The Federal Communications Commission has adopted new regulations that would give local cities and towns greater authority in controlling cable TV rates, but most cable systems in major metropolitan areas would not be affected.
Skyrocketing monthly fees and a flood of complaints about poor service have spurred both the FCC and Congress to take another look at four year-old legislation that freed the cable industry from local rate regulation.
Now, 97 percent of the nation's 9,600 cable TV systems are exempt from any kind of price controls. But under new rules backed by the Bush administration and voted unani
mously yesterday by the FCC, local governments would be able to control the prices charged by about 60 percent of the cable systems in the country.
The new rules would allow only cable TV systems facing competition from at least six over-the-air broadcast stations to // avoid regulation from local city councils or franchising authorities.
The cable industry has lobbied against any re-regulation of local rates on the grounds that it needs to pass along the costs of upgrading the systems and improving the quality of programming that subscribers want.
"Without the ability to increase rates at will or based on market conditions -- and subject to market forces -- a cable system either would not be able to justify adding a new service or may be forced to drop" one if it becomes too expensive, said William R. Cullen, senior vice president of United Artists Cable Corp., which operates systems totaling 165,000 cable subscribers in Los Angeles. It also owns the contract for the city of Baltimore.
Previously, cable TV systems were only subject to local rate regulation if they faced competition from three over-the-air stations. Such a standard exempted the overwhelming majority of cable systems around the country from local price controls.
In anticipation of the FCC's action yesterday, the cable industry for more than a year has been moving to restructure how it offers packages of channels to local subscribers. The 1984 Cable Act, which set the stage for deregulation of the industry two years later, restricted the FCC to regulating only the lowest tier of basic service, which primarily includes local, over-the-air TV stations.
As a result, cable companies have been "retiering" packages of channels that have removed such popular cable networks as ESPN, USA Network, CNN and the Discovery Channel from basic service and into a new so-called "expanded basic" tier, which is not subject to regulation. The FCC's decision "does nothing to prevent cable companies from gouging consumers by overcharging for the most popular cable programming," said Gene Kimmelman, legislative director for the Consumer Federation of America.
The cable companies say they have retiered because the programming services have increased their wholesale rates to the cable operator, which pass along the increase to the subscribers.