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Monthly rates for
cable rose 5.8% last year

Companies blame programming
and equipment costs for the increases

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From staff and wire reports

WASHINGTON -- U.S. consumers footed heftier monthly cable bills last year, as companies boosted their rates for programming and equipment by 5.8 percent, according to government figures.

That means cable costs for basic programming, expanded basic services and equipment -- like a remote control -- rose faster than inflation for the 12-month period ending July 1, 2000. The Consumer Price Index measured general price increases of 3.7 percent during the same period.

Oahu's largest cable TV company, Oceanic Cable, in January raised its monthly price for a standard package of channels to $31.99 from $30.47, marking Oceanic's fourth consecutive 5 percent rate hike in the past four years. Over the past four years, Oahu's overall inflation rate never rose above 2 percent. Also in January, the company also raised the monthly rental for cable boxes to $3.70 from $2.91, a 27 percent increase.

Cable companies contend that the hikes were result of cost increases for the popular channels they must buy from programmers -- such as sports shows -- and money spent to upgrade their systems to provide new services.

The increase was the same both for cable companies that face competition in their markets as well as those that don't, according to the Federal Communications Commission report.

Cable subscribers living in markets without competition paid on average $32.25 for programming and equipment in July 1999. A year later, their monthly bill for those services increased to $34.11.

Consumers in places where cable operators are challenged by rival providers continue to pay slightly less than that, the commission said. As of July 2000, those subscribers paid $32.40, the FCC said. The report prompted consumer advocates to renew their calls for the government to cap cable prices, arguing that competition from satellite TV services, like EchoStar and DirecTV, has failed to slow price increases.

"Consumers need a lid on these rates to prevent ongoing price gauging," said Gene Kimmelman of Consumers Union.

The FCC stopped regulating most cable TV services nearly two years ago, following the directive of a 1996 law. And the commission's new chairman, Michael Powell, has said he doesn't think regulators need to step in now.

Cable companies say they actually have done reasonably well holding down their prices, even as they face burgeoning costs for popular programming -- like sports channels. They also have invested money to upgrade their cable systems so they can offer high-speed Internet and local phone service to consumers.

"It's not possible for us to absorb the entire increase on our own," said Mike Luftman of Time Warner Cable, the nation's second largest cable business and parent of Oceanic Cable in Hawaii.

The company said its average price increases for basic and expanded programming will be under 5 percent for 2001. The National Cable Television Association, the industry's trade group, also noted cable operators have boosted the number of channels they offer consumers. That means the gain in cost per-channel was either unchanged or 1 cent depending on the market.