CyberWire Dispatch // Copyright (c) 1994 //

Jacking in from the Discount Port:

Washington, DC -- Your Beavis and Butthead jones just got cheaper, thanks to a ruling today by the Federal Communications Commission that will cut cable rates by 7 percent. It's the second such rate reduction ordered by the Commission in less than a year. The first cut was supposed to lower rates for all cable subscribers by at least 10%. But something got lost in the mix. Consumers and cable operators alike criticized the move.

FCC Chairman Reed Hundt declared the move a "brilliant balance" offsetting consumer groups claims that rates should be 18 percent lower and cable operators that claim their bottom lines have already tanked some $2 billion because of rate rollbacks.

The 7 percent was a tough compromise. According to confidential internal FCC memos obtained by Dispatch, Hundt was lobbying his fellow commissioners hard for a 16% cut. The proposal had no takers. Commissioner James Quello agreed with the 7 percent figure, saying consumer would be "better served." Commissioner Andrew Barrett, however, said the figure was on the "high side," but voted with for the decrease anyway. According to the FCC internal memos, Barrett had threatened to torpedo any increase above 6 percent.

The unanimous decision was a "Take Two" move by the Commission; cuts ordered last year lowered bills for about 2/3 of all cable subscribers, but the rest were hit with as much as a 31% increase. Cable couch potatoes howled. And the Commission sat up and took notice.

The new round of rate regulation only applies to "expanded basic" services. Local governments regulate basic cable rates -- and if you think those are too high, you can bitch the FCC. Honest. There's even an official FCC form you can fill out, just pick one up at your local cable office.

What the new cuts won't effect are the premium channels: HBO, Showtime, Howard Stern's Pay-Per-View T&A Extravaganza. Those services will still be priced at what the market will bear.

Under the new rules, cable companies are allowed to earn a "reasonable rate of return" on their investments, the FCC said, but the formula for "reasonable" isn't quite clear. Cable companies that feel like they're getting screwed can appeal to the Commission.

Meeks out....