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Cable TV rate deregulation sparks debate

graphic

March 31, 1999
Web posted at: 1:27 p.m. EST (1827 GMT)

MIAMI (CNN) -- Jonathan Binford and his brother, Brian, spend a lot of time watching cable television. The decision by the federal government to end its price controls on some of their favorite channels, starting Wednesday, doesn't worry them much -- but it does bother their mother.

"We've got to have those channels," Arlene Binford said. We can't live without them, so I guess they got us."

The Binfords are among 70 million American households connected to cable television services.

While basic cable prices are still government-controlled, expanded basic services such as CNN, ESPN, Discovery and MTV have been deregulated.

Congress and the Clinton administration hope that the move will promote competition in the communications industry.

'Prices are soaring'

The Consumers Union in Washington, however, believes it only means higher rates for subscribers.

"The prices are soaring," said Gene Kimmelman of the Consumers Union. "With the end of final government oversight of cable rates, the prices will continue to soar, because most consumers do not have a choice. There's only one cable company in their community."

A spokesman for the cable industry counters that, with the growth of satellite TV, the cable companies are unlikely to raise their rates much -- only about 5 percent a year to cover costs of programming and technology.

"This is not going to affect the consumer that much," said Steve Effros of the Cable Telecommunications Association. "Our ability to raise rates or change rates is constrained by our competitors."

The Consumer Union contends that the cable industry is overstating the amount of competition and that cable rates rose 24 percent during the past three years.

Correspondent Mark Potter contributed to this report.

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