Cable Rate Reduction

[David Farber <farber () central cis upenn edu>]

CyberWire Dispatch//Copyright 1994


Jacking in from the Discount Port:


Washington, DC -- Your Beavis and Butthead jones just got cheaper, thanks
to a ruling today by the Federal Communications Commission that will cut
cable rates by 7 percent.  It's the second such rate reduction ordered by
the Commission in less than a year.  The first cut was supposed to lower
rates for all cable subscribers by at least 10%.  But something got lost
in the mix.  Consumers and cable operators alike criticized the move.


FCC Chairman Reed Hundt declared the move a "brilliant balance" offsetting
consumer groups claims that rates should be 18 percent lower and cable
operators that claim their bottom lines have already tanked some $2 billion
because of rate rollbacks.


The 7 percent was a tough compromise.  According to confidential internal
FCC memos obtained by Dispatch, Hundt was lobbying his fellow commissioners
hard for a 16% cut.  The proposal had no takers.  Commissioner James Quello
agreed with the 7 percent figure, saying consumer would be "better served."
Commissioner Andrew Barrett, however, said the figure was on the "high
side," but voted with for the decrease anyway.  According to the FCC
internal memos, Barrett had threatened to torpedo any increase above 6
percent.


The unanimous decision was a "Take Two" move by the Commission; cuts
ordered last year lowered bills for about 2/3 of all cable subscribers, but
the rest were hit with as much as a 31% increase.  Cable couch potatoes
howled.  And the Commission sat up and took notice.


The new round of rate regulation only applies to "expanded basic" services.
Local governments regulate basic cable rates -- and if you think those are
too high, you can bitch the FCC.  Honest. There's even an official FCC form
you can fill out, just pick one up at your local cable office.


What the new cuts won't effect are the premium channels:  HBO, Showtime,
Howard Stern's Pay-Per-View T&A Extravaganza.  Those services will still be
priced at what the market will bear.


Under the new rules, cable companies are allowed to earn a "reasonable rate
of return" on their investments, the FCC said, but the formula for
"reasonable" isn't quite clear.  Cable companies that feel like they're
getting screwed can appeal to the Commission.


Meeks out....