Steve Mehs
01-09-03, 04:00 AM
Citing recent rate increases by cable companies, the Consumer Federation of America and Consumers Union released a report Wednesday bringing attention to continuing fee hikes for wired TV services.
In their presentation, the groups said rising rates are out of control since cable operators continue to take advantage of their monopoly power. The consumer groups insisted that exorbitant cable rate hikes are largely due to the lack of direct competition that exists for a majority of cable companies nationwide.
The groups also said they don't buy the cable industry argument that rates continue to increase due to skyrocketing programming costs. Industry and government statistics show that cable revenues are rising much faster than industry costs, they said. And revenues from advertising, digital cable and other add-on services are enough to cover the expense of upgrades and programming costs, the groups insisted.
In addition, operating margins for cable operators have been increasing dramatically since 1997, reaching a projected $18.8 billion a year in 2002, $7 billion more than it was in 1997. "If costs were really the cause of rising prices, then the cable industries’ operating margins – the difference between its revenues and costs - would not be rising," the report from the two groups said.
The Consumer Federation and Consumers Union also criticized the Federal Communications Commission for not doing enough to curb cable prices. "The FCC appears to have little interest in reigning in cable operators, since Michael Powell, who chairs the agency, insists that rising prices are not a consumer problem," they said.
From SkyReport (http://www.skyreport.com/skyreport/jan2003/010903.shtm#two) (Used with Permission)
In their presentation, the groups said rising rates are out of control since cable operators continue to take advantage of their monopoly power. The consumer groups insisted that exorbitant cable rate hikes are largely due to the lack of direct competition that exists for a majority of cable companies nationwide.
The groups also said they don't buy the cable industry argument that rates continue to increase due to skyrocketing programming costs. Industry and government statistics show that cable revenues are rising much faster than industry costs, they said. And revenues from advertising, digital cable and other add-on services are enough to cover the expense of upgrades and programming costs, the groups insisted.
In addition, operating margins for cable operators have been increasing dramatically since 1997, reaching a projected $18.8 billion a year in 2002, $7 billion more than it was in 1997. "If costs were really the cause of rising prices, then the cable industries’ operating margins – the difference between its revenues and costs - would not be rising," the report from the two groups said.
The Consumer Federation and Consumers Union also criticized the Federal Communications Commission for not doing enough to curb cable prices. "The FCC appears to have little interest in reigning in cable operators, since Michael Powell, who chairs the agency, insists that rising prices are not a consumer problem," they said.
From SkyReport (http://www.skyreport.com/skyreport/jan2003/010903.shtm#two) (Used with Permission)