Feds To Stop Regulating Cable TV Bills
The FCC Will Lift Price Controls on March 31
By JEANNINE AVERSA
.c The Associated Press
WASHINGTON (March 25) -- Cable TV customers will have to pay whatever their cable companies want to charge them to watch many of their favorite programs when federal price regulation ends next week. But even with government controls, the rates rose sharply over the past few years.
Following the directive of a 1996 law, the Federal Communications Commission will stop regulating most cable TV services March 31. Specifically, it will lift federal price controls for the expanded basic services that include many popular cable TV channels, such as Discovery, CNN, MTV and ESPN.
Consumers now pay on average about $31 a month for regulated cable TV services, including set-top box and remote control rentals, the Consumers' Union estimates.
Decker Anstrom, president of the National Cable Television Association, doesn't believe the nation's 67 million cable customers will get hit with whopping increases.
''Our companies are very much aware that they need to act with restraint,'' Anstrom said. ''If they don't, Congress will come back in and reinstitute rate regulation.''
Consumer groups said companies may restrict increases in the next few months to avoid being regulated again. ''But in the long run, rates will keep skyrocketing unless true price competition develops or the government decides to put a lid on rates,'' contends Gene Kimmelman, co-director of the Consumers Union's Washington office.
The Clinton administration and lawmakers say they will keep close tabs on rates after the price controls are lifted.
Congress and the Clinton administration set the March 31 date with the hope that widespread competition to cable would materialize, making price controls unnecessary. But such competition hasn't developed yet.
Meanwhile, the most basic level of service, including mostly broadcast TV channels and a few cable networks, will continue to be regulated. So will prices for set-top boxes and remote controls.
Premium channels such as HBO and Showtime were never subject to federal price regulation.
When price controls took effect in 1993, after a 1992 law that regulated the industry, rates initially went down, saving customers billions of dollars.
But near the end of 1994, the FCC bent to political pressure and revised the rules to give cable companies much more leeway to increase rates to pay for higher business costs, such as programming.
By the summer of 1996, cable rates were spiking up.
Consumer groups, citing Bureau of Labor Statistics' figures, said that since February 1996 - when the law paving the way for the March 31 deregulation was enacted - cable prices have increased 24 percent, while overall inflation has risen 6 percent.
The industry says that with each rate increase, customers have gotten more channels, improved service and better picture and sound quality.
The most recent cable TV rate increases are getting smaller, even though they still run well ahead of inflation. For the year ending Feb. 28, cable TV prices rose 4.9 percent, while overall inflation increased 1.6 percent, according to Bureau of Labor Statistics' most recent figures.
Time Warner, for example, which runs the nation's largest cable TV company with 12.6 million customers, announced price increases this year of no more than 4.9 percent, said spokesman Mike Luftman.
''No price changes will take place as a result of deregulation,'' Luftman said.
Consumer groups and some lawmakers don't believe competition for cable has developed sufficiently to keep rates in check. Rep. Peter DeFazio, D-Ore., wants Congress to freeze rates.
''A funny thing happens when you deregulate a monopoly,'' DeFazio said. ''Consumers get shafted.''
But House Commerce Committee Chairman Thomas Bliley, R-Va., said: ''Competition is the only true protection tool for consumers.''
Bliley, his Senate counterpart, Sen. John McCain, R-Ariz., and House Commerce telecommunications panel chairman Billy Tauzin, R-La., are pursuing legislation to make satellite TV companies more powerful competitors to help keep cable rates in check.
''I hoped that by this date every community would have two or three choices of video programming,'' Tauzin said. |
