Comcast won't tie rates to inflation

Comcast Corp. won't limit cable rate hikes to the inflation rate as a condition of the company's proposed merger with NBC Universal Inc.

"There is little doubt that consumers are getting more for their money than they did in the past," Philadelphia-based Comcast said in written comments to the U.S. Senate Judiciary Committee dated Monday and circulated yesterday in Washington.

The cable giant was responding to a question posed by U.S. Sen. Russell D. Feingold (D., Wis.), a member of the committee, which held hearings on the proposed Comcast-NBCU merger on Feb. 4. Comcast chief executive Brian L. Roberts and NBCU chief executive Jeffrey Zucker testified at the hearing and were asked to submit written answers to questions on cable rates from Feingold and others. Feingold specifically asked whether Comcast would tie cable rate increases to inflation.

Comcast needs Justice Department and Federal Communications Commission approval for the $30 billion NBCU deal, which some say could create a giant that would dominate the media industry and stifle competition. A loose coalition of special-interest groups that includes the Communications Workers of America, the American Cable Association, the advocacy group Free Press, and others opposes the deal.

Comcast says the merger would lead to more choices for consumers, and innovation.

The issue of cable rates comes as Comcast prepares to boost bills on Philadelphia-area customers April 1. The hike will average 2.5 percent to 3.5 percent, company spokesman Jeff Alexander said yesterday.

During the last 12 months, the consumer price index increased 2.6 percent before seasonal adjustments, according to the most recent monthly inflation report from the Bureau of Labor Statistics.

Cable TV costs the daily equivalent of "about the price of a morning cup of coffee," while the average cable-TV household watches 310.5 hours of cable-TV news and entertainment a month, Comcast said in the comments to Feingold.

Given the greater viewing of cable TV by households, "the price per viewing hour" of cable TV has declined 26 percent over the last 10 years when adjusted for inflation, Comcast said.

Calls to Feingold's press office were not returned.

Comcast would not comment.

Consumer groups have blasted Comcast and other cable-TV providers for rates that have risen twice as fast as the rate of inflation since the 1990s. Rising cable bills were a concern of Kevin Martin, the former chairman of the Federal Communications Commission, who wanted cable companies to sell cable-TV channels individually, or a la carte, instead of in multichannel bundles.

Mark Cooper, the research director at the Consumer Federation of America who also testified at the Feb. 4 Senate hearing, said yesterday he wasn't surprised that Roberts wouldn't agree to limit rate hikes because "you are asking him to change his business model."

Comcast would have less of an incentive to control programming costs if it owned NBCU, Cooper believes. That's because higher NBCU programming costs would be passed along to cable customers and boost Comcast profits, he said.

Comcast says that the pay-TV market remains highly competitive and that it can't raise prices without losing customers.

In the Philadelphia area, Comcast held off boosting cable bills in the weak economy in the last year.

"We've continually invested in next-generation technology to support new product features, more programming choices and improvements to customer service. These investments make it possible to deliver continued innovations such as more HD and On Demand choices, converged services, faster Internet speeds, multi-platform content and new services," Comcast's Alexander said in a statement.

As an example of some higher rates, the "triple play" package will climb 4.3 percent to $119.99 a month, and the digital starter package will rise 3.3 percent to $62.50 in South Jersey.