November 6, 2008
Probe Launched Into Cable Companies
Cable companies could be in big trouble after federal regulators investigate if they are raising prices as consumers prepare to switch to digital television.
The U.S. Federal Communications Commission sent letters to 12 companies after receiving complaints that some are increasing prices for programming packages.
The FCC says others are requiring customers to buy digital set-top boxes for fewer channels.
On February 17th, television broadcast signals will switch to digital from analog under a congressionally-mandated order to free up airwaves for emergency and other uses.
FCC Chairman Kevin Martin has been known to complain about growing cable prices, especially he points out, when rates for other technologies like cell phones have fallen.
Critics and consumer groups say cable companies may be using the digital switch as an excuse to change rates for packages.
"We are asking why some companies have taken steps to require customers to pay higher cable prices after the digital switch for the same channels that they received through analog signals previously," Martin said.
According to the FCC, prices for cable television nearly doubled in the decade that ended in 2005.
An industry spokesman said cable companies are moving their options to digital as part of the transition, which requires different channels and packages, and requires a set-top box.
Brian Dietz, a spokesman for the National Cable and Telecommunications Association, called the FCC inquiries "perplexing."
"The Bureau's actions are clearly contrary to the FCC's own policies encouraging the roll-out of new digital services," he said.
The FCC is investigating if companies are moving certain analog channels to digital only. The move puts them out of reach of customers who do not buy a company-supplied set top box.
In October, Consumers Union wrote to lawmakers questioning whether Comcast Corp and other cable companies were fueling growth by "reaching into the pockets of their subscribers."
The group noted Comcast's impressive 38 percent growth in third-quarter profits and rising prices.
Comcast, Time Warner Cable Inc, Bend Cable Communications, Brighthouse Networks, Cablevision Systems Corp, Charter Communications Inc, Cox Communications Inc, GCI Co, Harron Entertainment Co, RCN Corp and Suddenlink Communications were all sent letters from the FCC.
The federal agency also sent a letter to Verizon Communications Inc, a telephone company that provides services that compete with cable TV.
Company spokesman David Fish said Verizon was different from cable companies.
Fish said Verizon has never had separate tiers for analog and digital channels.
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On The Net:
Time Warner Cable Inc.
Bend Cable Communications
Cablevision Systems Corp.
Charter Communications Inc.
Cox Communications Inc.
Verizon Communications Inc.