FCC Report Eyes Cable Prices-DBS

The Federal Communications Commission's ninth
report on multichannel competition - released
earlier in the week - scrutinized rising cable
rates as well as satellite TV's growing role
in the business.

The FCC report found that cable prices rose 6.3
percent between June 2001 and June 2002,
compared to a 1.1 percent increase in the
Consumer Price Index, which measures general
price changes. Concurrent with the rate increases,
the report found that the number of video and
non-video services offered to cable customers
increased. The report also found higher
programming costs, a concern for both cable
and satellite TV operators.

The FCC said cable pricing decisions may be
affected by direct competition. 'Available
evidence indicates that when an incumbent cable
operator faces 'effective competition' ... it
responds in a variety of ways, including lowering
prices or adding channels without changing the
monthly rate, as well as improving customer
service and adding new services such as interactive programming,' the commission's report said.

The FCC report also found that small dish
satellite TV subscribership represents 20.3
percent of all multichannel subscribers. Between
June 2001 and June 2002, the number of DBS
subscribers grew from almost 16 million households
to about 18 million households, which is
significantly higher than the cable subscriber
growth rate, the FCC report said.

The continued growth for satellite TV is
still - in part - attributable to DBS' delivery
of local TV, given that satellite-delivered
local TV packages usually attract former cable
subscribers, the FCC said.

The report said cable had 68.8 million customers
as of June 2002. However, the FCC said cable
operators have seen significant subscriber losses
and 2002 may be the first year in which the
industry sees a net loss of customers.

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