Corraling Cable Television

January 18, 1992

One of the great misfires of the Reagan deregulation effort was unleashing the might of the cable television industry on unsuspecting and unprotected consumers. Rates for basic service have soared since the passage of the Cable Television Act of 1984, which stripped local governments of the power to control cable rates.

In Montgomery County, rates have skyrocketed 1,394 percent for a similar channel offering since the law took effect in 1986. In Baltimore County, rates have risen as much as 105 percent; in Howard rates have jumped 86 percent; rates in Annapolis have increased more than 70 percent. The consumer price index, by comparison, rose about 25 percent.

Welcome to market forces at work. The problem is two-fold. First, cable TV is an enormously capital-intensive business. This severely limits who can compete and for how long. Second, few areas can support more than one operator serving the same households. Even in places where two systems exist, prices are driven down for a while, but then one operator buys out the other or a third comes in and gobbles up the two. Bingo, prices shoot up.

Short of congressional legislation, localities' hands are tied. The U.S. Senate is expected to act on the Cable Consumer Protection Act late this month. This bill would, among other things, allow local governments to regulate basic cable rates and make operators pay licensing fees to re-transmit local broadcast programming. But the bill may not make it through Congress. Even then, it would face a promised presidential veto.

A growing number of localities are taking affirmative steps to manage the one aspect of the business over which they have some control -- service. In Howard, where Storer Cable begins renegotiating its contract next year, local officials are demanding more public access channels for educational programming. In contracts renegotiated with North Arundel Cable and Jones Intercable South a year ago, Anne Arundel imposed a system of $500 per day fines for customer service violations ranging from installation no-shows and failing to answer phones to failing to meet agreed upon construction schedules. Customer service has improved markedly.

This is the kind of leverage that should be brought to bear on cable operators. Rate increases, it appears, will be regular and often. As a Comcast spokesman blithely pointed out, "All cable operators raise their rates at the beginning of the year." Deregulating what in practical terms almost always amounts to a monopoly service is a boondoggle that can only be corrected by the naive legislators who fell for cable's siren song. Making sure operators fulfill their obligations and serve the needs of local residents is the one power local governments still hold. They should exercise it.

JTC

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