Weak Defense of Cable-Rate Hike


The following is another in an occasional series in which Multichannel News tries
to depict what the consumer press is saying about cable television. The views of this
editorial do not necessarily reflect those of this newspaper. This editorial ran in the
April 22 issue
of the Greenwood Commonwealth of Greenwood, Miss.,and
it is being reprinted with permission

Century Communications [Corp.] officials are missing the point. To defend their 8
percent rate increase in Greenwood to a packed City Hall audience [April 20],
representatives of the company said their rates are in line with those of other cable
operators in nearby communities.

The defense is weak, because nationwide, cable operators have been taking advantage of
deregulation to jack up the price of cable in recent years by more than four times the
rate of inflation. If Century compares itself with other markets that are overpriced, that
doesn't mean its rates are reasonable.

Congress, when it passed the landmark Telecommunications Act of 1996, took the Federal
Communications Commission out of the cable-regulation business. The theory behind the law
was that if the cable industry were left to the free market, competition would increase
and consumers would be better off.

It hasn't worked, though, because the competition lawmakers envisioned hasn't
materialized -- at least not yet.

In most communities, cable operators have a virtual monopoly, and they are taking
advantage of that position to push cable rates through the roof. In Greenwood, cable rates
have risen by at least 8 percent per year for four straight years.

Long-term, this situation should fix itself. Other utilities, such as telephone and
power companies, are starting to get into the cable business. If Congress can be persuaded
to eliminate an antiquated law that protects the cable industry by prohibiting satellite
companies from carrying over-the-air broadcast channels on their dishes, that will created
a more level playing field, as well.

In the short term, though, the City Council, as the franchising authority, needs to
exercise more of the power it reportedly has over the setting of cable rates.

Until the public uproar created by this latest increase by Century, Greenwood officials
apparently were not aware that they had any regulatory authority over cable service. They
say they may have been woken up too late to do anything about the increase that takes
effect [this] month.

City Hall, however, won't have that excuse the next go-round.

While the issue is hot, the city must fully investigate with the FCC what say the City
Council has over cable rates.

If it can be determined by rational economic analysis -- not by emotion -- that Century
is gouging subscribers, city officials should act to stop the practice with whatever
authority they have.