AP: Texas

02/10/2006

By DAVID KOENIG  / Associated Press

Cable company revenues rose faster than inflation last year, but cable's share of the TV-viewing market declined as satellite services gained ground, federal regulators said Friday.

The Federal Communications Commission said cable revenue rose an estimated 10.8 percent from June 2004 through June 2005.

The number of cable households fell nearly 1 million, and cable's share of households with something more than an antenna fell to 69.4 percent from 71.6 percent a year earlier. Satellite's share rose to 27.7 percent from from 25.1 percent.

The findings were released as the FCC approved its annual report on video competition. The FCC didn't indicate how much cable rates rose, but Commissioner Michael Copps said they were too high.

"Consumers are feeling the pain and paying the cost and not liking it," Copps said during a hearing. He added that the FCC doesn't fully understand the reasons for the increases.

Commissioner Jonathan Adelstein said a la carte pricing would help reduce consumers' bills, but programming providers aren't interested in that.

Chairman Kevin Martin said technology that commissioners saw during a two-day visit to Texas could offer more competition and lower prices.

Texas last year made it easier for phone companies to offer video by bypassing the slow process of winning local franchises. Instead, one franchise covers the whole state. Verizon Communications Inc. and AT&T Inc. have begun offering TV service.

Martin said the commission should remove barriers to new video providers, but he offered no specifics.

The commission met in Keller, near Fort Worth, the first town to receive Verizon TV service. The commission heard from a local television viewer, state and local officials and executives from phone and cable companies about competition in the industry.

About one-fifth of Verizon's Keller customers subscribe to the TV service, according to company spokesman William Kula.

The FCC members saw a demonstration of a similar technology from AT&T Inc., and another potential option to cable — sending Internet and video signals over power lines — on Thursday. The company, formerly known as SBC, began offering TV in its hometown of San Antonio in December.

AT&T was one of the first companies to take advantage of a recent Texas law and get a statewide franchise for video service. That let the company avoid the time-consuming task of getting approval from every town where it wants to offer video service.

AT&T and New York-based Verizon see video as critical to their plans for competing with cable companies in offering TV, Internet and phone service to consumers.

The Texas Cable & Telecommunications Association sued to overturn the Texas law the day after it was signed in September by Gov. Rick Perry. The cable trade group said the law would let phone companies sell TV service in rich areas but ignore poor ones. The case is pending.

Congress is also considering the franchising issue.

Sens. John Ensign, R-Nev., and Gordon Smith, R-Ore., have introduced legislation to speed up the franchising process for new market players by easing barriers that have drawn protests from phone companies. The bills would still let cities negotiate some terms of video franchises.