Echo raises rates after merger flop

Biz experts appealing to operators to freeze rate hikes

NEW YORK — U.S. pay TV consumers will have to resign themselves to another year of rate increases. Satcaster EchoStar Communications confirmed it will raise the price of four basic programming packages by $2 per month, which amounts to a 4% increase for its average basic customer.

Cable stocks rebounded late last week on the news, which decreases the likelihood of a price war between cable and DBS. However, cable industry experts are apparently appealing to operators to put a freeze on further rate increases in order to halt rising churn among customers rankled by the forced acquisition of new channels they haven’t asked for.

EchoStar had resisted rate increases over the past year while it was lobbying Washington to approve his merger with DirecTV. But CEO Charlie Ergen says the government sealed the fate of a rate increase when the FCC vetoed his DBS merger while approving the combination of cable giants Comcast and AT&T Broadband. The FCC disclosed recently that U.S. cable rates have jumped 6.3% in 2002, well ahead of inflation.

The $2 price hike, intended to help meet rising programming costs and pay for additional basic channels, is effective Feb. 1. The average Dish Network basic subscriber currently pays more than $50 per month. EchoStar emphasized that its price increase is dramatically lower than those recently announced by cable operators.

To help placate subs, EchoStar also announced it would guarantee the price of its America’s Top 50 programming package for both new and existing customers at the new price of $24.99 per month until January 2005. Along with price increases, EchoStar also said will start offering HBO/Cinemax value packs that will provide 100 channels with eight channels of HBO and five channels of Cinemax for $49.99 per month, or 150 with HBO and Cinemax for $59.99 a month.

Company insists this price freeze solidifies Dish’s position as the cheapest digital TV option in the U.S.

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