McCain to GAO: Probe Cable Rates

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Sen. John McCain (R-Ariz.) asked the General Accounting Office Tuesday to
investigate cable-rate increases and to assess the reliability of
industry-supplied financial data given to the Federal Communications
Commission.

'Consumers have a right to know why cable rates continue to climb faster than
the rate of inflation,' McCain said in a two-page letter to comptroller general
David Walker, who heads the GAO.

On April 4, the FCC released its annual cable-rate survey. It found that
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. Nominal rates are
not adjusted for inflation or quality improvements, such as channel
additions.

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

The GAO, the investigative arm of Congress, is already studying -- at the
request of Sens. Herb Kohl (D-Wis.) and Mike DeWine (R-Ohio) -- whether cable
rates are restrained in the roughly 40 markets where EchoStar Communications
Corp. and DirecTV Inc. offer local TV signals.

In his letter to Walker, McCain said he wanted the GAO to 'substantiate the
justifications for rate increases' that cable operators have provided the FCC.
Cable operators have largely attributed rate hikes to higher programming
costs.

'While the FCC's report provides a statistical analysis of the purported
causes of cable-rate increases, the data are based completely on self-reported
information from cable operators,' McCain said. 'The time has come for an
independent review of the cable industry's claims.'

McCain asked the GAO to recommend steps that policymakers should consider to
address continued cable-rate increases.

McCain also took on the issue of cable tiering of programming. He asked the
GAO to determine the extent to which cable operators may package services so
that consumers pay 'only for the programming they wish to receive.'

In a separate letter to FCC chairman Michael Powell, McCain asked the
commission to provide 'any and all necessary information and support' to the
GAO's investigation.

McCain is the most senior Republican on the Senate Commerce Committee. He
voted against the Telecommunications Act of 1996, which partially
rate-deregulated cable effective March 31, 1999.

'There are two signs of spring in Washington: the arrival of tourists to
enjoy the cherry blossoms, and the release of an FCC report that cable rates
have risen during the previous year,' McCain said in his letter to
Powell.

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