FCC: High Cable Prices Consumers' Biggest Problem

Aug. 21, 2008 — -- The single biggest problem facing consumers in the world of technology is the high cost of cable television, according to the chairman of the Federal Communications Commission.

Cable TV pricing has risen a staggering 77 percent since 1996, according to the Bureau of Labor Statistics. That's double the rate of inflation, and it comes at a time when other technology prices are decreasing.

"The average family has very little choice as to what channels are included, yet they're having to pay more and more for those same channels," said FCC chairman Kevin Martin.

Martin said subscribers should have more choice for the amount of money they spend. Currently, American cable customers pay an average of about $60 a month, but people watch only about 15 channels, according to Joel Kelsey, a policy analyst with Consumers Union.

If you want to watch a specific channel, you have to buy other channels you may never use because of the way the cable industry bundles channels together.

"Most cable companies enjoy kind of regional fiefdoms where there's not really much there in terms of other providers," said Kelsey.

But Martin and and some members of Congress want to see a la carte pricing, giving consumers the option of paying for only the channels they want.

"There's no question that they have the technology to do it, and I think that consumers would dramatically benefit by having the additional choice," Martin said.

In Canada, customers currently pay about $13 for the cable basics and then they can pick and choose another 15 channels for $17 or another 30 for less than $1 a piece.

But the American cable industry said such pricing would raise, not lower, customers' prices. The industry said less popular channels would be forced to lower their advertising rates, which would force consumers to make up the difference with higher subscription fees.

"It's the comparison between having a buffet or ordering lots of sides. Sides always cost you more," said Lillian Rodriguez-Lopez, at Minority Media and Telecommunications Group. "We know right now you that can get good value … for a huge variety of channels."

Still, there is serious talk in Congress about forcing cable companies to give a la carte pricing a try.