Cable Sub Ferree Might Pull Plug

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The cable industry is close to losing one of its most important subscribers,
politically speaking.

Kenneth Ferree, chief of the Federal Communications Commission's Media
Bureau, which oversees the cable industry, is unhappy that his cable rates just
went up.

'At some point, consumers just say, `This is just not worth the money.' And I
am actually close to that point, and they are going to turn it off,' said
Ferree, a Cox Communications Inc. subscriber in Fairfax, Va.

By contrast, FCC chairman Michael Powell is a direct-broadcast satellite
subscriber, but he has not said whether his company is DirecTV Inc. or EchoStar
Communications Corp.

Powell was recently interviewed by CNBC about cable rates. He said rates have
risen but so has the number of channels. He added that he believed channel
additions added to consumer value.

At a meeting with reporters April 5 at FCC headquarters, Ferree said
cable-rate hikes have caused him to question whether he wants to remain a
subscriber, especially because he doesn't spend a lot of time watching TV.

'I'm a cable consumer, too, and my rates just went up, and I am not happy
about it,' Ferree said. 'I'm in the position of having to make the decision,
`Gee, I don't watch that much television. Am I getting the value for the dollar,
or several dollars, that I spend every month for this service?''

Ferree couldn't say whether he views cable rates as reasonable, although he
said they seem to be in line with rates charged by DBS, cable's leading
competitor

'They are still essentially in the ballpark of what the DBS services [are]
for sort of the equivalent package,' he said. 'Maybe that is sort of the right
price. I don't know that there is any magical objective way to determine what
the right price is.'

Last Thursday, the FCC released a cable-rate survey showing that nominal
cable rates (or rates unadjusted for inflation and channel additions) rose 7.5
percent from July 1, 2000, through July 1, 2001. However, per-channel rates
adjusted for inflation actually declined during the period, the agency
reported.

Ferree said he didn't know whether the FCC's new digital-TV-transition plan
-- which calls on two-thirds of cable systems to carry up to five
high-definition-TV networks, either broadcast or cable -- would cause cable
rates to rise even more.

As a rule, basic cable service must include local TV signals, but the FCC has
not decided whether the basic tier needs to include HDTV signals provided by
local TV stations.

'The tier-placement issue is a problem, and we are trying to work though that
now,' Ferree said.

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