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Exposing the Reasons for Costly U.S. Pay-TV

Associated Press reports that cable television service rates keep going up while prices for other communications services are going down, says the U.S. chief communications regulator, and he blames local governments for blocking competition.

The Federal Communications Commission (FCC) is scheduled to vote on whether to make it easier for competitors to obtain cable franchises. FCC Chairman Kevin Martin, in speeches over the past few weeks, has said local franchise authorities at times "obstruct and in some cases completely derail" new attempts to bring video competition to an area. At stake is the battle for America's television watchers.

And people in the United States watch a lot of television. The FCC reports that the average U.S. household tuned in for eight hours and 11 minutes each day in the 2004 and 2005 fall television seasons. The latest statistics indicate there are 109.6 million television households and 94.2 million of them subscribe to a pay television service such as cable or satellite.

Cable accounts for 69.4 percent while direct broadcast satellite companies such as DirecTV and Dish Network are responsible for 27.7 percent.

Martin is using public resentment over rising cable prices to sell his proposal. He is expected to release a report that says cable rates have risen 93 percent from 1995 to 2005. Martin has also been quoting numbers compiled by the investment research firm Sanford C. Bernstein & Co. that predict a 5.4 percent increase in prices for cable subscribers in 2007 in a dozen markets, including Seattle, San Francisco and Philadelphia.

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