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UPDATE 1-US probes cable pricing ahead of switch to digital
November 5, 2008 / 10:06 PM / 9 years ago

UPDATE 1-US probes cable pricing ahead of switch to digital

(Adds industry group, Verizon comments, FCC probe details)

By Kim Dixon

WASHINGTON, Nov 5 (Reuters) - Federal regulators have launched a probe into whether cable companies are raising prices as consumers prepare to switch to digital television.

The U.S. Federal Communications Commission said on Wednesday it sent letters to 12 companies after receiving complaints that some are ratcheting up prices for programming packages or requiring customers to buy digital set-top boxes for fewer channels, ahead of the change.

Television broadcast signals will switch to digital from analog on Feb. 17 under a congressionally-mandated order to free up airwaves for emergency and other uses.

FCC Chairman Kevin Martin and consumer groups have long complained about rising cable prices, especially when rates for other technologies, such as cellphones, have fallen.

Now, critics say cable companies may be using the digital switch as an excuse to reset rates for packages.

“We are asking why some companies have taken steps to require customers to pay higher cable prices after the digital switch for the same channels that they received through analog signals previously,” Martin told reporters on Tuesday on the sidelines of an FCC meeting on unrelated matters.

Prices for cable television nearly doubled in the decade ended in 2005, according to the FCC.

An industry spokesman said cable companies are moving their options to digital as part of the transition, which necessitates different channels and packages, and requires a set-top box.

Brian Dietz, a spokesman for the National Cable and Telecommunications Association, called the FCC inquiries “perplexing.”

“The Bureau’s actions are clearly contrary to the FCC’s own policies encouraging the roll-out of new digital services,” he said.

Specifically, the FCC is questioning whether companies are moving certain analog channels to digital only, putting them out of reach of customers who do not obtain a company-supplied set top box.

Last month, Consumers Union wrote to lawmakers questioning whether Comcast Corp (CMCSA.O) and other cable companies were fueling growth by “reaching into the pockets of their subscribers.”

The consumer group cited Comcast’s 38 percent growth in third-quarter profits and rising prices.

The FCC letters went to Comcast, Time Warner Cable Inc TWC.N, Bend Cable Communications, Brighthouse Networks, Cablevision Systems Corp CVC.N, Charter Communications Inc (CHTR.O), Cox Communications Inc [COXC.UL], GCI Co, Harron Entertainment Co, RCN Corp RCNI.O and Suddenlink Communications.

Verizon Communications Inc (VZ.N), a telephone company that provides services that compete with cable TV, also received a letter.

Company spokesman David Fish sought to differentiate Verizon from cable companies. He said Verizon has never had separate tiers for analog and digital channels. (Reporting by Kim Dixon, editing by John Wallace and Andre Grenon)

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