Kerry Joins Menino in Seeking Information, Answers on Rising Cable Rates
Senator John Kerry, Chairman of the U.S. Senate Subcommittee on Communications, Technology, and the Internet, today asked for answers to continued hikes in cable bills for Massachusetts families.
In a letter to Federal Communications Commission Chairman Julius Genachowski, Kerry requested a detailed report on rate changes in Boston and other Massachusetts towns over the past 10 years.
"I hope to ascertain whether rate hikes are specific to Boston or systemic, if the hikes are justified, and what the factors are that can effectively check those rate hikes," Sen. Kerry wrote in his letter.
The full text of the letter is below:
May 10, 2011
The Honorable Julius Genachowski
Federal Communications Commission
445 12th Street, SW
Washington, DC 20554
Dear Chairman Genachowski:
I am writing to follow up on Mayor Menino's recent petition regarding unchecked rising cable rates in Boston. I share Mayor Menino's concerns about the consequences of price increases on families that can least afford it.
As you know, telecommunications deregulation was supposed to dramatically increase competition and lower rates. There is no doubt that it has successfully spurred innovation and in some cases lowered prices. Yet, while media profits rise and a few cable and telephone companies grow through investment and acquisition, cable competition in Boston has not been a check on rising rates. As wages for too many families remain stagnant, the skyrocketing basic cable rates in recent years have put increasing pressure on family budgets that are already squeezed.
A recent study commissioned by Mayor Menino's office confirmed that the basic cable rate for one company within the City of Boston jumped from $9.05 per month in 2008 to $15.80 in 2011. After holding increases in the basic tier of service rate below 6 percent each year from 2002 to 2009, the rate suddenly jumped by more than 60 percent in just the last three years. At the same time, in neighboring areas that are still rate regulated by the FCC's regulatory scheme, prices have grown significantly more slowly. In fact, this study concludes that this company has collected around $24 million more from Boston subscribers since 2008 than they could have when compared to the regulated rates consumers pay in surrounding areas. Additionally, this study notes that other unregulated communities in Massachusetts have seen similarly large price increases. Specifically, basic cable rates in Brookline and Everett jumped 17.6 percent and 16.7 percent, respectively, in the past year alone.
Mayor Menino is right to ask for an explanation of why that is, whether it requires you to revisit your finding of competition in Boston and other markets like it, and what you recommend to families facing rising prices for access to basic cable services. Given the importance of access to service and the growth in the cost of media for families, I am particularly concerned about the rise in what would have been rate regulated services without the FCC finding of competition.
Therefore, I hope you will provide the Senate Commerce Committee with an analysis of the price effects the Effective Competition determination has had on basic cable rates using a sampling of markets where this determination has been made over the last ten years, including Boston and other cities in Massachusetts. I hope to ascertain whether rate hikes are specific to Boston or systemic, if the hikes are justified, and what the factors are that can effectively check those rate hikes. If one or two competitors to the dominant provider is not having the expected price effect and prices are rising in tandem among the few providers that exist, then we must examine the benefits those price increases represent for consumers and how the increases affect working families.
Thank you in advance for your attention to this matter.
John F. Kerry