AT&T; to Raise 2002 Cable Service Rates

AT&T; Broadband, the No. 1 U.S. cable television company, said Friday that it will increase 2002 cable service rates by an average of 5.5% to offset its increased operating costs and the higher fees it pays for programming.

AT&T; Broadband, a unit of telephone giant AT&T; Corp., said the price hike affects all standard cable customers and some basic and “digital value” customers. Total monthly rates vary by market, said the cable company, which is weighing takeover offers from Comcast Corp., among others.

“Every market will be increasing prices, but not every market would take every base of customers up,” AT&T; Broadband spokeswoman Sarah Eder said.

Advocacy group Consumers Union criticized the rate hike and pointed to the lack of competition in the cable television market as a reason for cable service rates rising 35% over the last five years.

“This is a consistent but disappointing trend. Rates for broadband continue to go up as inflation remains low and the cost of goods remains low,” said David Butler, a spokesman for the Washington office of Consumers Union.

A report by the Federal Communications Commission said average monthly cable TV rates rose 5.8% during the 12-month period ended July 1, 2000, compared with an increase of 4.5% in the prior year. The FCC study looked at prices of basic service, other cable programming services and equipment charged by cable companies facing competition.

“Everyday costs such as putting gas in field trucks and paying competitive wages to customer-care personnel and technicians have increased,” AT&T; Broadband said when announcing the rate increase.

The firm also cited higher fees it’s paying programmers for the rights to carry their content.

AT&T; Broadband said its programming costs in 2002 will increase by about 15%, with sports programming accounting for the largest portion of the increase.

For the 12 months ended July 1, 2000, the FCC said, cable operators attributed 44.1% of their rate increases to higher programming costs. Other factors that reportedly led to price increases were system upgrades, equipment cost increases, inflation and increased costs for programming associated with newly added channels, the report said.

AT&T; Broadband said it will notify its 13.7 million subscribers in areas where prices are changing.

AT&T; shares rose 63 cents to close at $15.67 on the New York Stock Exchange.