FCC Refining a New Cable Rate Structure : Television: The industry lobbies against more price reductions. Proponents say the first round of cuts failed.

From Times Staff and Wire Reports

Responding to complaints that its first attempt to cut cable television rates didn’t work, the Federal Communications Commission will tackle the issue anew today. But the prospect of another major rate cut has dimmed.

When the FCC adopted cable price rules in April, it predicted that rates for regulated services would drop by at least 10% for two-thirds of America’s 57 million cable subscribers.

Some rates did just that, but others went up--an unintended consequence of the new regulations, which cover virtually all 11,000 U.S. cable systems, the FCC has said.


Many observers now expect some further reduction in the rates for service and equipment. Cable industry executives said rate cuts could range from 5% to as much as 15%.

But FCC Chairman Reed Hundt has been under pressure from congressional Republicans not to cut rates further. Opponents of a new round of federally mandated cuts argue that additional reductions could impair the cable industry’s ability to invest in an improved information infrastructure.

Proponents of additional cuts say the first round failed.

The 1992 Cable Act gave the FCC authority to oversee rates for channels not included in a basic cable package--channels such as ESPN and MTV--and any special equipment needed to deliver these channels. Rates for premium services, such as HBO, are not regulated.

Basic service generally consists of broadcast signals and public, educational and governmental access channels, and a few cable channels, such as CNN. Rates for that service are regulated by local governments, which also regulate rates for more common equipment, such as converter boxes and remote controls.

FCC economists and attorneys were refining the new rate structure late last week, and none would discuss either the size or scope of the expected cuts.

What the economists have been wrestling with is how best to estimate what price a local cable system would charge if it had competition. Only 3% of the nation’s cable systems compete with another cable provider.


Cable rates were virtually unregulated until 1992, when Congress directed the FCC to craft the rate structure that was unveiled last April.

Not only was there no regulation, there were no records of what cable companies were charging, which has made it difficult to determine a fair rate structure.

The cable industry has been furiously lobbying the FCC not to cut rates dramatically, warning that it could cripple cable investment in a national information superhighway and stifle job creation.

“If there are deep cuts in the range of 5% to 15%, cable companies’ ability to invest in programming and new technologies will be seriously damaged,” said Decker Anstrom, president of the National Cable Television Assn., the industry’s main lobbying group.

The Consumer Federation of America has been urging the FCC to slice cable rates by another 18%. “We want the whole enchilada,” said Bradley Stillman, the CFA’s general counsel.

That is not likely to happen; the FCC rejected a similar appeal last year.

The agency does not automatically review rates for the services it regulates. Instead, it waits for complaints from cities or consumers. But consumers who want to complain about the rates they’ve paid since Sept. 1, when the rates were first regulated, must do so by Feb. 28.


After that, consumers can challenge only what they pay for expanded basic service if the rate goes up.

Few such complaints have been filed. And with the drawing near, consumer groups and federal lawmakers have been trying to heighten awareness. Sen. Howard M. Metzenbaum (D-Ohio) on Feb. 15 sent letters to mayors of the nation’s 200 largest cities, urging them to file complaints with the FCC.