Cable television rates resume march upward Operators cite new rules, but critics say executives are exploiting loopholes


For cable television subscribers nationwide, 1996 is starting to look a lot like 1986.

After a lull in recent years, cable rates are spiking up again -- more sharply than at any time since Congress deregulated the industry in the 1980s. In mail boxes from New York City to Norfolk, Va., and Seattle to Sacramento, Calif., cable subscribers have received the unwelcome news that their monthly bills are going up 5 percent to 20 percent.

By June, when Tele-Communications Inc., the nation's largest cable operator, implements its across-the-board rate increase of percent, most of America's 63 million cable subscribers will be paying up to $3.50 more a month to watch CNN, MTV and the other channels that are part of basic cable service.

Cable operators said the increases are a necessary adjustment to the stringent rate cuts that the government imposed on them in 1993, after a consumer backlash that prompted Congress to reregulate the industry.

But critics said the industry is now seizing on loopholes in these rules to resume its practice of hefty rate increases.

"This is deja vu," said Gene Kimmelman, the co-director of Consumers Union, a lobbying group in Washington that has been critical of the cable industry. "These rate increases rank with the largest that occurred after Congress first deregulated cable in 1984."

What makes this wave of increases remarkable is that it comes even before cable rates are to be deregulated again. Under the communications law passed earlier this year, all government controls on cable prices are to be removed -- but not until 1999, as the result of a compromise between Republican and Democratic lawmakers.

The compromise assumed that by the end of the century, the industry would have vigorous enough competition from satellite TV or telephone companies to prevent cable rates from soaring.

Until then, in theory, the Federal Communications Commission is supposed to keep a tight rein on cable rates, allowing increases only for inflation and programming costs. In practice, though, the current rules give cable operators leeway to pass along higher costs to customers.

So far, the rate increases have not ignited a nationwide consumer revolt like the one that prompted the government to roll back rates in 1993. But complaints are starting to pile up in local government offices in Sacramento, Portland, Ore., Suffolk, Va., and other cities.

But now, unlike in the 1980s, consumers may have little recourse to the rising rates.

With Congress having passed an intricate bill that strips away most regulations from telecommunications companies of all sorts, even lawmakers who harshly criticized cable rates will have scant leverage to rein them in.

Proponents of deregulation argue that the competition unleashed by the bill will curb cable rates. But satellite broadcasters still reach barely 2 million customers, compared with the 63 million served by cable.

Almost all the big cable operators have implemented -- or announced -- rate increases since January. Indeed, some analysts said the industry was pushing its rates now primarily to capitalize on its monopoly position.

"They still have a window," said Dennis Leibowitz, a cable analyst at Donaldson, Lufkin & Jenrette. "They are doing it now because later competition will make it harder."

Pub Date: 4/12/96

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