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Cable rates stir controversy
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December 13, 1996: 4:38 p.m. ET
Deregulation hasn't reduced prices, and more price hikes are in sight
From Correspondent Casey Wian
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LOS ANGELES (CNNfn) - The 1996 Telecommunications Act, which deregulated the United States' telephone and cable industries, was supposed to bring more competition and lower prices for cable customers.
That hasn't happened.
Despite the introduction of competition from phone companies and satellite services, cable bills continue to rise at more than double the rate of inflation.
Three of the biggest cable operators plan more price increases starting next year.
Some 23,000 cable industry players gathered in Anaheim, Calif., this week, and while the rate increases would seem to point to larger profits, some urged restraint against pushing customers further.
"We must be careful, really careful, about price increases," said Decker Anstrom, president and CEO of the National Cable TV Association.
"We've worked hard to recover our standing with public officials and our customers. Let's not undo it now by putting short-term cash flow growth ahead of long-term leadership."
Cable operators are thinking ahead by rolling out new equipment like Internet modems and digital boxes that give viewers better quality and more programming choices.
Those choices aren't always cheap, but Ed Green, president of GI Communications, said viewers only have to pay for the services they use. (96K WAV) or (96K AIFF)
Cable operators will need to invest billions of dollars in new technology to meet the competitive threat posed by satellite and phone companies.
Working against that goal are the newer competitors who are slashing their prices, putting a financial squeeze on cable operators.
No one knows that better than the man who runs the nation's largest cable company, Tele-Communications Inc. President and CEO John Malone.
This month, TCI announced cost-cutting measures, including laying off 2,500 employees.
"The curse of the cable industry over all these years as an operating reality is that every year the debt goes up (and) all the money generated gets reinvested, and then some," explained Malone.
Cable stocks have taken a beating on Wall Street, and Malone said it's time the industry delivers a better return to shareholders.
A key challenge will be to convince customers to accept the price increases cable operators need to upgrade their systems and services. 
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