The prices charged by US cable-TV firms should not be subject to stricter government regulation, according to a new report from a congressional body.
The General Accounting Office, Congress's independent auditing unit, decided that the cost of cable television would be more adequately checked by competition than it would by regulatory intervention. It believes the rising threat of satellite TV and rival cable operators will act as a curb on price increases and a spur to the introduction of improved services.
The GAO study found that competition from satellite providers is less effective as a cost control. However, cable companies tend to upgrade their services in areas where satellite rivals offer local channels.
Federal Communications Commission figures released in the summer show that cable costs have soared an average of 7.1% per annum over the past five years, well ahead of the 2% inflation rate [WAMN: 09-Jul-03].
That report sparked criticism of cable companies from consumer groups and politicians, and prompted Senator John McCain (Republican, Arizona) – chairman of the Senate Commerce, Science and Transportation Committee – to commission the GAO investigation.
Despite the accounting body's findings, McCain argues that competition is only effective in a few markets where there is a real choice of providers. "The apparent implication for all other consumers," he declared, "is that they continue to be fleeced by their cable operators."
Data sourced from: Financial Times; additional content by WARC staff