FCC Takes Cable Companies to Task on Pricing

06 November 2008

WASHINGTON, DC: The Federal Communications Commission is investigating the pricing systems of Verizon and eleven US cable companies. The agency's chairman, Kevin Martin (pictured), says he is worried consumers are increasingly "getting less and being charged the same or more."

Letters were sent to cable operators and telecoms titan Verizon – which offers a pay-TV service through its FiOS platform – last month, giving them two weeks to respond to the FCC's concerns.

The areas under scrutiny include "channel switching", where analog channels are transferred to digital platforms to create space for alternative offerings such as high-definition services.

Watching "switched" channels requires analog users to subscribe to more expensive services, acquire set-top boxes or use an adapter (which companies including Verizon have offered users free of charge).

The agency will also assess if operators are leading consumers to believe that "channel switching" is tied to government regulations requiring all broadcasts to be in digital format by February 2009. 

By linking the two, pay-TV providers could effectively be encouraging their subscribers to choose more expensive digital systems.

Martin says the switching of channels also often takes place without consumers receiving "appropriate notice", resulting in the delivery of a "significant" number of complaints to the FCC.

Around half of America's 65 million cable subscribers have basic analog or "enhanced basic" packages.

Data sourced from USA Today; additional content by WARC staff