Public Campaign

OUCH! #17 -- February 12, 1999

THE CABLE GUYS

Remember the Telecommunications Act of 1996? The bill's sponsors promised that the landmark legislation, which ended most government regulation of the communications marketplace, would usher in a new age of competition between telephone, cable, and broadcast companies, bringing new choices and lower rates for America's consumers.

Well, it hasn't worked out that way. As a new study jointly conducted by the Consumer Federation of America and Consumers Union reports, for the vast majority of Americans competition and lower prices are "virtually non-existent." Instead of attacking each other's markets, local cable and telephone monopolies have focused on merging into "larger and larger regional firms that now form tight national oligopolies." A few companies now control well over half the market, but of the more than 8000-plus local cable systems, head-to-head competition exists in less than 150.

Perhaps the biggest losers are the nation's cable consumers, who have seen their bills rise about 21 percent in the last three years, almost four times the inflation rate. This has occurred with the approval of the Federal Communications Commission, under the dubious theory that cable companies need the extra revenues to deal with new competition. According to the consumer groups' study, the average consumer would be paying about $36 less per year if the FCC hadn't loosened its practices.

The communications and electronics industry invested heavily in the passage of the Telecommunications Act, donating $23.7 million to congressional candidates in 1995-96, according to the Center for Responsive Politics. The cable industry, a smaller but by no means insignificant subset of that group, has fought hard to keep Congress and the regulatory agencies from reviewing the law, giving a total of $3.4 million since then.

For example, last summer the Senate killed a proposal that would have simply asked the FCC to study rising cable rates. On average, senators voting against the proposal got 21 percent more in contributions from cable PACs and individuals who work in the industry than did senators in favor.

The law's provisions call for the FCC's price controls on cable rates to be fully lifted on March 31. It's highly unlikely that either Congress or the White House will take any action to review the Telecom Act before then, as lobbyists for the communications industry have both ends of Pennsylvania avenue wired. National Journal reports that fatcats are swarming around newly-installed House Speaker Dennis Hastert. Among an elite group of $5,000 donors to a February 2 dinner of Hastert's leadership PAC: representatives of Ameritech, Bell Atlantic, BellSouth, GTE, Microsoft Corp., and SBC Communications Inc.

And who got to watch the Super Bowl with the President at Camp David? Along with a chummy coterie of Bill Clinton's political allies, superlobbyist Mike Berman, president of the Duberstein Group, whose clients include cable giant Time Warner.


OUCH! is a regular e-mail bulletin on how private money in politics hurts average citizens, published by Public Campaign, a non-partisan, non-profit organization devoted to comprehensive campaign finance reform. Every day, we pay more as consumers and taxpayers for special interest subsidies and boondoggles because of our system of privately financed elections. It's time for a change.

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