DirecTV in the News

Congress Questions Cable Price Increase

WASHINGTON (AP) -- April 4, 2001 -- Too many Americans open their cable TV bills and discover surprise increases, lawmakers said Wednesday as they quizzed industry leaders on how to keep costs in check.

Cable executives, summoned to Capitol Hill, defended their monthly rates -- which increased last year by 5.8 percent, about $2 for an average bill of $34.11 for basic plans. They cited the higher costs they pay to carry popular programming like sports channels.

Companies also have incurred costs to add new channels and upgrade their facilities to offer high-speed Internet access and phone service.

Still, the cost per channel to consumers actually has stayed stable for a number of years, said Robert Sachs, head of the National Cable Television Association, the industry's top lobbying group.

"Compared to other entertainment options, cable remains a good value,'' he said.

Cable businesses have no choice but to boost the channels and new products they offer if they want to keep pace with the satellite TV industry, said Jerry Kent, head of Charter Communications, the nation's fourth-largest cable business.

"We are just now catching up,'' Kent said.

But senators on the Senate Judiciary's antitrust, business rights and competition subcommittee pondered why cable bills haven't declined more rapidly after the government stopped regulating the industry to foster competition.

"Can consumers expect to see cable rates decrease any time soon?'' asked Sen. Mike DeWine, R-Ohio, the subcommittee chairman.

Not until there is widespread, head-to-head competition between cable companies, asserted consumer advocate Gene Kimmelman. He cited figures showing that rates go down when a new cable company enters a market and challenges the lone provider already there.

RCN Corp. (NasdaqNM:RCNC - news), created after a 1996 law freed cable and phone companies to compete more vigorously, is one such rival provider. While the company has had success in building cable systems along the Northeast, it still faces serious competitive hurdles, vice chairman Bob Currey said.

For one, the cable company already dominating the market often strikes exclusive arrangements with building landlords that make it impossible for a new player to get in, he said.

"During the transition to competition, we need the government's active oversight and enforcement of the rules,'' Currey told the panel.

Both satellite and cable competitors urged Congress to close a loophole in federal law that allows cable businesses to refuse to sell some of the programming they create -- including regional sports channels -- to rivals.

That creates an unfair playing field because subscribers will opt for the service that gives them programs they want -- such as coveted local sports coverage, said Eddy Hartenstein, chairman of DirecTV, the satellite TV provider to more than 9.5 million customers.

The subcommittee's top Democrat, Sen. Herb Kohl of Wisconsin, suggested that Congress address these inconsistencies as it extends the life of the very rules that give cable and satellite companies access to programming produced by their rivals. Those are set to expire in 2002.