Bill’s Impact Could Send Basic Cable Rates Soaring

Commentary on a House staff bill regarding the digital TV transition has covered the waterfront. But there has been a glaring omission concerning the bill’s potentially deleterious impact on basic-cable rates.

As proposed by House Energy and Commerce Committee chairman Rep. Joe Barton (R-Texas), cable operators would, after the transition, be required to place analog and digital local-TV signals on the basic tier, which consumers must purchase before signing up for any cable programming service.

As long as cable operators continue to need to please both analog- and digital-equipped customers, Barton’s basic-tier mandate could send basic rates soaring.

A Barton aide dismissed this concern, saying basic rates would largely remain price-regulated at the local level.

In 2001, the FCC indicated that MSOs could recover costs to add local DTV signals but “rate adjustments should only apply to those that purchase digital programming.”

Because Barton’s bill would require all cable subscribers to “purchase digital programming,” it would appear to undermine the FCC’s effort to limit digital cost increases to digital subscribers.

Although MSOs get a lot of grief for raising rates, they at least can attribute increases to the addition of new channels so that per-channel rates remain flat or actually decline when adjusted for inflation.

Barton’s approach would appear to mean that all-analog cable subscribers would need to buy digital signals they can’t view, and all-digital subscribers would need to buy analog signals they don’t want.