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Cable TV Costs Jumped 8.2 Percent Last Year

Average expanded basic rate rose to $22.02 a month

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The national average monthly cost of cable TV service and equipment increased by 8.2 percent, from $37.06 to $40.11, over the 12-month period ending July 1, 2002, according to the Federal Communications Commission (FCC).

FCC's annual report on cable industry prices takes into consideration monthly charges for the basic service tier (BST) and cable programming service tier (CPST, also known as "expanded basic"), monthly charges for equipment, installation fees, reconnect fees, and fees for digital cable service.

The report shows the past year's 8.2 percent increase compares with a 5-year compound annual rate of increase of 7.1 percent from July 1997 to July 2002.

Specifically, the 8.2 percent increase reflects average increases in monthly charges of 3.7 percent for basic service, from $13.93 to $14.45; 10.8 percent for the expanded basic service, from $19.88 to $22.02; and 12.0 percent for equipment, from $3.25 to $3.64, over the same period.

The average number of channels available increased from 59.0 to 62.7 channels, an increase of 6.3 percent for the year ending July 1, 2002. (FCC failed to comment on the number of channels actually worth watching.)

The average overall monthly rate per channel increased from 65.6 cents to 66.4 cents per channel, an increase of 1.2 percent. Over the same period, the consumer price index increased by 1.5 percent. Thus, in real terms, the effective per channel rate fell by approximately two-tenths of one percent.

Also compared in the report are prices charged by cable operators facing effective competition with those of cable operators not facing effective competition. Both groups increased their average monthly rate for programming and equipment by 8.2 percent over the 12-month period ending July 1, 2002. As of that date, cable operators facing competition were charging, on average, $37.84 while operators not facing competition were charging $40.26. The difference in average monthly rates between the competitive and noncompetitive groups (the "competitive differential") was 6.4 percent for 2002, close to the 5-year average differential of 6.5 percent. On a per channel basis, competitive and noncompetitive cable operators, respectively, charged 63.7 cents and 66.6 cents per channel as of July 1, 2002, a differential in average monthly rate per channel of 4.6 percent.

A full copy of the FCC report is available at http://www.fcc.gov/mb.

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