Consumer Groups Bash Cable Rate Hikes

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Two days before Thanksgiving, a consumer group decided to make the cable industry its sacrificial turkey.

In a press release issued Tuesday, entitled "`Tis the Season for Higher Cable Bills," the Consumers Union blasted cable operators Cablevision Systems Corp., Comcast Corp., Time Warner Cable and Cox Communications Inc. for raising monthly rates anywhere between 3.5 percent and 7.8 percent around the country.

The CU's two-page release asserted that cable's ability to raise rates with seeming impunity was the result of insufficient competition from the direct-broadcast satellite industry and the Federal Communications Commission's refusal to grant nationwide licenses free-of-charge to would-be cable competitor Northpoint Technology Ltd.

Although FCC data over the years has shown a steady rise in nominal cable rates, the agency has also documented that cable rates on a per-channel basis adjusted for inflation have actually declined.

But the CU claimed that the per-channel analysis was flawed because it "raises the question of how many cable companies actually let consumers purchase only the cable channels they want on a per-channel basis. The answer is none."

CU senior director of public policy and advocacy Gene Kimmelman has forged close ties with Sen. John McCain (R-Ariz.) on cable-industry issues, including rates. As chairman of the Senate Commerce Committee next year, McCain has made cable rates a priority issue.

In response, the National Cable & Telecommunications Association said the CU's contention that the DBS industry exerts little competitive pressure on cable after amassing 18 million subscribers in the past decade was "ludicrous."

"We compete vigorously with DBS, but cable service -- featuring more choice, better local programming and new digital services -- remains the best consumer value in the marketplace today," NCTA senior vice president of communications and public affairs Rob Stoddard said.

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