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 STATEMENT  OF  COMMISSIONER  MICHAEL  J.  COPPS, 
 DISSENTING 
 Re:  Implementation  of  Section  3  of  the  Cable  Television  Consumer  Protection  and  Competition  Act  of  1992. 


 I  respectfully  dissent  from  today’s  Report  on  cable  rates.  At  a  time  of  significant  increases  in  cable  rates  year  after  year,  consumers  deserve  a  better  effort  from  the  FCC.  I 
 do  not  believe  that  the  Commission  has  adequately  fulfilled  its  statutory  responsibility  under  Section  623(  k).  For  this  Report,  the  Commission  conducts  even  less  analysis  than 
 it  has  in  the  past  and  does  not  audit  any  of  its  results  notwithstanding  problems  with  our  methodology  disclosed  in  a  recent  report  from  the  General  Accounting  Office. 


 The  data  show  the  continuation  of  a  troubling  trend  --  rates  increased  8.2  percent  in  one  year,  significantly  more  than  inflation  and  more  than  the  average  over  the 
 preceding  five  years.  We  hear  from  consumers  who  are  fed  up  with  continual  increases  in  their  cable  bills.  When  consumers  keep  getting  hit  in  the  pocketbook  year  after  year, 
 we  must  commit  the  resources  necessary  to  gather  the  information  so  we  can  make  informed  decisions  to  ensure  that  consumers  are  protected. 


 In  section  623(  k),  Congress  gave  the  Commission  the  charge  to  publish  annually  statistical  reports  on  the  average  rates  for  basic  cable  service,  other  cable  programming, 
 and  cable  equipment.  Congress  directed  the  Commission  to  compare  those  rates  in  areas  that  are  subject  to  effective  competition  with  areas  that  are  not  subject  to  such 
 competition.  Congress  further  provided  definitions  of  when  effective  competition  exists. 
 In  adopting  this  section,  Congress  envisioned  that  the  Commission,  as  the  government’s  expert  agency,  would  actively  pursue  information  each  year  on  cable  rates 
 and  publish  statistical  reports.  Here,  we  have  not  delved  as  deeply  as  Congress  expects.  The  data  we  have  and  the  analysis  derived  from  it  are,  for  me,  insufficient. 


 To  carry  out  its  responsibility  under  the  statute,  the  Commission  sent  surveys  to  a  sample  of  cable  operators  asking  them  to  provide  their  rates  for  cable  services  and 
 equipment,  and  to  attribute  any  increases  in  rates  to  a  number  of  different  factors  including  costs  of  programming.  The  operators  attributed  over  60  percent  of  their  rate 
 increases  to  programming  costs,  yet  the  Commission  does  not  conduct  even  minimal  audits  to  assure  the  accuracy  of  these  data. 


 The  Report  states  that  there  may  be  areas  presumed  to  have  effective  competition  but  in  which  the  competitive  situation  subsequently  changed.  These  changed 
 circumstances  could  account  for  some  of  the  discrepancies  with  the  General  Accounting  Office  (GAO).  In  a  report  issued  in  October  2002,  the  GAO  used  the  Commission’s  data 
 but  undertook  additional  analyses  to  gauge  the  actual  state  of  competition.  The  GAO  found  instances  where  the  Commission’s  data  were  inaccurate.  The  majority  recognizes 
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 the  shortcomings  of  our  data,  but  nonetheless  concludes  that  we  have  carried  out  our  obligations  under  the  Act.  And  again,  the  Commission  fails  to  conduct  even  the  most 
 minimal  of  audits  to  ensure  the  accuracy  of  the  data,  including  the  actual  extent  of  competition. 


 I  am  further  disappointed  that  the  Commission  failed  to  undertake  statistical  analyses  as  it  has  in  past  Reports.  Previously,  the  Commission  conducted  econometric 
 analyses  of  such  important  issues  as  the  impact  on  cable  rates  of  clustering,  DBS,  and  cable  overbuilds.  Such  analyses  were  useful  to  enable  the  Commission  to  determine 
 whether  specific  factors  influence  rates,  and  to  measure  the  extent  of  that  influence.  For  example,  the  Commission  conducted  regression  analyses  to  determine  whether  the 
 number  of  channels  offered  influences  the  rate  charged.  It  also  used  econometric  analysis  to  assess  whether  the  demand  and  price  charged  for  cable  service  were  sensitive  to  the 
 type  of  competition  faced  by  cable  operators.  To  carry  out  Congress’  directive  for  statistical  reports  on  cable  rates,  we  would  have  preferred  not  only  to  continue  the  efforts 
 of  the  past,  but  to  expand  the  analyses  to  include  such  areas  as  the  impact  of  local-  into-local  DBS  offerings  on  cable  rates. 


 The  Commission  needs  to  be  more  proactive  in  its  cable  reports.  I  urge  the  Commission  to  adopt  a  specific  plan  to  obtain  data,  conduct  audits,  and  undertake  the 
 analyses  that  can  provide  a  fuller  and  more  accurate  picture  of  cable  rates.  Such  an  effort  is  necessary  to  fulfill  our  statutorily  mandated  responsibilities. 
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