The Consumers Union last week urged Congress to crack down on cable TV rates by shifting regulatory authority over the industry from the Federal Communications Commission to the states.
“Congress should provide states the same power over cable monopolies that they have over telephone monopolies,” the watchdog group said in a report released in Washington.
Among other things, the report alleges that cable rates have risen 44.7 percent-21/2 times the rate of inflation-since 1996, when the Telecommunications Act was approved. That law provided for cable’s deregulation.
“When markets fail to police themselves properly, it is critical to impose oversight of market abuses,” said Gene Kimmelman, director of the Consumers Union’s Washington office.
But Marc Smith, a spokesman for the National Cable & Telecommunications Association, said the report was based on a false premise because cable rates weren’t actually deregulated until March 1999.
“According to the Bureau of Labor Statistics, cable prices have exceeded the rate of inflation by 2.35 percent a year since prices were deregulated while they increased 5.34 percent during the three years of regulation after 1996,” Mr. Smith said.
“The report unfairly singles out the cable industry and ignores the pricing pressures faced by all multichannel providers, including DBS, which have been forced to raise their prices as well to compensate for increased programming costs.”
The report was originally supposed to be unveiled during a Senate communications subcommittee hearing on cable rates last week.
But Sen. Daniel Inouye, D-Hawaii, who chairs the panel, canceled the session without explaining why.
Sources, however, said the lawmaker was concerned that the hearings might compound the industry’s financial woes at a time when cable stocks were already hurting. That’s an argument the cable industry had been promoting on Capitol Hill.