Claims about cable prices by consumer group lobbyists continue to be misleading and factually inaccurate. Cable prices reflect cable costs, and cable continues to deliver great value for the dollar compared to every entertainment alternative.
The consumer group lobbyists have failed to take full account of the enormous investment cable operators have made in upgrading their networks to provide consumers with advanced broadband services. Since 1996, cable operators have invested more than $70 billion – or $1,000 per cable customer – in network improvements. In 2002 alone, capital expenditures averaged more than $200 per customer. The consumer lobbyists also minimize the fact that cable operators have experienced double digit programming cost increases and greater than inflationary labor increases in order to provide consumers with new services and improved customer care.
The consumer group lobbyists also have failed to acknowledge that most consumers enjoy a choice of at least three multi-channel video providers, including DirecTV, Dish Network, and a local cable operator. Some even enjoy four choices. This is not 1992 or 1996, when satellite competition barely existed. Today, nearly 20 million Americans subscribe to DBS. Cable operators understand this because they compete vigorously everyday in the marketplace. This competition has spurred new investment by cable, leading to the introduction of exciting new services like digital cable, high speed Internet and cable telephony, all to the benefit of consumers. The fact that one out of four multi-channel TV households is served by a provider other than cable establishes beyond question that consumers have and do make choices when it comes to multi-channel video. The consumer lobbyists’ regulatory agenda seems to blind them to this reality.
This same group of consumer group lobbyists previously has mischaracterized the nature of cable price increases. Cable rates weren’t deregulated until April 1, 1999, and for the 39-month period from that date through June 30, 2002 – the period covered by the most recent FCC video competition report – annual cable price increases averaged 5.15 percent, according to the U.S. Bureau of Labor Statistics (BLS). By comparison, for the 39-month period from January 1, 1996 through March 31, 1999 – during which time cable rates were regulated – cable price increases averaged more than 7.6 percent annually, according to BLS. Because the facts don’t fit the consumer groups’ regulatory agenda, they’ve distorted them by combining price increases for regulated and deregulated periods from 1996-2002. Yet the facts demonstrate that in the face of robust multi-channel video competition, cable price increases have moderated since deregulation.
Consumers Union and Consumer Federation of America report: Cable Mergers, Monopoly Power and Prices Increases.