- July 24 - Cable television rates have increased 45 percent since the federal
government began deregulating the cable industry in 1996, while the industry continues
to break its promises to the government and consumers to promote competition,
according to a new report by Consumers Union, the nonprofit consumer organization
that publishes Consumer Reports magazine.
At a time when federal lawmakers and regulators are putting new checks and
balances in place to prevent corporate irresponsibility, the consumer group is
calling on policymakers to impose similar oversight of cable's monopolistic practices.
In a white paper entitled
Consumers and Impeding Competition: The State of the Cable Television Industry,
2002," Consumers Union says that the average monthly rates for cable
TV have skyrocketed since Congress approved the Telecommunications Act in February
1996. From that time until June 2002, cable rates shot up 44.7 percent, while
inflation rose 16.5 percent, as indicated by figures from the U.S. Bureau of Labor
Statistics. That means that cable rates increased nearly three times as fast as
inflation. Despite the enormous growth in satellite TV, satellite's popularity
has not restrained increases in cable rates.
Meanwhile, cable's commitment to bring competition to other telecommunications
sectors has gone largely unfulfilled. Cable's promise to expand into local phone
markets and challenge Bell monopolies is still a pipe dream for all but a handful
of consumers. Cable companies promised to open their systems to numerous providers
of high-speed Internet services, but most have kept their systems closed to outside
"Many cable industry leaders were willing to mislead Congress about how
'competitively' they would behave in return for deregulation," said Gene
Kimmelman, director of Consumers Union's Washington DC office. "They led
Wall Street on a wild goose chase in expanding telecom markets that were speculative
at best, and then some of them cooked their corporate books to conceal how irresponsible
their behavior had been."
Consumers Union is urging Congress and regulators to hold cable companies responsible
for abusive practices in the wake of similar efforts aimed at accountants and
"When markets fail to police themselves properly, it is critical to impose
oversight of market abuses, as Congress is attempting to do in response to problems
in the accounting industry. Congress should do the same thing with cable companies,"
said Kimmelman. "When you look at the price hikes and the broken promises
to compete, it is clear that there needs to be stricter public accountability
in the cable industry."
In its white paper Consumers Union criticizes the Federal Communications Commission
(FCC) for failing to encourage the development of new technologies to compete
with cable, and it calls on Congress to make the FCC reverse course. It also calls
on Congress to shift oversight of cable companies from the Federal Communications
Commission (FCC) to state regulators. The group believes that states should have
the same power over cable monopolies as they do over local telephone monopolies.
Consumers Union, publisher of Consumer Reports magazine, is an independent
nonprofit testing, educational and information organization serving only the consumer.
We are a comprehensive source of unbiased advice about products and services,
personal finance, health, nutrition and other consumer concerns. Since 1936, our
mission has been to test products, inform the public and protect consumers