NEW YORK (CNN/Money) - The consumer group that publishes Consumer Reports blasted cable companies Wednesday, claiming they are misleading customers about their reasons for raising rates.

Consumers Union, along with the Consumer Federation of America, released a report disputing claims by major cable operators that rising costs were to blame for rate increases.

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Instead, the consumer groups said, rate hikes are funding a series of mergers in the industry that are meant to increase the operators' monopoly power, eroding consumer choice and enabling the companies to keep raising rates.

"Cable operators are blaming the rate increases on a number of things in an effort to hide the underlying cause -- the greed of the nation's most persistent monopolists in the midst of a costly and anti-consumer merger wave," the report said.

A spokesman for Atlanta-based cable provider Cox Communications Inc. (COX: Research, Estimates) said the consumer groups were displaying ignorance of the costs cable companies absorb.

"When [consumer groups] make such dramatic statements, they show little if any comprehension of the business mechanics of the cable industry or the role of its players," said Cox spokesman Bobby Amirshahi.

For example, Amirshahi said, the top 48 expanded cable networks -- such as Lifetime and ESPN -- collectively raised the rates they charged Cox by 11 percent in 2001, 10 percent in 2002 and are expected to raise them another 12 percent in 2003. But Cox raised its customers' rates by only about 5 percent in 2002, he said.

According to data provided by the National Cable and Telecommunications Association, a cable industry lobbying firm, cable operators have invested $70 billion -- or about $1,000 per cable customer -- in network improvements since 1996. In 2002, the NCTA said, cable companies spent more than $200 per customer on system upgrades.

"Claims about cable prices by consumer group lobbyists continue to be misleading and factually inaccurate," NCTA spokesman Rob Stoddard said in a release.

The consumer groups' report cited figures from the Federal Communications Commission showing the cable industry's annual operating profits had risen by about $7 billion since 1997, to $18.8 billion a year. Meanwhile, operating revenues per subscriber have risen to $273 a year from $208 in 1997.

Meanwhile, between 1998 and 2001, cable companies forked over about $250 billion on mergers and acquisitions, meaning they spent nearly six times as much on buying each other out as they did on system upgrades, the consumer group's report said.

Industry consolidation has allowed cable providers to raise prices at will, the group said. Their report cited a recent General Accounting Office finding that, in communities with two cable companies and two satellite providers, cable prices are, on average, 17 percent lower than in communities with two satellite providers and one cable company.

"They would not be able to raise prices and pass program price increases through if they did not have monopoly power," the report said.

The groups admonished the FCC for doing nothing about the situation and for strengthening the cable operators' power by refusing to allow mergers of satellite providers. The groups specifically cited the recent failure of a planned merger between Hughes Electronics (GMH: Research, Estimates) and EchoStar (DISH: Research, Estimates).

"[The FCC's] decision to keep the satellite industry weak by preventing mergers has served to reinforce the market power of the cable industry," the report said.

The report also called on Congress to act to fight cable operators' growing monopoly power, warning that they will use that power to affect prices for high-speed Internet access. According to the group, the cable industry controls 65 percent of the residential high-speed Internet market and 79 percent of the "advanced services" market.

Amirshahi of Cox Communications said those figures sounded about right, but reflected the quality of the high-speed Internet access cable providers offer. "This signals that consumers are voting with their checkbooks," Amirshahi said. "They find our products superior and more reliable."

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