FCC: Nominal Cable Rates Rose 7.5%

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Nominal monthly cable rates rose 7.5 percent during the 12-month period
ending July 1, 2001, while inflation over the period was 2.7 percent, the
Federal Communications Commission said Thursday.

The average monthly rate for the basic tier, the expanded-basic tier and
equipment rose from $34.42 to $36.99, the FCC said.

All cable customers subscribe to the basic tier, and the vast majority also
subscribe to expanded basic.

The FCC rate data included cable systems that were subject to effective
competition and those that were not. Generally, a cable incumbent that has lost
15 percent market share to competitors is deemed subject to effective
competition.

Gene Kimmelman, Washington-office co-director of the Consumer Union, said the
FCC report showed that cable remains a monopoly that engages in price-gouging.
Cable rates, he added, are much lower in locations where two wireline cable
systems compete head-to-head.

'Until the Bush administration and Congress step in to put a lid on rates,
and until this competition can grow throughout the nation, consumers will face
ongoing cable-price gouging,' Kimmelman said.

The FCC expressed cable-rate increases in nominal terms, meaning that the
data were not adjusted for inflation or channel additions.

The agency found that cable rates rose 1.5 percent, to 60 cents, on a
per-channel basis. Looking just at the expanded-basic tier, the commission said,
rates rose 0.5 percent, to 80 cents, on a per-channel basis.

After adjusting for inflation, per-channel cable rates declined in real terms
during the period studied by the FCC.

'It's worth noting that prices per channel remain relatively constant,
despite substantial operator investment in programming and personnel to support
cable's more advanced services,' the National Cable & Telecommunications
Association said in a prepared statement.

The FCC reported that cable operators added 5.5 percent more channels during
the year, going from 56.3 channels to 59.4.

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