The Federal Communications Commission Tuesday voted to reduce rates for many cable television services by 7 percent, moving to correct an earlier attempt at price cutting that backfired.
The new rates, approved by a 3-0 vote, will be phased in. They will allow the commission to step in if it finds that a cable company has tried to avoid regulation by changing the way it bills.It was not immediately clear how the cuts would change an individual subscriber's bill. The FCC only cut rates for the service it regulates, sometimes referred to as "expanded basic." It includes such channels as ESPN, C-SPAN and CNN.
Local authorities regulate basic cable rates - packages that usually include local broadcast channels, and government and public access channels. The prices for premium channels, such as HBO and Showtime, and pay-per-view channels are not regulated.
The reduction ordered last year lowered bills for about two-thirds of America's 57 million cable subscribers. But many others howled when their rates rose as cable companies restructured their charges.
FCC Chairman Reed Hundt termed the decision a "brilliant balance" between the competing concerns of cable subscribers and the needs of the cable industry.
"I think consumers will be better served by the additional reduction," said Commissioner James Quello.
But Commissioner Andrew Barrett, while he voted for the action, said he considered the 7 percent cut "a bit on the high side."
Cable firms had lobbied hard against substantial cuts, arguing that last year's federal regulation had already cost them billions of dollars.
The new rules will allow the cable companies to "earn a reasonable return on their investment," said Sandy Wilson of the commission staff.