Lawmakers look at reining in rates for cable television

Friday, March 26, 2004 | 11:18 a.m.

SUN STAFF AND WIRE REPORTS

Senators said Thursday they will consider new regulations for cable television unless the industry addresses soaring prices and allows consumers more channel choices.

Members of the Senate Commerce Committee said pressure from angry constituents is leading them to look at ways to hold down cable rates and let subscribers choose individual channels rather than packages set by operators.

"You start acting irresponsibly, we regulate you," Sen. Trent Lott, R-Miss., told cable industry executives at a committee hearing. "There is a point where people will rebel. They're going to holler at us and we're going to take it out on you."

Since Congress deregulated the industry in 1996, cable rates have increased by 53 percent while inflation has risen 19 percent.

Cable operators said higher prices reflected higher programming costs, more channels and improvements such as rewiring systems to provide digital TV.

When announcing an end to a protracted national feud over the cost of programming between Cox Communications and the sports network ESPN last month, Steve Schorr, a spokesman for Cox Communications' Las Vegas operations, said a rate hike is likely during 2004.

Cox negotiated a nine-year deal with ESPN with an average annual rate increase of 7 percent. The cable company claimed that ESPN was seeking yearly increases of as much as 20 percent.

Historically, Cox has made annual rate adjustments in Las Vegas on March 1. Schorr said recently that the company would delay such a move until after the contract negotiations with ESPN were complete. In February, he said the company would begin reviewing its rate structure.

"We are going to try to delay that as long as we can," Schorr said in February, adding that everything from higher gasoline costs to health costs have increased the company's cost of doing business.

Cox, the dominant cable provider in the Las Vegas Valley, has about 1,000 Las Vegas-area employees and serves about 401,000 local customers.

James O. Robbins, president of Cox Communications Inc., said some broadcasters are forcing operators to pay for their cable channels in exchange for the right to carry network programs.

In January 2000, some 400,000 Cox customers in the Washington area, Cleveland, Dallas and Houston lost the Fox network for a week in a dispute over whether the cable company also should have to carry two Fox cable channels.

Robbins and George Bodenheimer, president of ESPN Inc. and ABC Sports, agreed that cable subscribers should not be able to buy channels individually.

"It would be a consumer disaster for Congress to force ESPN and other channels out of the expanded basic lineup," Bodenheimer said.

But the committee chairman, Sen. John McCain, R-Ariz., said subscribers should be able to buy ESPN without having to also pay for dozens of other channels.

"I go down to buy a loaf of bread," McCain said. "I don't have to buy broccoli and milk to go with it."

While such a policy would give consumers more freedom to pick their channels, it could "result in reduced advertising revenues and might result in higher per-channel rates and less diversity in program choice," said Mark L. Goldstein, director of physical infrastructure issues for the General Accounting Office, the investigative arm of Congress.

Of concern to several parents' groups and lawmakers is that subscribers who, for example, want to get the Disney Channel or Nickelodeon for their children must also get MTV and FX, which carry racier programs.

"You will strengthen your position if you will segregate these offerings," said Sen. Gordon Smith, R-Ore.

Sun reporter

Kevin Rademacher contributed to this story.