McCain Blasts Cable-Rate Hikes - Multichannel

McCain Blasts Cable-Rate Hikes

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Sen. John McCain (R-Ariz.) Tuesday accused cable operators
of gouging customers after the Federal Communications Commission released a
report showing that cable rates on average climbed 8.2% for the 12-month period
ending July 1, 2002.

McCain, chairman of the Senate Commerce Committee, called the cable rates
hikes "astounding" given that inflation in the overall economy was 1.5% and
markets were starting to come out of recession.

"This means that cable rates increased an unbelievable 5½ times faster than
inflation.  The cable industry has risen to new heights in their apparent
willingness and ability to gouge the American consumer," McCain said in a
prepared statement.

The Consumers Union, in reacting to the FCC study, called on Congress to
reregulate cable rates or allow subscribers "to pay for only the channels they
want to watch."

McCain, who supports the CU's a la carte approach, has asked the
General Accounting Office to take a closer look at the factors causing higher
cable rates.

The report is expected to be released in the fall.

"These increases defy logic. The Committee on Commerce, Science, and
Transportation will continue to focus on this issue in the months to come,"
McCain said.

The FCC's survey dealt with nominal cable rates, meaning that the 8.2% figure was
not adjusted for inflation or for quality improvements made by cable
companies.

The FCC report showed that the combined average monthly rate for basic,
expanded basic and equipment increased by 8.2%, from $37.06 to $40.11, over the
12-month period.

On a per-channel basis, however, the agency found that cable rates dropped
two-tenths of one percent after adjusting for inflation.

A per-channel decline in rates suggests that consumers received more channels
to go along with high rates.

The National Cable & Telecommunications Association released a statement
prior to McCain's that promoted a monthly cable subscription as a great value
for the money, whether on a relative basis or standing alone.

"Although cable prices have increased, cable consumers are also enjoying
increased value for their entertainment dollar.  Compared with taking a
family of four to a single movie, concert or professional-sports event, a month
of basic cable remains a superior entertainment value," said Rob Stoddard,
the NCTA's senior vice president of communications and public affairs.

FCC members Michael Copps and Jonathan Adelstein, both Democrats, called
on the FCC to put more pressure on cable operators in order to determine whether
cable operator-supplied rate data were accurate.

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