Why is my cable TV bill going up so fast?

John W. Schoen Senior Producer • Profile • E-mail

This week, Erik in Washington state is steamed about increases in his cable TV bill. Turns out he may be getting some help from the FCC. Over in the other Washington (D.C.), Elena and her husband are drowning in financial records and trying to figure out what they can toss.

Why can Comcast cable basic rate increase 3-4 percent every year for the last four years?
-- Erik, Buckley, Wash.

If your cable TV rates have gone up by 4 percent a year, you’re getting off relatively easy, according to a report last week form the Federal Communications Commission. Since 1996, the average monthly cable bill is up 93 percent, the commission reported last week.

Deregulation was supposed to help bring down the price of many telecommunications services, and it most cases it has. Over the past decade, for example, telephone rates are down 40 percent and wireless rates down 80 percent, according to the FCC.  

But it hasn’t worked out that way with cable TV rates. The average cable bill rose 5.6 percent in 2005 — to $43.04. Basic cable was up 3.3 percent to $14.30 and “expanded” basic — the package 84 percent of cable subscribers chose — was up 6.2 percent to $28.74.

In theory, cable companies aren’t supposed to be able to just raise their rates as much as they want. The cable television industry is regulated by thousands of individual local franchise authorities — city or county commissions set up by the states — which grant cable operators the right to sell their service. Apart from reviewing rates, these commissions collect franchise fees from the cable company and are supposed to make sure customers get good service. (It looks like your local franchise authority is the Rainier Communications Commission, so if you’ve got a complaint about Comcast, you should give them a call.)

Local Franchise Authorities — usually — regulate basic cable rates, though there are certain situations when these basic rates go unregulated. And rates for all other service tiers are unregulated.

Which means cable companies can effectively charge whatever they want. And unlike, say, the wireless phone industry, there’s a lot less competition among cable television companies in a given service area. Though the cable operators have recently begun offering local and long distance phone services, telephone companies complain they’ve hit roadblocks when they try to offer digital television service over their newly installed fiber optic cables.

All of which could be about to change. Last week, the FCC voted to streamline the approval process for telephone companies that want to sell you television services. The new rules set deadlines for local regulators to review applications from phone companies that want to offer you digital TV service. And the FCC voted to restrict the demands local franchise authorities on phone companies in exchange for approval — everything from picking up the cost of televising city council hearings to paying for streetlights.

More competition would help lower cable rates, said FCC Chairman Kevin Martin. But the new rules are already under attack — from, among others, local regulators. County and city government officials say the FCC went too far with the new rules, taking regulatory authority away from them.

Cable companies also say the new rules give telephone companies an advantage because they eliminate the kind of negotiation with local officials that cable companies had to go through when they got started. The commission split along party lines — with the Republicans favoring the new rules and the Democrats opposing them.

So don’t expect to your local telephone company to be allowed to compete with your cable operator any time soon. It looks like the new rules are going end up in court, where a judge will likely have to rule on the new rules. And don’t be surprised if the new Congress decides to weigh in as well.

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