Washington— Consumer groups plan to advocate for the passage of federal legislation designed to regulate cable TV pricing and packaging, in an effort to trim the size of monthly cable bills.
The campaign is spearheaded by the Consumers Union and the Consumer Federation of America, which released a report last Wednesday that claimed cable operators have falsely blamed higher programming costs for rising consumer rates.
CU senior director of public policy and advocacy Gene Kimmelman said he plans to seek legislation that would empower state regulatory commissions to oversee cable rates and would require cable operators to allow consumers to purchase cable networks on an à la carte basis.
"Our concern is that the chairman of the Federal Communications Commission, Michael Powell, is coddling price-gouging cable monopolists," Kimmelman said at a press conference here. "It's time for Congress to come back in and revisit this issue."
Senate Commerce Committee chairman John McCain (R-Ariz.) is planning to examine cable rates after he receives an industry pricing study from the General Accounting Office later this year, McCain spokeswoman Pia Pialorsi said.
National Cable & Telecommunications Association spokesman Rob Stoddard said the consumer groups failed to take into account cable's $70 billion investment in new facilities and growing competition from direct broadcast satellite providers.
"Claims about cable prices by consumer-group lobbyists continue to be misleading and factually inaccurate. Cable prices reflect cable costs, and cable continues to deliver great value for the dollar compared to every entertainment alternative," Stoddard said in a statement.
Under his plan, aimed at expanding consumer choice, Kimmelman said cable operators should allow subscribers to drop channels from a tier, and should cut the price of the tier by an amount equal to the per-channel sum of each service that is dropped.
Alternatively, Kimmelman said cable subscribers should be allowed to select cable networks and pay for them on an à la carte basis.
Cable-industry supporters have said that à la carte pricing would not benefit consumers, in that five to 10 of the most popular cable networks sold à la carte might cost as much or more than 50 to 60 cable networks sold in a package.
Cable lobbyists and executive repeatedly argue that programming costs largely drive their retail cable rates higher.
CFA research director Mark Cooper said cable revenue from the sale of digital video and high-speed data products has been sufficient to cover programming cost increases and, therefore, cable operators do not need to raise basic rates.
Dish hike due
"It's a great story," Cooper told reporters. "It's not true."
Programming-cost explanations are not unique to cable. Last week, DBS provider EchoStar Communications Corp. raised monthly rates on its Dish Network platform across the board, effective Feb. 1.
The company plans to hike the price of its America's Top 50 service by 8.7 percent ($22.99 to $24.99), its America's Top 100 package by 6.3 percent ($31.99 to $33.99) and its America's Top 150 package by 4.9 percent ($40.99 to $42.99). EchoStar pledged to freeze the America's Top 50 price at $24.99 for two years.
"Rising programming costs and the addition of a variety of new basic channels necessitated the Dish Network increase," EchoStar said in a statement.
The smarter way to stay on top of the multichannel video marketplace. Sign up below.