Consumers Union Washington, DC Office

May 5, 1999

Consumers Union(1) believes that the need to promote more competition in the cable industry is blatantly obvious. Cable rates have risen about 24% since passage of the 1996 Telecommunications Act and continue to climb three to four times faster than the rate of inflation (see Attachment A). Under the current regulatory and statutory environment, satellite television has been unable to offer a mass-market alternative to cable.

The failure of federal policy to ensure reasonable cable rates makes it necessary for policymakers to pass legislation promoting increased competition to the cable industry. Legislation that puts cable's potential competitors on the same legal footing as cable companies would undoubtedly open the door to more choice for consumers, and will hopefully lower prices in the multichannel video programming market.

Consumers Union believes it is critical to enable satellite companies to become head-to-head competitors with cable for the core TV services that consumers watch the most. We also believe that because of the highly concentrated nature of the cable marketplace, policies designed to foster increased competition throughout the market require giving potential competitors like satellite TV breathing room as they seek to enter the market and expand their businesses.

Consumers Union believes that Congress has a responsibility to the nation's consumers to pass forceful legislation designed to promote mass-market competition to the cable industry and block cable's monopolistic practices. Such legislation could offer much needed relief to consumers from spiraling cable rates. H.R. 1554, which recently passed the House, provides a first step in that direction by seeking to end discriminatory practices that could thwart effective competition to cable. We look forward to working with the Senate and in Conference to ensure that the final bill will allow satellite TV and other potential competitors a fair chance to compete on price with the cable television industry.

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(1) Consumers Union is a nonprofit membership organization chartered in 1936 under the laws of the State of New York to provide consumers with information, education and counsel about good, services, health, and personal finance; and to initiate and cooperate with individual and group efforts to maintain and enhance the quality of life for consumers. Consumers Union's income is solely derived from the sale of Consumer Reports, its other publications and from noncommercial contributions, grants and fees. In addition to reports on Consumers Union's own product testing, Consumer Reports with approximately 4.5 million paid circulation, regularly, carries articles on health, product safety, marketplace economics and legislative, judicial and regulatory actions which affect consumer welfare. Consumers Union's publications carry no advertising and receive no commercial support.