Report on Cable Industry Prices (2008)

Federal Communications CommissionDA 09-53Before theFederal Communications CommissionWashington, D.C. 20554In the Matter ofImplementation of Section 3 of the Cable Television Consumer Protection and Competition Act of 1992Statistical Report on Average Rates for Basic Service, Cable Programming Service, and Equipment)))))))))MM Docket No. 92-266REPORT ON CABLE INDUSTRY PRICESAdopted: January 15, 2009Released: January 16, 2009By the Chief, Media Bureau:TABLE OF CONTENTSHeadingParagraph #I.INTRODUCTION AND EXECUTIVE SUMMARY...........................................................................1II.OVERVIEW OF STUDY....................................................................................................................15III.SURVEY RESULTS............................................................................................................................21A.Basic, Expanded Basic and Digital Services.................................................................................21B.Weighted Average Cable Prices................................................................................................27C.Price Per Viewing Hour..............................................................................................................31D.Programming Expense for Expanded Basic...................................................................................37E.Family Tier.....................................................................................................................................38F.Programming Sold on an Individual Basis.....................................................................................40G.Distribution of Channels................................................................................................................42H.Subscriber Equipment....................................................................................................................45I.Service Installation Charges.........................................................................................................46J.System Operating Capacity............................................................................................................47K.Services Availability and Subscription..........................................................................................49L.Receipts from Cable Services........................................................................................................50IV. ECONOMETRIC ANALYSIS.............................................................................................................54V. CONCLUSIONS...................................................................................................55VI. ORDERING CLAUSE.........................................................................................................................56APPENDIX AAPPENDIX B Federal Communications CommissionDA 09-532I.INTRODUCTION AND EXECUTIVE SUMMARY1.Section 623(k) of the Communications Act, as amended by the Cable Television Consumer Protection and CompetitionAct of 1992 (“Cable Act”),1requires the Commission to publish a statistical report on average rates charged for the basic cable service and cable programming service tiers, and cable equipment.2The Cable Act also requires the Commission to compare the average rates of cable operators subject to “effective competition,” as identified through specific adjudications, with those of cable operators that have not been found subject to effective competition.3The key findings are presented below.2.Averages forall communities. The average monthly price of expanded basic service (the combined price of basic cable service and cable programming service) increased by 3.9 percent over the 12 months ending January 1, 2006; by 4.6 percent over the 12 months ending January 1, 2007; and by 5.0 percent over the 12 months ending January 1, 2008. Chart 1 below shows the trend in cable prices from 1995 to 2008. Over this 13-year period, the price of expanded basic service has grown from $22.35 to $49.65, an increase of 122.1 percent, compared with an increase in the Consumer Price Index of 38.4 percent over the same period.4 1Section 623(k) was adopted as Section 3(k) of the 1992 Cable Act, Pub. L. No. 102-385, 106 Stat. 1460, codified at 47 U.S.C. § 543(k).2The term “service tier” refers to a category of cable service provided by a cable operator and for which a separate rate is charged. See 47 U.S.C. § 522(l7). Cable operators are required to offer an entry-level video-programming service tier called “basic cable service.” Basic cable service must include, at a minimum, the local broadcast stations and any public, educational, and governmental access channels that may be required pursuant to an agreement with a local government. See47 U.S.C. § 543(b)(7). “Cable programmingservice” includes channels other than channels on the basic cable service tier or for which per-channel