CABLE'S NEW TUBE STAKETHE BIG TV WINDFALL CONGRESS PROMISED MAY END UP COSTING YOU
Have you looked at your latest cable bill?
Thanks to Congress, the Federal Communications Commission and your local cable-television company, that monthly amount-due reminder might surprise you.
It will prove especially surprising if you recall headlines over the last few months touting something called the Cable Act of 1992, government's first attempt to reregulate the nation's 11,000 cable companies since the deregulation frenzy of the mid-1980s set them free.
Essentially, the act sets a new rate formula and several new billing procedures. When it was passed by Congress last October, supposedly to protect consumers from the price-gouging tactics of monopolistic cable companies, some House members were promising the nation's cable users a $6 billion savings.
The FCC later downsized the projected windfall by several billion dollars, but as recently as late July, commission spokesfolks were still talking 10 percent price drop.
Dimension Cable, which services 83 percent of the Valley's cable users (rates vary in each city), took a cautious stance in news reports, predicting its customers would see no significant rate decrease.
But in a flier mailed to customers before Cable Act changes went into effect, the company said 60 percent of its users could expect a rate drop. The other 40 percent, noted Dimension, which had increased its rates 5 percent just last March, would see either no change or a slight increase.
"In most cases," the flier said, "the difference will be in pennies."
The changes went into effect September 1. As Dimension Cable bills showing Cable Act changes began to reach customers, the complaints began.
It seems that lots of cable customers have a higher bill this month than last. As reported by the Wall Street Journal last week, it's not a local phenomenon.
Users at opposite ends of the cable spectrum--those who take only the most basic package of stations (that's less than 20 percent of Dimension's customers), and those who can afford both multiple cable hookups around the house and several premium channels--might be seeing a bill reduction.
The rest--and nobody can say for sure how large a group that is, though it's probably quite a few--may be out more than a few pennies.
What happened to the billion-dollar bonanza?
"In reality, it won't be that number," says Ivan Johnson, Dimension Cable's vice president of public affairs, adding that the exact number won't be known for a while. "It'll probably be November before all the dust settles."
As the dust settles, local cable users are realizing that they've been hit with several often-baffling changes to their viewing lives. These include:
Dimension Cable has used Cable Act changes to alter its billing structure for some of its station packages, or "tiers" as they're known in the business. Some popular networks (the Nashville Network, Discovery, American Movie Classics, Turner Network Television) once carried in a larger package have been broken out for separate billing, or individually as " la carte" channels; most customers are only learning now that they have to contact Dimension and cancel those stations to avoid an extra charge for them.
There are now bill entries for equipment charges (converter boxes and remote controls), which haven't been itemized before. Customers who have just one converter are now being charged for their box--that's new, mandated by the government. At the same time, households with more than one converter may now be paying less. The government says that cable bills have to be itemized this way, so that the cost of actual cable service can be compared from company to company without equipment or installation fees messing up the numbers.
There are now bill entries for prorated fees. Because of Dimension's rolling billing schedule--if your cable service was installed on the 13th of some month several years ago, your monthly billing cycle still begins on the 13th--the company has to, by law, prorate any fee changes made by the Cable Act.
There's also a strange new address at the bottom of everybody's bill, which has caused some customers to send their payments to the wrong place.
The Cable Act requires that the address and phone number of a cable company's licensing authority--in the City of Phoenix, that would be the Contract Administration Division of the city's Public Works Department--be listed on every bill.
Cable subscribers are reading that division's downtown address, which is now prominently displayed at the bottom of every cable bill, and mailing--or, in some cases, hand-delivering--their bills to that office.
Terry Parker, contracts administrator for the division, says her office forwards the misdirected bills to Dimension as quickly as possible, and has encouraged the company not to charge those customers late fees.
Parker says her office, which acts as liaison between Dimension and cable customers in the city, has fielded a slightly-higher-than-average number of calls from confused or angry cable customers.
"We're not getting a huge number of calls, but the calls are taking longer, because of the complexity of the changes," says Parker, whose own cable bill increased $3 over last month. (Subtract prorated charges, Parker says, and she'll probably end up with a 90-cent price hike--when the dust settles.)
"I even brought mine in and photocopied it and said to my staff, 'Okay, explain it to me. You'll need to explain it to a citizen who calls.'"
Johnson says Dimension has likewise seen a significant increase in calls from customers wondering about that and other inspired alterations legislated in the Cable Act.
An average number of calls in a month is 170,000, Johnson says. September saw more than 200,000, causing Dimension to pay overtime for customer-service reps and bolster their numbers by recruiting workers from the telemarketing and collections branches of their phone banks.
"Clearly, there have been some people who are unhappy," he says. "There are a lot of moving parts to this. To some extent, it was probably unavoidable."
Johnson, in part, blames the government. In midsummer, the FCC bumped up the deadline for all these changes, once scheduled for October 1, by a month. Cable companies, Johnson says, were left with less time to study the Cable Act's moving parts (interpreted for the industry by the FCC in a 541-page booklet, reportedly clogged with more than 1,000 footnotes), and some of the confusion got passed along to customers.
Starting in late August, Dimension announced the Cable Act changes in fliers mailed to subscribers, in newspaper ads and on its own access channels.
"We could've done a better job of notifying our customers if the FCC had given us more notice," he says. "We were rushed. We don't think what we did was perfect, but given the time constraints, we did as good as we could do."
Of the many thousands of calls fielded from customers, Johnson says, most are more miffed at channel lineup shifts (done for "technical reasons," he says) than at billing changes.
As for the surprise changes in channel "tiers," Johnson says most callers seem more concerned that they'll lose their favorite channels if they don't somehow act immediately, rather than expressing anger at any new charges for the four-network "Preferred Dimension" package.
Johnson says Dimension won't know exactly who will be affected by the billing changes, or by how much, for a while.
By October, all of Dimension's bills will show the full effect of the Cable Act. Many customers will then decide whether to drop or add channels based on the outcome of the government-directed changes. In the meantime, the effect of the Cable Act on the "average cable customer is hard to describe," he says. "There are so many variables."
Johnson doubts that the savings to the "average cable customer" is going to be anywhere near the 10 percent break predicted over the summer by the FCC, although the company "actually had people calling here asking if they could deduct that much from their bill," he says.
(According to Mark Gershman, marketing manager of TCI Cable of Scottsdale, "a vast majority" of cable users in that city "saw a decrease in their bill," adding that the savings to users was "reflected very quickly in our revenues.")
Dimension, Johnson says, is not making out like a bandit on the billing changes. In fact, he says, Congress insists that changes caused by the Cable Act end up "revenue neutral" for cable companies.
Dimension, currently facing the prospect of future competition from several wireless programming providers and whose license with the City of Phoenix is up for renewal in less than a year, has not yet reached that benchmark.
"It's not revenue neutral, which is what's required by law," he says. "As best we can project, we'll lose--it's like $400,000.
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