L.A. Seeks Authority to Set Cable TV Rates
Hoping to rein in cable television rates in some of Los Angeles’ poorer communities, city officials will soon apply for new fee-setting authority over companies that serve areas including South-Central Los Angeles, Boyle Heights, Eagle Rock and the Hollywood-Wilshire area.
The applications, city officials said, will be forwarded to the Federal Communications Commission as early as this week. They will ask that the four cable franchises not be excused from a new federal law governing the cable industry.
The law, approved last year by Congress, established new regulations for the cable industry. But it also provides some exclusions, including one for companies that do not have more than 30% of an area’s households as subscribers. Federal officials used the subscription rate as a benchmark for competition on grounds that companies serving so small a percentage of households must be in competitive markets, and thus should not face new rules.
But Los Angeles officials dispute that argument and hope to have the same rate-setting authority over all of the city’s 14 cable franchises.
For one thing, they say that there is no competition in any of the city’s 14 cable areas because each company is awarded an exclusive franchise. The low percentage of subscribers in some franchise areas, they say, may reflect several factors--including economics--but has nothing to do with competition.
Moreover, officials note that they already have asked the FCC for some rate-setting authority for the 10 franchise areas with higher subscription rates and that those areas should not be held to different, tougher requirements.
“The city feels that all of the residents of the city should be treated in the same manner . . . so residents in all areas should have benefits of rate regulatory provisions,” said David Hankin, assistant general manager of the city’s Department of Telecommunications.
Hankin made his comment after the council voted for the new rate authority.
The action was requested by Councilman Rudy Svorinich Jr., whose district extends from Watts to San Pedro. Watts is among the areas served by the South-Central franchise operated by Continental Cablevision.
“I believe it’s in the best interest of consumers . . . to make sure that the people of Los Angeles have cable rates that are equally and fairly distributed,” Svorinich said.
But officials with the cable companies serving the city’s less affluent areas argued that the action was unnecessary since their fees are often lower than those charged in other parts of the city. And, they say, their rates for basic service have generally stayed the same or gone down since the new federal regulations took effect.
“It’s interesting that our systems, systems affected by this motion, have the lowest rates in town . . . so where is the issue here?” said John Gibbs of Continental Cablevision. The company, which operates the South-Central and Hollywood-Wilshire franchises, recently dropped rates for its basic 22-channel service.
Ben Ochoa, general manager of Buenavision Telecommunications, said his company was freezing its basic rate charge at $21.90 after a $1 increase last year.
Nevertheless, the city’s Hankin defended the city’s decision to seek rate-setting authority even for companies that have frozen or lowered basic rates. “Rate regulatory authority means just that,” he said. “We want to make sure that all the companies are treated alike.”
Previously, the council adopted a motion by Councilman Joel Wachs that also sought to regulate rates by local cable television operators, particularly in the case of customers who are on low or fixed incomes. That action was taken after it was determined that the same 1992 cable regulations--dubbed the Cable Competition and Consumer Protection Act--may lead to higher rates for customers with basic service while lowering them for subscribers with premium services.
The rate adjustments were anticipated because new federal rules require cable operators to cut rates for certain services, such as remote control devices, and--to make up the loss--companies were proposing higher rates for basic cable service.
Under the new regulations, local jurisdictions will have rate-setting authority only for basic broadcast stations and costs associated with the installation of cable programming, while the FCC will retain jurisdiction over rates for cable programs delivered by satelite, such as CNN, ESPN and so-called superstations like Chicago’s WGN.
Rates for premium channels broadcasting movies or sports programs will continue to be unregulated by either federal or state authorities.