NCTA chief: FCC report 'obsolete'

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WASHINGTON -- The cable industry is fighting back, lashing out Thursday at FCC chairman Kevin Martin's decision to release a commission report showing that the prices consumers pay for cable TV are rising faster than inflation.

In a letter to Martin, National Cable and Telecommunications Assn. president and CEO Kyle McSlarrow called the report "obsolete" and asked the agency to redo it.

"The public has the right to expect that the agency will collect and disseminate data in a way that is transparent, impartial and credible," he wrote in a letter mailed Thursday. "Unfortunately, a number of assertions have been made that are not supported by the facts, or, in some instances, by the 2005 Cable Price Report itself. These inconsistencies should be corrected."

McSlarrow contends that the FCC needs to measure prices for digital as well as analog cable and to consider price breaks consumers get when they order a "bundle" of services such as phone, video and Internet access.

"The commission and the public could obtain better and more useful information from consumer advertising appearing on television and in newspapers in the Washington, D.C., metropolitan area," he wrote.

In late December, Martin released the report, which showed that the prices most Americans pay for cable have nearly doubled in the past 10 years.

The report found that, in 2004, rates for basic and expanded cable service, which account for just less than 85% of subscribers, rose 5.2%. For the previous decade, prices rose a total of 93%, the commission said.

McSlarrow argues that price increases do not portend a lack of competition.

"Even if cable prices, as properly measured, were increasing faster than inflation, it would be wrong, as a matter of economics, to conclude that this was an indication that cable operators have market power or that the video marketplace is not fully competitive," he wrote. "It really is time for the commission to stop ignoring this point, and more importantly, to stop perpetuating the economic fallacy that nominal cable price increases somehow demonstrate a lack of competition in the video marketplace. This is especially so when the underlying premise on whether consumers are getting more value is wrong."

Martin has been aggressively pushing the cable industry to change its structure. He wants the industry to stop forcing customers to buy "tiers" of service and believes that consumers would be better served by an a la carte model.

Cable operators contend that the a la carte model will actually cost consumers more on a per-channel basis.
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