Tangled Cable TV Rates

September 01, 1993

Was last year's cable television regulation law a boomerang? Its supporters predicted that rates, which had been climbing for years, would be rolled back by about 10 percent. The industry argued the opposite would happen. As the new law starts taking effect this month, it appears cable operators were correct.

The law is immensely complicated, and so are the regulations adopted last spring by the Federal Communications Commission. Clearly, the FCC thought it was rolling back the average charges viewers pay to get cable service. So did consumer advocates who had battled the industry for years. So did Wall Street, which immediately marked down the value of cable TV stocks.

But the cable companies thought otherwise, and they are carrying out their dire predictions -- at least in the short run. Cable companies throughout the region are sending out bills with the new rates that take effect this month. Nearly half of those bills in many areas carry higher charges. Most shocking to those who thought the new law favored consumers is the fact that viewers with the smaller monthly charges are paying most of the increases.

It will take time for the impact of the new rates nationally to be assessed. If the FCC's target of $1 billion in rate cuts is not met, its analysts will have to figure out why. Were they overly optimistic in their estimates, or have the cable companies found loopholes consumer advocates did not discover? In most cases the new cable rates are subject to federal or local review, but that will take time and a lot of expertise few local governments have.

One of the principal reasons the cable companies predicted higher rates was the new law's requirement that they negotiate with over-the-air broadcasters for the rights to carry their programs. Until now the cable systems have been required to carry them but not to pay for them. However, they appear to be winning the showdown with the over-air broadcasters. Although stations here still have not capitulated, the TV networks have agreed not to charge fees for the stations they own but rather to accept other concessions. If the prosperous, network-owned stations can't resist free transmission of their programs, it's not likely others can.

Officials who worked in the Bush administration and other critics of government regulation will cite the new cable TV rates as evidence of its futility. That leaves it up to regulators to determine if the new law is wrong in principle or in they way it is being implemented.

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