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Surprise Ending for Cable TV Customers : Entertainment: Rate regulation was supposed to cut monthly bills. It will for some subscribers, but for others the charges actually will go up.

September 02, 1993|ANDREW LePAGE | SPECIAL TO THE TIMES

THE REGION — When most San Gabriel Valley residents open their cable bills this month, they will see what is likely to be their first rate decrease ever. But some cable subscribers--mostly the ones ordering the cheapest cable services--will be socked with a bigger bill.

About half the cable operators serving the valley have slightly increased their rates for packages including both broadcast and cable channels (so-called "expanded basic service"), and the other half have trimmed their rates.

In most cases, though, fees for additional cable hookups in homes have disappeared and rental rates for remote control devices have plunged, from several dollars a month to 50 cents or less in most areas.

"It's a historical fact that cable rates have moved in one direction: up," said Craig Watson, regional manager of Crown Cable, the valley's largest operator, and president of the Southern California Cable Assn. "Our costs have continued to go up and we've made the case that rates must go up as well."

The rate changes went into effect Wednesday as a result of new federal regulations that were designed to put a lid on runaway cable bills. But rates went up for as many as one-third of the nation's 57 million cable television households.

Rate increases, mostly in the range of $1 to $3 a month, will fall hardest on subscribers who receive only basic service and whose bills are already relatively low, and on customers receiving several premium entertainment channels such as HBO, Disney and Cinemax. Local cable operators say less than 5% of their households subscribe only to basic service.

Still, Valley cable operators say, most households will see lower cable bills.

For example, Crown Cable subscribers will now pay $24.63 a month for "expanded basic" service, which includes 54 broadcast and cable channels, rather than the $25.90 they were paying before Wednesday. Crown serves Alhambra, Altadena, Monterey Park, Pasadena, San Gabriel, Temple City, Walnut and other portions of the San Gabriel Valley.

cable customers in Baldwin Park, Hacienda Heights and La Puente will see an increase in the cost of such expanded basic service on their new bills from cable operator TCI Cablevision of Los Angeles County. Subscribers will pay $1.46 more a month, as their bills for expanded basic service increase from $19.50 to $20.96 a month.

"Cable operators are just following the new rules, but in the end the consumer is confused by what's happened. The press was reporting a 10% rate cutback across the board, but reality didn't bear that out," Watson, of Crown Cable, said.

Overall, government authorities and cable companies are sticking by their original prediction that two-thirds of consumers nationally will save a total of $1 billion per year on their cable bills. Most of these subscribers are expected to get a rate cut of about 10%.

But the rate cuts fostered by Congress and federal regulators over the past year will flow mainly to families now spending large sums for multiple cable connections and extra equipment, and could range as high as $15 or $20 per month.

About 85% of Crown's subscribers will see an overall decrease in their cable bills because the price of expanded basic service has dropped, because the company will no longer charge a fee for additional outlets in a home, and Crown is now charging 12 cents, rather than $4, for the use of a remote control. Monthly rental for a converter box, however, is now $1.61 instead of being provided for no charge.

Cable operators say it is unfortunate that those subscribers who will be socked with heftier cable bills are typically the ones least able to pay more.

"The high-end subscriber who can afford cable services has benefited from these new regulations but the poor haven't," said Rob Roeder, general manager of Insight Cablevision, which serves Claremont. "Many of our basic service subscribers are on fixed incomes."

For example, a Claremont family subscribing only to basic service, with one cable hookup, must now pay $4.40 more a month. Meanwhile, a family with three cable hookups that subscribes to the expanded basic service, plus two premium channels, will save more than $13 a month.

Roeder and others in the cable industry say the new regulations will not allow them to continue their practice of subsidizing basic-only service by charging inflated prices for equipment rental and additional outlets. That is, households with multiple hookups, converter boxes and remote controls were subsidizing people who wanted only basic service, which now costs substantially more in most areas.

The new regulations, spelled out in more than 500 pages of complex formulas and rules for cable operators to use in determining their rates, were drafted by the FCC based on a law passed by Congress last October to halt the rapid rise in cable rates. Cable bills have risen steadily since the industry was deregulated in 1986.

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