NCPA - National Center for Policy Analysis

Competition Reduces Cable TV Rates

November 3, 2003

Competition leads to lower cable rates and improved quality, concludes a new General Accounting Office report.

Over 70 million American households receive television service from a cable television operator. In recent years, rates for cable service have increased at a faster pace than the general rate of inflation. The GAO found:

  • Competition from a wire-based company is limited to very few markets, but where available,cable rates are substantially lower --by an average of 15 percent -- than in noncompetitive markets.
  • Direct broadcast satellite (DBS) service is available nationwide, and in markets where DBS companies provide local broadcast stations, cable operators improve the quality of their service.

A variety of factors contribute to increasing cable rates. For example, during the past 3 years, the cost of programming has increased considerably (at least 34 percent). Additionally, cable operators have invested large sums in upgraded infrastructures, which generally permit additional channels, digital service, and broadband Internet access.

Although some members of Congress have called for cable rate reregulation, the GAO warns that regulations could raise rates for some consumers, while lowering them for others.

Source: "Issues Related to Competition and Subscriber Rates in the Cable Television Industry," GAO-04-08, October 2003, General Accounting Office.

For GAO text


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