Comcast, Boston in dispute over basic cable rates


Boston Mayor Thomas Menino has complained that Comcast is taking advantage of its subscribers with huge basic service rate hikes and wants authority to regulate rates again. Comcast says it remains competitive, but Sen. John Kerry (D-MA) has jumped in, asking the FCC to look into the matter.

According to stories in the Boston Globe, the city did have the right to oversee rates until 2002. That was when a second cable company entered the municipality to provide direct competition. However, it has not attracted a great deal of business.

Menino is complaining about a 60% hike in basic cable rates over the past three years.

Comcast says its rates are still the cheapest in town, lower than rival cable operator RCN and satellite providers. Comcast also notes that it competes with broadcast television.

Verizon’s FiOS service would be another potential competitor, but has not entered the Boston market, nor does it have any current plans to enter.

In a letter to FCC Chairman Julius Genachowski, Kerry said that the rate hikes hit consumers who can least afford it at a time when their earning power has been stagnant. He also noted that the rate hikes in nearby Massachusetts communities where local franchising authorities still have oversight power have not been nearly as steep.

He conclude, “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.”

According to reports, some local businesses are in favor of the measure, as are environmentalists and apartment management companies.

RBR-TVBR observation: The competition between different types of MVPD is real for consumers who are making an initial subscription decision, but it is also shackled by the difficulty consumers have switching from one to another. It is impossible to get fed up with one, pick up the phone, and subscribe to a competitor, and until that IS possible, the MVPD market is not competitive in the fullest sense.