ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, June 28, 1996 TAG: 9606280040
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
EVEN REGULATION can't seem to keep fees steady when the reason for the escalation is defined as rising costs.
The last time cable TV rates jumped up by double digits, Congress ordered them brought down.
This time, with rates climbing as much as 26 percent since January, customers probably are out of luck: Congress has no plans for more price controls and is, in fact, moving the other way.
The agency that oversees the 3-year-old price rules contends its hands are tied, too.
``I don't have any choice. If I don't have cable, I won't have television,'' said customer Robin Reynolds of Fairfax County, Va., where Media General Corp. raised rates 4.3 percent. Reynolds' condo community forbids over-the-air antennas to receive local broadcast signals.
In Western Virginia, the largest operator, Cox Communications Inc., raised rates 6.8 percent in March for its basic expanded service. That's the most popular level of cable television among the company's nearly 56,000 customers in Roanoke, Roanoke County and Vinton.
Nationwide, rates have jumped from 3 percent to 26 percent this year, affecting millions of customers.
Cable firms and the Federal Communications Commission, which regulates the industry, insist customers are being protected from rate gouging and are benefiting in many cases by receiving additional channels.
The government, they say, simply can't prevent companies from recovering legitimate expenses.
``If there is a villain here, it is rising costs - and consumer lobbyists for misrepresenting the status of our business,'' said Bob Thomson, a senior vice president at Tele-Communications Inc.
But critics such as David Olson, who heads the Portland, Ore., cable office, point to a portion of the FCC rules - recently ordered by Congress - that prevent individual customers from asking the government to review rate increases for expanded basic cable.
The FCC can investigate only after a local franchising authority complains. And none have, said Meredith Jones, the agency's cable chief.
The fact that individuals can't directly complain is troublesome, critics say, because the FCC does not verify companies' costs, which are used to justify rate increases. In addition, the FCC doesn't independently track changes in rates.
Thus - although FCC chairman Reed Hundt says he's reasonably certain agency rules protect customers from rate-gouging - he can't be sure.
``You have to look at the individual market and see whether or not the formula was being honored,'' Hundt said.
``And we do that by responding to complaints. The problem is we don't have the ability to respond to individual complaints anymore, because Congress took that power away from us.''
Hundt acknowledges his agency could tighten price rules but says it has no plans to do so. Congress, he insists, should look into the rate increases. The Commerce Department is examining them, but it has no regulatory power.
In the past decade, government oversight of cable prices has seesawed.
In 1986, Congress first deregulated the industry. Two years later, its accounting arm found that monthly rates for the most popular cable services had jumped by 26 percent - to $14.77.
Prompted by public outrage over those soaring rates, Congress nationally regulated the industry again in 1992. The FCC estimates customers since have saved more than $3 billion.
Since then, the industry has been given more pricing leeway. And as part of this year's sweeping telecommunications law, Congress ordered the FCC to stop regulating rates by 1999, or sooner, if a cable company is competing against a telephone company for cable customers.
``Maybe it's just as well they get out of the rate business on March 31, 1999, because the way it's going, the FCC's rules are eclipsing any useful purpose,'' said Portland's Olson.
The FCC's Jones cites Labor Department data that cable prices rose only at the inflation rate - 8.3 percent - between January 1993 and January 1996. But that figure does not include the bigger-than-usual rate increases that companies began taking in January.
Under FCC rules, cable firms can increase rates to cover inflation, the cost of adding new channels, or other business cost increases - including higher licensing fees for channels already provided to customers. Firms also can increase rates if they add new technology.
Rate increases this year have fallen under those categories, cable companies say.
Nationwide, average increases at the top four cable companies were: TCI, 13.6 percent; Time Warner, less than 10 percent; Continental Cablevision, about 5 percent; and Comcast, 3.6 percent.
Many of this year's bigger-than-usual increases are an aberration, because the FCC now allows companies to take increases annually rather than quarterly, Jones said. So companies such as TCI are recovering three periods of costs and inflation increases in one jump.
Such explanations don't satisfy Nick Johnson, an FCC commissioner from 1966 to 1973. Johnson lives in Iowa City, Iowa, where his cable is going up 17 percent to $25.89 a month from $22.11.
Customers should protest increases by canceling service, Johnson said. But they won't, because people are ``addicted to cable television.''
``Everybody complains ... so you hold a meeting and then nobody comes out. Why? Because they are all home watching television,'' he lamented.
LENGTH: Long : 102 lines ILLUSTRATION: GRAPHIC: Chart by AP: The cost of cable. color.by CNB