The Federal Communications Commission last week released a report saying that cable rates rose 8.2% last year, or five times more than the Consumer Price Index.
That yardstick — the CPI — has always baffled me, because in the case of cable, it is comparing apples with oranges. Even the FCC seemed a little baffled by its study, judging from the fuzzy language about its findings.
On the one hand, the commission asserted that expanded basic-cable rates have gone up 8.2%. However, the FCC said, when one considers that the average number of channels offered by a system jumped from 59 to 62.7, "thus, in real terms, the per channel rate fell by approximately two-tenths of 1%."
Hmmm. That little contradiction in math might just be one of the reasons that Sen. John McCain (R-Ariz), the Commerce Committee chairman who has been making some threatening noises about reregulating cable, has no immediate plans to do so.
Come September, the General Accounting Office will come out with its report on cable's rate increases and likely turn up other factoids about the industry's upgrades and increases in capital-expenditure spending.
But for now, we have to live with this FCC report, which has lead to headlines like, "Cable TV Rates Soared Last Year."
Soared, I have to ask, compared to what? Perhaps, the real yardstick here should be comparing cable to the cost of entertainment. That would mean comparing an apple to an apple —à la discretionary spending.
I'm no mathematician, but when National Cable & Telecommunications Association president Robert Sachs points out that just one ticket for a so-so seat at Boston's Fenway Park now costs $36, that's an interesting barometer for comparison with cable.
There are scores of other benchmarks, like the rising price of movie tickets, that would make far more compelling comparisons for cable than the existing CPI. And frankly, the cable industry could do a better job explaining why it charges what it does at both the national and grassroots levels.
Instead, cable operators will blame rate increases on rising program costs and call it a day. And of course, sports is the big, bad bogeyman here. Sure, ESPN passed on a 20% increase to cable operators, but that's just one piece of the high-stakes business that sports has become in this country.
So let's go back to Fenway Park, where a family of four is out to see a ball game and paying $144 just to get through the gate. By the time they have parked the car, devoured some popcorn, hot dogs, sodas — and a brewski or two for the old man — that little outing will easily cost $200.
While Sachs sees no clear and present danger from rising cable rates on the regulation front, others do. Those who remember the pain of the 1992 Cable Act worry that the present 8.2% rate increase could spell trouble if cable's enemies decide to play dirty pool.
And cable — with some within its ranks now raising objections in Washington to News Corp.'s plan to acquire DirecTV Inc. — should perhaps tread more gently.
Odds are this deal will sail through and DirecTV, with 11 million subscribers and a new owner hell-bent on improving it, could use cable's recent price "gouging" — McCain's word, not mine — as a future lobbying tool.
That's why the FCC needs a new yardstick. The industry should insist that it find one.