CU’s Statement on the FCC’s January 28 Cable Competition Report

Wednesday, January 28, 2004
Susan Herold, 202-462-6262

Statement from Consumers Union’s Gene Kimmelman, Senior Policy Director, on
the FCC’s Jan. 28 Cable Competition Report

“The FCC’s new cable competition report once again demonstrates how consumers have been short-changed and ripped off since Congress began deregulating the industry under the 1996 Telecommunications Act. As the FCC admits, much of the hoped-for competition — from telephone companies and cable “overbuilders” — has not materialized, and the explosion of satellite video has done virtually nothing to prevent cable from raising rates nearly three times faster than inflation.
“The Commission recognizes that in the few communities where there are two cable wires competing head to head (not just one cable and two satellite companies), prices are on average 15 percent lower than in communities with a single cable and two satellite providers. If head-to-head cable competition existed nationwide, consumers could save more than 4 billion dollars a year in cable charges.
“While the FCC repeats all the industry excuses for raising rates 53 percent since the Telecommunications Act, the agency fails to note that new revenues generated by services added to cable’s monopoly revenue base, such as high speed Internet and pay-per-view, would cover all investment in new technology and generate a reasonable profit with no need for basic rate increases.
“Once again the Commission fails to note the harms caused to consumers by cable’s unrestrained monopolistic practices, and the agency proposes nothing that will protect consumers from cable industry pricing abuses. It is time for Congress to step back in and provide consumers relief by promoting policies that generate more competition and more choices for consumers in the media marketplace.”