Cable TV rates across the U.S. are rising faster than the general rate of inflation, although rates are lower in areas where there exists wireline cable competition, according to a newly issued, 94-page report from the federal government’s General Accounting Office (GAO). Major findings of the report include the following:
- during the past 5 years, cable TV rates have increased approximately 40%, well in excess of the approximate 12% increase in the general rated of inflation over this period.
- the primary reason for cable rate increases are that programming costs by cable operators have risen on average by as much as 34% over the past three years, and cable operators have spent billions of dollars upgrading their networks and improving customer service. Costs associated with sport programming over cable networks has risen on average by 59% over the past three years.
- in areas where consumers can local broadcast stations from both of the top DBS providers, the DBS penetration rate is approximately 40% higher than areas where local content is not available via DBS.
- the report did not find that ownership affiliations between cable networks (such as CNN or ESPN) and broadcasters (such as NBC or CBS) or between cable networks and cable operators (such as Time Warner or Cablevision) are associated with the level of license fees.
The GAO report also criticized the reliability of data used in the FCC’s annual report on the cable industry. The GAO randomly sampled 100 out of 750 cable franchises, concluding that the FCC’s cable report may not provide reliable information on recent cable rate increases and the effect of competition. For instance, 84 out of the 100 cable companies it surveyed did not provide a complete account of their cost changes in the past year. The GAO is recommending that the FCC take steps to improve the quality of its data collection.
Although reregulation of cable rates stands as a possible option for Congress to consider, the GAO report recommends taking steps to promote competition and allowing the normal workings of the marketplace to reduce rates. Specific options include reviewing whether modifications to the program access rules would be beneficial, promoting wireless competition, and reviewing whether changes to the retransmission consent process should be considered.
http://www.gao.gov