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1996 cable deregulation a failure for consumers

Increased cable industry concentration and anti-competitive practices since the cable industry deregulation was instituted in 1996 have prevented competitors from gaining enough market share to give consumers real choices, lower cable rates or improved cable service quality, a coalition of consumer groups charge in a new report.

The report, released last week by the U.S. Public Interest Research Group (PIRG), compares industry and deregulation proponent promises in 1996 to cable consumer realities in 2003. It finds that: cable rates have skyrocketed; service levels have declined; industry consolidation has increased; cable continues to deny competitors access to programming; wireline competition is virtually non-existent; and the industry now dominates the broadband Internet market, giving it “enormous and unregulated influence” over America’s digital future.

“Since deregulation seven years ago, the cable industry has price-gouged consumers by raising its prices more than 50 percent,” said Ed Mierzwinski, U.S. PIRG consumer program director. “Congress promised that deregulation would bring competition and lower prices. Instead, the industry has raised prices and used anti-competitive practices to prevent consumers in nearly every market from having a choice of cable providers, a choice that would lower their rates and improve their terrible service.”

The study, called “The Failure of Cable Deregulation: A Blueprint For Creating a Competitive, Pro-Consumer Cable Television Marketplace,” was endorsed by the Consumer Federation of America, Center For Digital Democracy, Media Access Project and Consumers Union.

Among the key recommendations of the report:

  • Congress should empower state public utility commissions (PUC) to regulate all cable rates and charges for video services until meaningful competition emerges and also return largely-diminished authority to local communities and their franchising authorities to protect consumers from the industry’s worst abuses.
  • Introduce an à la carte programming requirement to expand consumer choices. Consumers should be able to choose their own suite of programming, rather than being force-fed the programming tiers that cable operators want them to purchase.
  • Ensure access to vital programming by preventing the cable companies from their anti-competitive practices of locking up must-have programming, such as sports and other regional channels. Modify the existing federal program-access law to eliminate loopholes that have allowed the cable industry to continue these anti-competitive practices and undermine the emergence of would-be wireline competitors.
  • Empower viewers by putting a citizen board member on every large (greater than four percent of cable households) cable company’s board and by requiring as a condition of franchise renewal that cable operators include billing inserts that invite consumers to join a local Cable Action Group that would operate a local Audience Channel, well-funded and equipped by the cable company.

The report also charged that the deregulated cable industry’s growing dominance over the emerging broadband Internet poses threats to diversity and democracy on the Internet. Unlike DSL broadband, which is owned by regulated phone companies required to share their networks, cable Internet service providers can lock out their competition. As cable companies dominate the user interface, the report said, they could limit consumer access to Internet content from online competitors, from streaming video to movie channels.

“Cable’s powerful stranglehold threatens consumers, competitors and communities. With the impending new FCC give-away on cable ownership policy, the public must take immediate action to restrain this media monopoly. Both the future of TV and the broadband Internet are at stake,” said Jeff Chester, executive director of the Center for Digital Democracy.

“The American public has little idea how the cable industry has flouted the intent of Congress, co-opted the FCC, and reaped tremendous profits at the public’s expense,” said report author Jay R. Halfon. “This report details the overwhelming evidence of the cable industry’s abuses, particularly its success at quashing wireline competitors, who have had the only success impacting cable rates.”

To download the full report, visit http://uspirg.org.

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