What Can Be Done about Cable Rates?

THE BALTIMORE SUN

I don't spend all my free time at home watching television. It just seems that way to my wife and kids. Never pass up the chance to see a classic movie for the 23rd time, or Monster Truck Crunchers, or a documentary on African wildebeest or reruns of "The Dick Van Dyke Show." Captain Couch Potato at the duty station.

All of which is to say that I have a strongly vested interest in what happens to cable TV rates, which are going up again.

For the majority of households today, television means cable TV. Not as a luxury, but as a basic service. A better antenna may bring in broadcast stations clearer, but it cannot capture signals of the cable-only channels that provide a greater diversity of entertainment and information and, yes, drivel.

For nonstop news and public affairs coverage, there's no broadcast equivalent of the various CNN and C-Span channels. Same with the 24-hour weather channel, and so on.

These programs, despite their value as a public utility, are not free. They shouldn't be. No more than this newspaper you're reading, or electricity and or sewage service. Cable operators have to be paid for bringing these channels to your TV set. But their monopoly status demands that government try to regulate prices and quality of service.

Unfortunately, the harder government tries, the more adept the cable operators become at finding the profitable loopholes. Too often, government ends up regulating the wrong part of the business, or doing it the wrong way, and consumers' cable bills continue to escalate.

In the case of cable TV in Harford County, both the feds and the county are regulators of rates. The Federal Communications Commission broadly oversees the industry with benchmark rates, under the Cable Act of 1992. That's the law that promised a 10 percent cut in cable bills and ended up costing most customers more money, under FCC pricing formulas.

Since September, the Harford County Council has been certified by the FCC to regulate rates for basic cable service and equipment used to receive the service. Basic service includes only local broadcast channels and the county public access channel, Harford Cable Network.

Basic is the service with the fewest customers for Comcast Cablevision, which has the lion's share of cable customers in Harford. It's the least important to the company in generating income, too.

So whether the County Council regulates the price of basic service or not, the vast majority of Comcast's 45,000 customers in Harford will not be much affected.

Yes, the charges for converter boxes and remote controls may be limited by the council's oversight. But the cable firm's main income comes from selling the packages of channels that are not locally regulated. Under the FCC rules, it can raise rates as costs rise and if it adds more channels to its packages.

It comes as no surprise that Comcast is raising its rate beginning March 1, adding a couple of channels and telling customers to take the service or leave it. County rates for the popular Expanded Basic Service with Value Pak will go up 7.5 percent on March 1, from $17.56 to $18.89. That increase may be worth it to some subscribers, who will get two new comedy and news channels plus a classic movies channel for the higher charge.

But other customers will be faced with the continuing rise in cable rates for things they do not want. You can't hold on to the old package because, like soap powders, the new and improved version is all that is available -- at a higher price.

Cable operators can bundle the channels into packages any way they wish. Consumers don't get to pick and choose (except for the "premium" channels, movies and Home Team Sports and the like). And the bundle prices keep rising, even as the cable companies claim they don't have more channel capacity available. If companies can earn more by offering channels a la carte, or by bundling channels together, they will do so. If they can increase profits by switching more available channels to pay-per-view, they'll do it.

Only "basic" service remains unchanged, but that's not what most people want. In many cases, Harford residents who buy basic service could probably get the same reception cheaper by installing an outdoor antenna.

Without real competition, however, cable rates will rise as far as operators can stretch the federal rules. And most customers will keep on paying the extra charges instead of canceling their service; the installation fee is high enough to discourage rash reactions. Where cable service competition exists, studies have shown, rates go down and the packages of channels offered customers become much more attractive.

Government regulation is a poor alternative, but it is the only one we have. Given the complexities of cable channel offerings, and the widely varying local franchise agreements across the United States, the FCC's "Going Forward" standard of 20 cents per new channel offered is perhaps the most manageable solution.

But most cable customers want more choice of channel packages offered, rather than more channels in fewer packages. That's one area where the government could do more to address consumer complaints.

Don't look to the Harford County Council for solutions to these problems. Its new authority only covers local basic service. And the council has yet to establish or approve or even hold hearings on rate schedules since assuming that authority.

Mike Burns is The Baltimore Sun's editorial writer in Harford County.

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