U.S. Rep. Paul Kanjorski called for congressional action after bankrupt Adelphia Communications announced an Aug. 1 increase in basic service prices for customers in Scranton in his northeastern Pennsylvania district, the second increase in a year for the area.
Adelphia said the increases, like others in Buffalo, N.Y., and in Martin and St. Lucie counties in Florida, were necessary to cover rising costs. In Buffalo and Scranton, those included the cost of adding the Yankees Entertainment & Sports Network, the New York Yankees' new channel.
Cox Communications also cited rising programming costs in increasing rates for San Diego County, Calif., customers more than 4 percent July 1 after a 3.7 percent increase in September. Cox vice president Dan Novak said that included sports programming cost increases up to 15 percent. San Diego County's other major cable company, Time Warner Cable, raised rates 5.9 percent in January.
The cable television industry won deregulation of its rates and service 1984, was re-regulated in 1992, and won deregulation again in 1996. But the most recent FCC report on cable prices said rates rose 7.5 percent from July 2000 to July 2001, more than twice the inflation rate of 3.4 percent.
"Consumers have a right to know why cable rates continue to climb faster than the rate of inflation," Sen. John McCain said in a letter asking the General Accounting Office to investigate cable rates.
The GAO hasn't launched the study, and McCain spokeswoman Pia Pialorsi said the senator won't propose legislation concerning cable rates until he learns the causes of the increases he termed "all too familiar to consumers."
"They continue to endure rate increases that outstrip, by many multitudes, the price increases of other consumer goods and services," McCain wrote.
The Center for Digital Democracy, a consumer-advocacy group in Washington, D.C., has called on consumers to urge legislators to rein in what it terms unfair cable pricing practices.
"In light of ongoing cable industry consolidation, the 'Don't protect cable consumers' slant of the FCC, and recent revelations about misspending of funds at Adelphia Communications, it's time for the public to take up the issue of cable price-gouging," said Jeff Chester, executive director of the group.
Chester noted a Consumer Reports study of cable television, airlines, banking, telephone and electric service that called cable television "the most monopolistic of the industries we evaluated" and said rates have "skyrocketed under deregulation."
Mark Cooper, director of research for the Consumer Federation of America, also urged increased oversight, noting Senate testimony by AT&T and Comcast executives suggesting that cable modem customers who download large files such as videos and songs may face higher rates.
AT&T Chairman Michael Armstrong told a Senate panel that existing technology would enable companies to track "the Net hogs" and charge them higher rates. Comcast President Brian Roberts told the panel it would be "very logical" to charge according to consumption.
At last week's meeting where Comcast shareholders approved the proposed merger with AT&T Broadband expected to form the nation's largest cable company, AT&T Comcast, Roberts said the company's main revenue-raising strategy would be to sell customers new products, such as premium cable services.
But Cooper predicted price increases as well.
"The simple fact of the matter is that if you look at the argument they made for the merger, to increase the profit margins for AT&T systems, the answer is the way you do that is raise prices," Cooper said. "This has been the history of the industry."
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