Senate hearing: no relief from rising rates

On July 24, the U.S. Senate Committee on Commerce, Science, and Transportation held a hearing named The Cable Act at 20. It considered "the impact of the Cable Television and Consumer Protection Act of 1992 on the television marketplace and consumers twenty years after its passage." The news was not bright.

In addition to consumer complaints over rising rates, Commerce Committee Chairman Jay Rockefeller (D-WV) attacked both the producers and the cable companies for the recent war that has left millions of viewer with reduced or nonexistent content. "Overheated rhetoric alleging greed and bad faith is little comfort for someone paying for service they are not getting," said Rockefeller.

One of the witnesses was Mark Cooper, director of research at the Consumer Federation of America. Cooper's written testimony is a depressing analysis of the relentless climb of consumer telecommunications rates. It's also a report on the failure of competition to protect consumers.

Cooper pointed out that, "In the 1992 Act Congress recognized that the cable market was afflicted by severe, anticompetitive problems and anti-consumer practices." Congress worked to offset that bias, and the result was the 1996 Telecom Act. But, as Cooper said, "... the 1996 Telecom Act abandoned rate regulation and promised that competition would protect consumers. It did not."

According to Dr. Cooper's chart, cable, satellite and radio services have risen approximately 400 percent since 1984 in an almost perfectly climbing line. "In fact," said Cooper, "the only time when consumers have had a respite from relentless price increases for multichannel video programming services... was the brief period in which the rate regulation of the 1992 Cable Act was in place."

Cooper also questions whether "the emerging quasi-monopoly in wireline broadband services the public interest." The problem is that broadband is increasingly being supplied by the same monopolistic cable companies, with the same problems for consumers.

He also does not believe that the growth of smart phone technology will supplement the imperiled wireline service. As he said:

"I believe mobile broadband is a terrific technology that will be at the center of the communications ecology of the 21st century digital economy, but it is not a substitute for wireline broadband. On the contrary, wireline broadband is a vitally important complement and a necessary input for wireless broadband."

In short, we have impressive technological advances, but the costs to consumers are increasingly onerous. And that's the unfortunate news after 20 years of the Cable Act.

In short, we have impressive technological advances, but the costs to consumers are increasingly onerous. And that's the unfortunate news after 20 years of the Cable Act.

The Cable Act at 20 (Senate Commerce Committee hearing, Jul. 24, 2012)

CFA Director of Research, Mark Cooper, testimony, Senate Commerce Committee (Jul. 24, 2012)