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Cable rate regulation is a valuable means of
obtaining data from cable providers and has helped limit equipment
rate increases. However, only basic service rates may be regulated
and the FCC has implemented rate regulation in a manner that permits
cable operators almost unfettered discretion to raise rates for
premium and other non-basic rates. Thus, consumers have seen very
little benefit from rate regulation. Sen. John McCain (R-AZ) has
questioned why cable rates continue to rise faster than the rate
of inflation and commissioned the GAO to investigate the matter.
Their report on cable rates was published in October 2003 (see below).
Rate regulation is further restrained by federal effective competition
statutes that permit local governments to be striped of their authority
to regulate rates if the FCC determines that effective competition
exists. The federal statute and the FCC’s industry-friendly
interpretation of it has led to instances where effective competition
is declared even if the cable operator continues to be the only
provider in portions of the franchise area. The statute and the
FCC have also permitted effective competition to be declared based
on the presence of DBS service, even though the FCC’s own
price study concluded that the presence of wireless video service
has no effect on wireline cable rates. Finally, there is growing
evidence that cable operators are requiring all basic service subscribers
to purchase higher-priced digital equipment, even if such subscribers
are not subscribing to digital services. This may have the effect
of helping the cable operator subsidize its rollout of cable modem
and other services.
For More Information
-------------------------------
GAO Report on Cable Rates: "Issues
Related to Competition and Subscriber Rates in the Cable Television
Industry", [GAO-04-8]
October 24, 2003
GAO Suggests Competition Good for
Cable
by Frank Ahrens
Washington
Post, October 25, 2003
Congressional Testimony before the Senate
Committee on Commerce, Science and Transportation. Media Ownership
in Video Markets: The Case for Competition and Effective Rate Regulation.
May 6, 2003
Testimony of TeleCommUnity, NACo, NATOA,
NLC and US Conference of Mayors on Cable Rate Issues
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PDF
Testimony of Mr. Gene Kimmelman of Consumers Union on Cable
Rate Issues
PDF
GAO Testimony: Data Gathering Weaknesses In FCC's Survey Of
Information on Factors Underlying Cable Rate Changes
PDF
Critique of FCC Rate Regulation Policy and
Rules
National Association of Telecommunications
Officers and Advisors (NATOA)
Comments and Reply Comments filed at the FCC In re Revisions to
Cable Television Rate Regulations, Notice of Proposed Rulemaking
and Order, MB Docket No. 02-144
2002
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The Failure of Cable Deregulation: A Blueprint
For Creating A Competitive, Pro-Consumer Cable Television Marketplace
US
PIRG Report, August 2003
GAO Interim Report: Review of FCC Analysis of Cable Rates Issues
in Providing Cable and Satellite Television Service
Report to the Senate Committee on the Judiciary, Subcommittee
on Antitrust, Competition, and Business and Consumer Rights, General
Accounting Office Report 03-130
October
15, 2002
FCC Reports
FCC Reports on Cable Industry Prices:
In re Statistical Report on Average Rates for Basic Service, Cable
Programming Service, and Equipment, MM Docket No. 92-266
April 4, 2002 |
July 8, 2003
FCC "Ninth Annual" Report: In re Annual Assessment
of the Status of Competition in the Market For the Delivery of
Video Programming, MB Docket No. 02-145
December 31, 2002
FCC 2002 Sec 706 Report -- Availability of High
Speed Services for Internet Access Report: FCC Wireline Competition
Bureau Industry Analysis and Technology Division, High Speed Services
for Internet Access
June 30, 2002
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