Cable rates have continued to climb at three times the rate of inflation, and as more criticism emerges, the industry goes on the defensive. As we've mentioned in previous reports, rising cable rates have drawn the attention of many consumer groups and several politicians, all of whom are concerned that the industry is using its monopoly powers to gouge consumers in the pocket book with all the tact of a sabre-toothed tiger.

During the past six years cable rates have risen more than 45 percent, three times the rate of inflation. No other technology industry has seen such rampant price hikes; in fact many other industries are seeing significant price reductions, despite also having to deal with network expansion costs. In that same six year time period, wireless phone service costs have dropped 32 percent; long-distance telephone costs have fallen 25 percent.

But cable rates continue to climb.

Some regions have witnessed multiple hikes in the same year. Lafayette, Louisiana was the only Cox cable market to witness three different rate hikes last year. Other areas were lucky and only witnessed two. Cox at the time blamed sports programming increases and network improvements, though it was a lack of network improvements that was responsible for service nightmares like the ones we've reported in Virginia.

Cox naturally isn't alone, with multiple cable companies hiking fees until customers grow frustrated and switch to satellite. Comcast broke many camel's backs when they announced they'd be charging non-TV broadband subscribers significantly more. Comcast is in effect driving customers to Satellite with rate hikes, and then using the increased competition to argue there's no need for regulation. Make a tidy profit while keeping the FCC at bay.

Groups like the Consumer's Union filed a series of scathing attacks last year (see .pdf report), claiming in their reports that the cable industry was taking advantage of their monopoly position, and that price hikes were based primarily in greed, not necessity. "We think this is largely because cable companies have no real competition in their communities" said Consumers Union rep, David Butler. In fact, in communities that do have more than one cable provider (only 5% of all communities nationwide, though the FCC argues this is closer to 2%), prices are on average seventeen percent lower.

The cable industry, of course disagreed with the Consumer's Union's findings, or any such notion that geographical monopolies are the primary catalyst for continued hikes. The argument continues to be that content is the major culprit. Bev Greenberg, vice president of public affairs for Time Warner, blames the hikes on show business. "You are dealing with the sports world and the entertainment world," Greenberg said recently. "We all know about the costs of entertainers and athletes today."

Yet according to the FCC, the cable industry spent $9.3 billion on programming in 2001 and generated $43.9 billion in revenues. In 2002, cable providers spent $10.9 billion on programming and brought in revenues of $49.3 billion.

The National Cable and Telecommunications Association shot down the Consumer's Union report as well, claiming it "overlooks a number of facts, including the constant escalation in costs of content; the recruitment, training and retention of qualified personnel; improvements in customer care and service; as well as the industry's ongoing investment in upgrading its plan."

The reports have attracted some political attention from the likes of Senator John McCain, but so far all that's come of it is a series of Senate Hearings and the occasional bout of finger pointing. There is a simmering push for the industry to offer more "a-la-carte" pricing; providing sports programming in particular as its own add-on package to lower prices for the un-interested.

As perhaps a pre-emptive strike against the growing number of consumers wondering why their cable bill looks increasingly like a credit card statement after a weekend in Vegas, the NCTA this week issued a new report justifying the hikes anew. In the release, the NCTA blames a multitude of issues on the rate hikes, from the costs incurred from rolling out "new services and top quality programming choices", to increased labor costs.

But again, the Consumer's Union is having none of it, with one CU rep putting it succinctly: "Since there hasn't been competition, rates have gone up. Anybody who pays the bill knows it."