GAO: Cablers good to go
October 27, 2003, Monday
Washington — Most cablers are breathing a sigh of relief: A General Accounting Office report about rising cable rates released Friday did not call for new government regs.
"We're pleased that after 14 months of careful study and careful work the GAO has found that this is the industry that has worked hard to benefit its customers and there really is not an enhanced role for government in the cable TV industry," said Comcast exec veep David Cohen.
The GAO, Congress' investigative arm, began the study last year in response to concerns by Sen. John McCain (R-Ariz.) and consumer groups about recent cable rate hikes.
The cable industry is so nervous that Congress will pass harsh new laws to rein in consumer cable charges that it launched a newspaper ad campaign last week touting the various investments it's made in recent years to improve customer service.
While most cablers were encouraged by the report's findings, they cannot rest too easy. The study found that competition leads to lower cable rates and improved quality.
Specifically, in the very few markets around the country that have two or more cable providers, the GAO discovered that the amount those companies charge consumers is 15 percent less than in markets without competition.
National Cable & Telecommunications Assn. topper Robert Sachs took issue with the competition argument in a conference call with reporters Friday. Sachs argued that competition exists in such a small number of markets, there is no way to extrapolate the findings to the national level.
"This finding represents 2 percent of the market nationwide," he noted.
McCain, who chairs the powerful Commerce panel that oversees the cable industry, had the opposite reaction to the study. "The apparent implication for all other consumers is that they continue to be fleeced by their cable operators," he said Friday in a statement.
More worrisome for the industry is McCain's insistence that the report provides "numerous issues ripe for examination by the Committee," including increased sports and programming costs, the impact of ownership affiliation on cable carriage and a la carte programming options.
In the study, the GAO determined that in the past five years cable rates have jumped approximately 40 percent, in excess of the roughly 12 percent increase in inflation during the same time period.