Clash over a Cable-TV Rate Request

NJBIZ, Nov 26, 2007 by Ruth, João-Pierre S

NEWARK

State protests efforts to deregulate prices in more than 100 communities

THE STATE'S THREE largest cable television operators want controls lifted on basic cable rates in a total of 109 towns, but New Jersey Ratepayer Advocate Stefanie A. Brand is challenging their efforts. The companies say growing competition from Verizon Communications and satellite TV providers ends the need for regulation in many parts of the state.

Brand, whose office is part of the Department of the Public Advocate, this month asked the Federal Communications Commission (FCC) to deny petitions filed by Comcast Cable Communications, Cablevision Systems Corp. and Time Warner Cable to deregulate basic rates in the municipalities.

Brand says the average rate for basic cable-plus service, which includes standard broadcast channels and additional nonpremium channels such as Comedy Central and ESPN, has climbed in the state from $19.99 in 1999 to $36.74 today. She says deregulation would expose more than 1 million subscribers to further sharp rate hikes. "If the FCC approves these applications and deregulates the market, there won't be sufficient checks on rate increases to protect the public," she says.

The New Jersey Board of Public Utilities says 2.5 million subscribers receive at least basic cable service in the state.

The cable operators insist that Verizon's FiOS television service and satellite TV companies like Dish Network have made continued regulation unnecessary. "These municipalities in question clearly meet the standard for effective competition as established by the FCC," Mark Nevins, spokesman for the New Jersey Cable Telecommunications Association in Trenton.

Concurs Brian Dietze, vice president of communications for the National Cable & Telecommunications Association in Washington, D.C.: "There is a threshold point [under the 1996 Telecommunications Act] when there is another competitor with 15 percent of subscribers in a given market. That is a trigger for cable companies to apply for deregulation."

The FCC three years ago deregulated cable rates in 49 New Jersey towns served by Cablevision, which has 983,000 subscribers here and wants 77 more towns added to the deregulated list.

Brand questions each of the three companies' arguments for deregulation and the logic behind freeing the operators to jack up rates. "The idea of effective competition was it would put a check on prices," she says.

Comcast's claim to face a strong rival in Verizon is an overstatement, she says. Comcast wants deregulation in 24 towns that it serves. "The petition didn't demonstrate FiOS had entered these particular towns and was truly competing with Comcast," Brand says. Comcast, the largest cable service provider in New Jersey, has more than 1.3 million subscribers in the state.

Brand says Time Warner Cable, which serves about 56,000 subscribers in New Jersey, used misleading data to request rate deregulation in eight towns that it serves. "We challenged their math because they were using in some ways outdated data," she says. "We didn't think they were adequately showing the percentage of encroachment from satellite. We didn't think their numbers made sense because they were comparing apples and oranges."

Dietze says Brand will have a hard time persuading the FCC to deny the deregulation requests. An agency spokesperson could not say how long the review would take. "There are thousands of cable systems in the country and most now have significant competition," says Dietze. "Some petitions have been challenged but most have been approved."

E-mail to jpruth@njbiz.com