a series of letters to the FCC, lawmakers involved in the cable rereg fight sent the unmistakable message that they expect the commission to adopt tough rules when it votes April 1 to carry out rate regulation and program access provisions of the cable bill.

“The cable industry’s persistence in raising rates to excessive levels during consideration and after enactment of the 1992 (Cable) Act makes it imperative that the commission act quickly to protect consumers from price gouging,” wrote Sens. John Danforth, R-Mo., Ernest Hollings, D-S.C., and Daniel Inouye, D-Hawaii , all influential members of the Senate Commerce Committee.

In a separate letter, Senate antitrust subcommittee chair Howard Metzenbaum, D-Ohio, wrote, “Monopoly pricing by cable operators must stop. Cable operators are entitled to earn reasonable profits. The 1992 Cable Act now prohibits them from earning monopoly profits.”

Metzenbaum complained that in Dayton and Circleville, Ohio, rate increases of 21.3% and 20% are expected to take effect April 1, the same day the FCC announces its rate regulation rules. Continental Cablevision has notified its Circleville customers that the 20% rate hike is necessary “to fulfill the expectations of this legislation,” according to Metzenbaum.

“I am astonished that a cable company would blame a new round of rate increases on legislation that was designed to keep rates down and on regulations that have not even been written,” Metzenbaum said. He urged the FCC to “strongly consider” nixing cable rate hikes adopted after the 1992 rereg bill passed.

The missives from Congress came a week before the FCC hands down its crucial rate regulation and program access decisions implementing the new cable law.

Under the legislation, Congress ordered the FCC to set guidelines for regulating cable prices on the basic tier (consisting of a minimum of local broadcast stations, public broadcasting channels and government channels).

Congress also gave the FCC the go-ahead to roll back rates if a complaint about unreasonable pricing of upper-level cable tiers is verified. The FCC has no power to regulate rates of premium cablers such as HBO and Showtime.

The rate regulation decision is expected to carry a “benchmark” pricing scheme establishing limits that can be charged by cable operators for each channel on a basic tier. However, it’s unclear how the FCC will deal with the prevalent industry practice of “re-tiering.”

Since the cable bill was passed, many cable operators have re-tiered their systems and charged higher prices by moving the popular cable network channels onto an “expanded basic” tier. Cablers who have re-tiered apparently assume the FCC won’t crack down on upper-tier price hikes.

However, House telecommunications subcommittee chairman Ed Markey, D-Mass., argued in a letter to the FCC this week that it was “the clear intent of Congress to ensure reasonable cable rates, even in tiers above the basic tier.”

It would be “unacceptable if the regulations promulgated by the FCC did not faithfully fulfill the mandate of the Cable Act to reduce cable rates for consumers,” he said.

Lawmakers are also leaning on the FCC to adopt tough lingo concerning program access, a provision in the cable bill that requires vertically integrated cable companies (companies such as Time Warner that own both networks and systems) to make their programming available to competing technologies such as DBS and “wireless” cable.

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0

Leave a Reply

No Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More TV News from Variety