The cost of basic cable television service climbed 10 percent last year, more than twice the rate of inflation, and has risen more than 43 percent in the three years since Congress gave cable operators the right to set their own prices, a government study said yesterday.
The report by the General Accounting Office comes as the House and Senate consider bills that would reestablish some government control over the prices that cable systems may charge. As such, both sides of the re-regulation issue tried to put the most favorable spin on the GAO's findings.
Proponents of re-regulation said yesterday the report provided proof that the cable industry, which operates without direct competition in most communities, has taken advantage of deregulation to gouge consumers. "You don't have to be Dick Tracy to realize that there are some bad guys in the cable business and that Congress has to do something about it," said Rep. Edward J. Markey (D-Mass.), chairman of the House subcommittee that ordered the GAO report.
But representatives of the cable industry pointed out that the study showed that the rate of price increases has declined during each of the past three years. According to the GAO, the average price of the lowest-priced basic cable service was up almost 17 percent in 1987, 11.5 percent in 1988 and 10 percent last year.
In 1989, basic service cost $15.95 a month compared with $14.50 the year before and $11.14 in 1986, the last year rates were regulated.
Further, the report found that the average subscriber's total monthly bill -- which takes into account the cost of basic service, premium channels such as HBO and optional add-ons such as hooking up a second TV set -- grew only 5 percent to $26.36 in 1989, about even with inflation.
"This ... is still further evidence that cable rate increases have leveled off," said James P. Mooney, president of the National Cable Television Association, in a prepared statement.
John M. Ols Jr., who directed the rate study for the nonpartisan GAO, called the price increases since deregulation "significant" and said the findings suggested that "some form of interim rate regulation may be necessary."
Ols also said that consumers were more likely to drop premium services and other options as the cost of basic service rose. This, he said, would explain why the total monthly bill was up only at the inflation rate last year while basic service costs grew at twice the rate.
Separately, the report appeared to undercut the idea that the rapid buying and selling of cable systems since deregulation had led operators to raise rates exorbitantly. Instead, the GAO found that rates for systems changing owners between 1985 and 1989 were about the same as those that remained under the same owner.
The GAO's cable figures largely matched those found by Paul Kagan Associates, an independent research firm, earlier this year. Kagan said the average cost of basic service increased 10.5 percent to $15.97 in 1989; premium charges were virtually flat at $10.27 per month; and the average total bill each month grew 10.5 percent to $25.85.