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Cable TV industry sticks consumers with hidden tax

Cable Customers Stuck with Hidden Tax Due to Cable Industry’s Practice of Bundling Channels
Consumers Union Testifies at Tuesday House Commerce Subcommittee Hearing

Tuesday, July 13, 2004
Contact: Susan Herold, 202-462-6262
(Washington, D.C.) – Cable TV customers are forced to pay a hidden “cable tax” because the industry requires them to buy expensive packages of channels to get the ones they actually do want, Consumers Union will testify Tuesday during a House Commerce Subcommittee hearing on proposals to expand consumer choice in the cable TV market.
Gene Kimmelman, CU senior public policy director, will ask the committee to give consumers the option to get rid of that special tax through the a la carte option – the right to pick and pay only for the cable channels they want, in addition to the current packages of channels offered.
American consumers support cable a la carte: a national, scientific poll being released by CU found that two-thirds of cable customers surveyed in May would prefer the option to pick their own channels, and 59 percent would pick fewer channels than they currently must buy in their current cable packages. Asked if they would still choose fewer channels even if their bill didn’t decline proportionally, 29 percent of customers said they would.
“We believe it is time for consumers to have choice when it comes to cable television, and not just the industry’s choice, which is sticking customers with ever-increasing bills for the cable company’s selection of channels,” Kimmelman said.
For every household watching the 30 least-popular cable channels, approximately 250 households who are forced to pay for those channels are not watching. Research also shows cable rates have increased at five times the rate of inflation since the industry was deregulated in 1996.
CU is calling on policymakers to expand opportunities for diverse programming that better meets the needs of wide-ranging audiences at lower prices by expanding consumers’ abilities to choose the channels they want.
Lack of competition in the cable industry – 98 percent of Americans have only one cable provider – and lack of independent programming from diverse sources means consumers are stuck paying more for channels they don’t want, and can’t get the programming that best meets their interests.
“By placing their most popular channels in expensive tiers with channels most people don’t watch or find offensive, the industry forces consumers to pay a special cable tax for those programs they actually do want,” Kimmelman added. “We believe giving customers the option to pick their own channels, in addition to existing channels packages, is the only way to ensure consumers get a fair shake.”
To read Consumers Union’s testimony click here
To view the survey results, click here