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The Landscape:
· According to government research, there are 65 million cable subscribers in the country. The cable industry is adding about 2 million subscribers a year. Currently, almost 70 percent of households subscribe to cable.
· More than 90 percent of cable subscribers receive expanded service, which usually includes the most popular cable channels such as ESPN, CNN, TBS and TNT.
· Since the passage of the Telecommunications Act of 1996 which called for the end of cable regulation, cable rates have climbed 24 percent and continue to climb about three or four times the rate of inflation.
· Federal Communications Commission data show that, in 150 communities where there has been competition, cable rates are about 10 percent lower than in areas where a cable provider has a monopoly on service. If rates were reduced to this competition level nationwide, consumers would save about $3 billion a year.
· Direct Broadcast Satellite service caters to the high-end of the television viewing market, failing to bring true competition to the cable industry.
· Due to the up-front costs for a satellite dish and related installation charges, which run three-to-five times the cost of installing cable, satellite TV remains too costly for many consumers.
· Consumers Union has found that satellite service today is little threat to cable because, in part, nearly one-half of satellite TV subscribers purchase cable as well.
· The Telecommunications Act of 1996 set an arbitrary three-year period on cable regulation, assuming that the industry would face increased competition from satellite broadcasters and telephone companies in that time. March 31 is the last day of that three-year period.
"When Republicans took over Congress in 1994, they made deregulation a priority and wanted no controls at all on the cable industry. It took two years to come up with legislation that would satisfy the Congress and secure Presidential approval. Despite preserving public oversight for three years, Congress made it clear that it wanted the Federal Communications Commission to get out of the business of regulation. And the FCC acquiesced with a 'hands-off' policy that has allowed cable rates to jump 24 percent in the last three years.
"The Telecommunications Act of 1996, a law that was supposed to provide consumers with competition to prevent skyrocketing cable rates, has failed to keep the hands of the cable operators out of consumers' wallets. Cable rates have risen almost four times the rate of inflation in the last three years. The rates just keep climbing because most of the 65 million Americans who subscribe to cable have no choice about where to get their service.
"Congress must take immediate, forceful action to correct its mistake and give consumers relief from spiraling cable rates. Consumers Union believes that policymakers must put a new lid on cable rates, and open the cable market to more competition from satellite television and other providers. Only when satellite television or other providers offer the vast majority of cable subscribers an alternative that meets their needs, will cable companies be forced to bring down prices.
"We believe it is critical to both enable and require satellite and other companies to become head-to-head competitors with cable for the core television services that consumers want most. This means:
· Elimination of rules that prevent satellite companies and other cable competitors from carrying local programs, such as local news.· Passage of legislation which gives satellite and other potential cable competitors comparable treatment under our nation's communications and copyright laws;
· Expansion of previous laws designed to hold down cable rates and make popular television channels available to cable's potential competitor's;
· Aggressive regulatory oversight of potential access to cable equipment and cable-owned programming;
· Strong antitrust and regulatory review of satellite mergers to ensure that satellite companies continue to reduce up-front costs and eliminate other obstacles to direct price competition with the cable industry.
"Unfortunately, April 1 will find most consumers playing the fool and paying inflated cable rates. Due to Congress' lack of action on this issue, the only choice consumers will have is to pay the ever-increasing cable bill or cancel their cable service."
