Cable companies have just found a new excuse to raise rates, thanks to an order from the Federal Communications Commission on Friday that uses what might sound like a novel justification: The competition from streaming services.
Before we get to the details of the FCC decision, some history is in order first. The Cable Television Consumer Protection and Competition Act of 1992 allows local regulators to control cable prices in markets with only one cable provider — which is supposed to cap the company from taking advantage of its monopoly position to raise prices sky-high. The law allows, however, for that cable company to petition for the removal of that regulation when an additional cable player arrives on the scene.
That’s exactly what happened in the case of Charter, which decided that AT&T TV Now, which is AT&T’s online TV service, counted as competition for Charter service in a small group of places in Hawaii and Massachusetts. AT&T’s presence meant Charter no longer had a monopoly, the company argued, so we should be allowed to increase our rates.
In its order siding with Charter, the FCC argues that: “Granting Charter’s petition is consistent with the text of the statute, requiring the deregulation of cable rates when, as here, an online streaming service option with comparable programming is available from a (local exchange carrier) affiliate in the franchise area, and reflects the competitive state of the video marketplace.”
Charter’s position is that the presence of competition means it needs to be able to raise its rates to keep up. And the company in a letter to the FCC pretty much said it would do this (in the affected areas) if the FCC granted its position. Naturally, this decision by the agency is drawing fire from critics who think the permission granted here is overly broad — or, rather, could be interpreted to be overly broad.
US Senator Ed Markey, a Democrat from Massachusetts, released a statement today in light of the fact that as a result of the FCC’s decision, Charter will “no longer be subject to rate regulations and will be able to raise rates for basic cable service and equipment in 32 Massachusetts communities.”
“Today, the FCC paved the way for a powerful cable company to increase its prices without regard to the impact on consumers,” he said. “I will closely monitor whether Charter uses this decision to dramatically hike (prices) for Charter cable consumers in Massachusetts.
“In light of today’s decision, it is more important than ever that Congress pass the TRUE Fees Act, which protects cable subscribers from hidden fees and allows customers to end their contracts without early termination fees. Both the Commission and Congress should be looking out for consumers, not corporations and putting families first.”