Despite a stagnant economy, cable rates rose at an average rate of 8.2 percent in the year ending July 1, 2002, according to the FCC. That's even higher than the 7.1 percent average annual increase over the past five years.
But viewers are receiving more channels (an average of 62.7, up from 59), so the average price per channel, adjusted for inflation, dropped a nominal 0.2 percent.
The average monthy bill rose from $37.06 to $40.11. Basic cable increased an average of 3.7 percent. "Cable programming service tier" rose an average of 10.8 percent and equipment charges shot up an average of 12 percent.
The National Cable and Telecommunications Association issued a quick response, saying that cable remains a "superior entertainment value" compared with taking families out to movies or sporting events. NCTA said cable operators have invested more than $15 billion in system upgrades in year studied by the FCC, an average of $215 per subscriber.
The commission's two Democrats, Jonathan Adelstein and Michael Copps, dissented from the FCC's announcement, saying the commission had failed to fully investigate the causes of the increase. "The operators attributed over 60 percent of their rate increases to programming costs, yet the Commission does not conduct even minimal audits to assure the accuracy of these data," Copps said in his dissent.
The satellite TV industry said the report helps explain the growing success of DBS.
"Today's annual report illustrates why consumers continue to unplug their cable boxes and switch to satellite television service, and one reason why the number of DBS subscribers grew my more than 10 percent from April 2002 to March 2003," said Andrew Wright, president and CEO of the Satellite Broadcasting and Communications Association. "The cable industry has consistently used its market power to raise its rates each year in order to finance upgrades in an effort to match DBS. This annual report continually underscores the superior choice, value and customer service that satellite TV provides."
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