Powell: Cable Rates Seem Reasonable

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Las Vegas— It's been a while since the chairman of the Federal Communications Commission gave the back of his hand to those who say cable rates are too high.

But that's what Republican FCC chairman Michael Powell did here last Tuesday in a broad-ranging discussion with ABC News journalist Sam Donaldson, who decided to press Powell on whether rates were affordable for consumers.

"Average cable rates don't even come close compared to what you pay for gas, for electric service," Powell said at the National Association of Broadcasters' convention. "My electric bill is by an order of magnitude higher than my phone bill ever is or ever will be (and) a magnitude higher than my cable bill."

Donaldson noted that Powell was recently quoted saying that he didn't care whether cable rates go up.

"What I've learned about you reporters is that when they report the stuff, they never report the question," Powell said. "The question to me on that statement was, 'Do you think they have risen to justify reregulation?' No."

In March 1999, the FCC lost its authority to regulate upper-tier cable rates, though local governments may set the price of basic service. Agency cable-price surveys show rates rising in the aggregate, but declining on a per-channel basis when adjusted for inflation and channel additions.

Former Democratic FCC chairman William Kennard complained early on in his tenure that cable rates were too high and that the agency had been too generous in permitting operators to pass through external costs. But Kennard never made a serious attempt to regain regulatory authority over rates.

As a government official and a consumer, Powell said he keeps an eye on cable bills. But he would not recommend plunging the FCC into the regulation of cable rates.

"I am one of the people who pays this particular expense. I care quite a bit. But whether I think it's an order of magnitude that would justify regulatory or government reintervention, absolutely not," Powell said.

Powell added that observers fail to remember that the cable industry stagnated eight years ago, when the FCC cut rates by 17 percent over two years. Those cuts hurt the quality of cable service to consumers, he said.

"If one were to look back at the health of cable companies at the height of regulation, and looked at the staleness in innovation and the prices you were paying for limited service, I do not believe you could make an objective case that that was a better environment than the one that exists today," Powell said. "We forget about that in current times."