WASHINGTON – Montgomery County Council member Marilyn Praisner can hardly go to the grocery store without getting stopped by a constituent who has a complaint about their cable TV service.
“It’s usually about the prices, the quality of service or the lack of service,” Praisner said Thursday.
Cable rates in Montgomery County have gone up the last three years “by three to four times the rate of inflation,” she said. That mirrors the nation: The Federal Communications Commission said the average monthly rate for cable and satellite subscribers grew 8.2 percent from 2002 to 2003 and 56 percent since 1996, nearly three times the rate of inflation.
The escalating costs of cable television sparked Thursday’s hearing before the Senate Commerce, Transportation and Science Committee, where government intervention was discussed as a possible remedy if price increases continue.
Any such decision would be felt in Maryland, where 74 percent of the state’s 2.07 million households with televisions have cable, according to the National Cable & Telecommunications Association.
“I was very encouraged,” said Praisner, who testified in her roles as chair of the National Association of Counties’ telecommunications committee and chair of Telecommunity, a telecommunications advocacy group for local governments. “This is clearly not a partisan issue.”
While lawmakers disagreed Thursday on how much government regulation of the cable industry is needed — if any — all agreed that increasingly higher costs for cable, combined with fewer consumer choices in TV channels, is a problem.
“When it comes to purchasing cable channels beyond the basic tier today, consumers have all the ‘choice’ of a Soviet election ballot,” said Sen. John McCain, R-Ariz. Consumers have “one option — take it or leave it. You want ESPN? You must buy 40-plus channels of expanded basic.”
The solution, according to a General Accounting Office report released at the hearing, is increased competition in the industry.
In the 2 percent of U.S. markets that have a choice between two or more cable companies, rates were 15 percent lower in 2001 than in markets without competition, the GAO reported.
But network and cable representatives claimed they already faced plenty of competition and blamed each other for increasing cable costs.
George Bodenheimer, president of ESPN and ABC Sports, said the “retail price decisions of cable operators” have driven up costs, while James O. Robbins, president and chief executive officer of Cox Communications Inc., said 66 percent of rate increases in 2002 were “directly attributable” to programming costs.
Both men opposed “a la carte” pricing, which would allow subscribers to choose and pay for only the channels they wanted to watch. Several senators, citing letters from parents’ groups, brought up a la carte pricing out of concerns that the current bundling of channels offers too ready a mix of family and adult-oriented channels.
The GAO agreed with the industry officials, reporting that a la carte pricing could reduce advertising, therefore increasing per-channel rates and reducing program choices.
Bodenheimer was more direct.
“Make no mistake about it, whether you call it a ‘family tier’ or a la carte, the consumer will be hit with higher costs and less choice,” he said.
Praisner said that while her groups support a la carte pricing, they still feel it is “not a solution to the real problem with cable — the lack of effective competition.”
She hopes that local governments “continue to be participants” in discussions of cable costs, noting that not only do local governments have cable franchising authority, but they also are usually the first people to hear the complaints of customers.
To that end, Praisner said she meets quarterly with Comcast officials to air constituent complaints. Though optimistic about the prospects for the cable industry, she remains realistic.
“We will continue to have those meetings as long as people continue to complain to me at the grocery store,” she said.
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