Up to One-Third of Cable Viewers Face Rate Hikes

Despite early promises to the contrary, as many as one-third of the nation’s 57 million cable television households face price increases when the new federal regulations designed to put the lid on rates take effect Wednesday.

The rate increases, mostly in the range of $1 to $3 a month, will fall hardest on basic-service-only subscribers, whose bills are already relatively low, and on customers receiving several premium entertainment channels, such as the popular HBO, Disney and Cinemax.

If a consumer outcry arises over the new bills, it could prompt Congress to try a second time to regulate cable rates. Some lawmakers say that they are ready to step in if necessary.

“When we said that two-thirds or three-quarters of cable subscribers would get rate decreases, we never imagined that the rest would get an increase,” said Rep. Edward J. Markey (D-Mass.), an author of the new cable rate law. “We’re looking at it hard and we will demand answers from the industry.”

Overall, government authorities and cable companies are sticking by their original prediction that two-thirds of consumers nationally will save a total of $1 billion per year on their cable bills. Most of these subscribers are expected to get a rate cut of about 10%.

But the rate cuts fostered by Congress and federal regulators over the last year will flow mainly to families now spending large sums for multiple cable connections and extra equipment, and could range as high as $15 or $20 per month.

An estimated 4 million Southern California cable subscribers will be told of their new rates in their September bills, which should begin arriving in mailboxes as early as today. These notices will be the first realization for many households that the new cable law can bring increases as well as cuts.

“We know consumers will be upset, but we’re only following the law,” insisted Dale Bennett, vice president of California operations for Tele-Communications Inc., the nation’s largest cable owner, whose territories include 200,000 customers in portions of the San Gabriel Valley and Riverside County. “It just didn’t work out as everyone anticipated it would.”

But James Quello, interim chairman of the Federal Communications Commission, accused the cable industry of publicizing the minority of cases in which cable bills will rise in an effort to discredit the new federal cable law. Broadcasting & Cable, a trade journal, quoted him as saying that the industry should be careful: “They could tick off Congress and the FCC.”

And some consumer groups say that the cable companies, which vigorously fought re-regulation, are now packaging their services to circumvent the new rules.

“It’s a loophole that the cable companies are using to avoid the reductions that Congress and the FCC wanted and intended to give,” asserted Bradley Stillman, legislative counsel for the Consumer Federation in Washington, D.C.

Stillman predicted that subscribers would only see real cuts in their cable bills with the advent of competition from direct broadcast satellite technology in the next few years.

At the heart of the issue is a complicated set of regulations drafted by the FCC after Congress’ passage in October of a law designed to put a halt to the rapid rise in cable rates that followed the industry’s deregulation in 1986.

Under the FCC regulations, cable operators are required to reduce many charges, but are permitted to increase other rates--so long as the rate hikes generate less money than the required price cuts.

The FCC’s new rate scheme is complicated and its formulas apply differently to each of the estimated 11,000 cable territories. Further, cable customers sign up for different types of services. As a result, it is impossible to offer generalized rate information.

However, the FCC says that the biggest changes will come in the area of equipment fees.

The law forbids companies to charge customers with multiple cable connections an extra service fee for those additional outlets. It also requires cable operators to base charges for renting such equipment as converter boxes and remote control devices on their actual cost. As a result, households with multiple connections will save the most.

Linda Waters of Aliso Viejo in Orange County said that her cable company told her she would save $11 each month on her current $43 bill because charges were dropping for converter boxes, remote controls and her second TV outlet.

“I called my husband to tell him there was a rate change, and he just automatically assumed it was an increase,” she said. “I’m thrilled. That’s a little over $100 a year. It adds up pretty fast.”

Among the subscribers likely to be hit with an increase are those now getting only the cheapest cable services, including “basic” and the next level up, often called “enhanced basic.” These customers may find that their cable operator has removed programming from these categories and put it in a separate cluster for which there is an additional charge.

For example, Continental Cable, which serves 323,000 households in and around Los Angeles, has created a new cluster with three popular channels--TNT, WTBS and WGN--that used to be part of its other packages. It is charging $1.50 per month for the new cluster.

As a result of all of the rate changes, said John Gibbs, Continental’s vice president for legal affairs, a large number of Continental subscribers will see monthly charges rise about $1.40.

Still other operators are increasing fees for certain premium channels and pay-per-view services that are not covered by the new rate regulations. For example, Comcast will charge 50 cents more per month for HBO. TCI will charge about $1 per month more for each premium channel.

One TCI family in Arcadia, for example, learned that its rate would increase from $40.90 to $45.17 per month because of a nearly $5.50 increase in Disney and HBO.

“It’s going to be a mess before it gets better,” said John Vrba, an Irvine resident and Dimension Cable Services customer. Vrba complained that his cable company had added three foreign-language programs and a religious broadcast, none of which interest him. “They took the more popular channels and put them on a fee. I think it’s a way to get around the stated intent of the FCC.

“They took the Nashville Network away, and that’s something I’d like to have.”

The new cable law also changes the way consumers must complain about suspected price-gouging. Complaints about basic service must be lodged with the local franchising authority, usually the city or county government. Complaints about all other matters must be filed with the FCC.

Complaint forms are available by writing to the FCC, Cable Form Request 329, P.O. Box 18238, Washington, D.C. 20036.