
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, August 18, 1993                   TAG: 9308180131
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A2   EDITION: METRO 
SOURCE: The Washington Post
DATELINE:                                 LENGTH: Medium

NEW CABLE LAWS MAY BOOST PRICES

With only days left before the Sept. 1 starting date for new cable television price regulations, industry executives are warning that some customers will see higher bills, rather than the lower prices promised by federal officials who crafted the law last year.

Although the Federal Communications Commission has mandated that rates above a "benchmark" level must be rolled back as much as 10 percent or more, the complicated law allows operators to raise prices under certain circumstances - and many cable operators say they will do so.

The number of subscribers affected by higher prices will vary in each of the nation's 11,000 cable systems. Estimates of those getting higher bills range as high as 50 percent in some places, though several local operators say they have not finalized their new rates and can't make an accurate calculation.

In general, however, cable executives give this rule of thumb: People who now spend the most on cable service and equipment will see their bills fall the most, while those with relatively basic service are likely to get a rate increase.

The law envisioned this shifting of the rate burden, said Bill Johnson, an FCC official who helped write the new price rules. He said the reality of the requirements is that "the TV maven in the mansion with lots of sets [hooked to cable] and remote controls gets a big reduction. The poor soul who uses cable just for [basic] service gets an increase."

Johnson stuck by the FCC's prediction in April that the rate rules will save consumers more than $1 billion a year in charges overall, but that the savings would be unevenly spread throughout the nation's 57 million subscribing households. In effect, some households could see their total bill fall by 30 percent or more as others rise.

The rate shifts come about because the regulations allow the companies to raise certain prices, as long as the total revenue from these increases is not greater than cuts required by the law.

Cable executives point out that their biggest-paying customers have, in effect, subsidized those with limited service with their payments for service and equipment.

For example, many companies now charge $4 or $5 per month for an entry-level "antenna" service consisting of local broadcast stations and a few cable networks. The next "tier" of service often adds a few more channels, including the most popular cable networks, such as CNN and MTV, for a much higher price.

Under the new law, these two tiers of service must be priced at the same per-channel rate. So, as the higher-cost tier comes down a little in price, the lower tier will shoot up much higher to reach the average, raising the bills of those who receive bare-bones service.

Operators don't have to raise their service rates if they are below the benchmark level, but they say they have no choice: After Sept. 1, rates cannot increase faster than inflation, plus certain costs.

by CNB