Cable Companies Under Fire

The cable industry is under fire in Washington over its reluctance to embrace digital television, as well as over rate hikes that exceed the rate of inflation. Both problems have attracted the attention of legislators.

At the recent HDTV Summit in the nation's capitol, cable operators were accused of pricing schemes and other tactics that force consumers away from high-definition television. National Association of Broadcasters (NAB) president Edward Fritts described the cable providers as "monopoly gatekeepers" because they carry only 75 of the 779 DTV broadcast stations now on the air.

The National Cable & Telecommunications Association (NCTA) president Robert Sachs countered that his industry is under no legal mandate to carry both analog and digital signals. He also pointed out that some stations aren't carried by cable because they demand payment for HDTV programming. Once analog broadcasts are shut down, cable companies will have no choice but to carry digital, Sachs said. That won't happen until digital broadcasting achieves a majority of the TV market as determined by the Federal Communications Commission (FCC). Cable providers have invested $70 billion in upgrades to compete with satellite services. EchoStar and DirecTV offer the widest array of digital programming currently available to most consumers.

US House of Representatives Energy and Commerce Committee chairman Billy Tauzin (R-LA) plans to conduct hearings on a new DTV bill shortly after the Easter recess. Among the committee's considerations will be cable-carriage rights for multicasting, and so-called "plug-and-play" standards. On March 15, US Senate Commerce Committee chairman John McCain said that the five top US cable operators should let consumers choose which channels they receive and pay accordingly, rather than pay for dozens that they don't watch. Such a system would combat rising cable rates, McCain explained.

Cable rates rose 6.3% in the year ended June 2002, according to FCC statistics. About 68.8 million consumers subscribe to cable services, but only 250,000 new ones signed on last year compared to approximately two million who subscribed to satellite services in the same period.

Providing more choice for consumers would be "an important first step to lowering cable rates," McCain stated, "Although not a complete solution to the problem of skyrocketing rates." The former presidential hopeful made his suggestions known in a letter sent to the heads of Comcast Corp., Time Warner Cable, Charter Communications, Cox Communications, and Adelphia Communications Corp.