Cable Companies' $46+ Billion Robbery -- Subscribers Have Been Ripped off for $5 a Month Since 2000

[Joanne98]

By David Rosen and Bruce Kushnick, AlterNet
Posted on November 8, 2010, Printed on November 10, 2010
http://www.alternet.org/story/148785/

When cable television subscribers open their monthly bills they will not see a charge for the “Social Contract.” Since the mid-1990s, it appears that every cable subscriber has shelled out $1 per month increasing to $5 a month by 2000 to subsidize cable companies’ system upgrades. There has been no accounting for the total monies raised through this subsidy nor a thorough assessment of whether the cable operators fulfilled the system upgrades (including wiring and services to public institutions) the subsidy is suppose to underwrite.

We estimate that the total Social Contract or “social con” ripoff has cost American cable subscribers $46 billion. But the true costs of the social con could be much higher, as the cable companies may have “double billed” on their construction upgrades. These new construction payments underwrote cable operators implementing multiple revenue streams and a monopoly on their wires. This helped cable companies to now offer broadband, Internet, telephone and other services.

As of this writing, the Social Contract is a black hole, with no audit trails, no removal of a charge that seems to have ended up a perpetual cash machine. We call upon the Federal Communications Commission (FCC), the Congress and state Public Utility Commissions (PUCs) to provide a thorough, complete and transparent assessment of the Social Contract.

On September 24, 1997, the FCC’s then-chairman Reed Hundt testified before Congress on the Social Contract. As he reported, “The Commission has found social contracts to be a useful tool for providing for the upgrade of cable facilities allowing operators to expand service offerings.” And added, “the Commission's social contracts have allowed recovery for upgrades only through adjustments to rates charged for cable programming services tiers, the tiers that are within the Commission's exclusive jurisdiction.”

http://www.alternet.org/media/148785/cable_companies%27_%2446%2B_billion_robbery_--_subscribers_have_been_ripped_off_for_%245_a_month_since_2000/

[BrklynLiberal]

1. Big corporations ripping off the little guy..anyone surprised????

[Thav]

2. Sounds like it's Audit Time

And time to freeze that subsidy until they can all account for the dollars they got.

[onenote]

3. I know something about these social contracts and this story is filled with errors

Just one example of how the authors misunderstand the social contracts can be found in their statement that the social contracts required cable operators "to upgrade their networks to a minimum data rate; technically, it was set at 750 MHz per second analog and 1at least 200 MHz is expected to be dedicated to digital distribution'".

The upgrade requirement had nothing to do with data rate. In the world of cable television, a requirement to upgrade a system to 750 MHz is a requirement that relates to the system's capacity, not its speed. Each traditional analog broadcast signal is licensed to occupy 6 MHz of spectrum. The greater a cable system's capacity (as measured in MHz) the greater the number of channels of content it can offer -- and with compression, more than one "channel" can now be offered in a 6 MHz slot. Increasing capacity also allows cable systems to devote some of that capacity to providing other services, such as voice or broadband.

Also, the rate increeases authorized by the social contract were limited to the "expanded" tier, not the basic tier and the expanded tier was deregulated in 1999. Its impossible to say whether a cable system's current rates still are collecting the "social contract" dollars or whether they are collecting dollars to offset other costs incurred in the ensuing 11 years. Money is fungible. If a system that raised its rates by $2 under the social contract, but its costs for content went up by $3 over the ensuing years and the system only raises its rates by $1, is it still collecting the social contract dollars or have they tranformed into dollars collected to offset cost increases unrelated to the social contract.

Finally, it is my recollection(although I haven't had the time to check) that cable operators that signed social contracts were reported to submit reports indicating their expenditure of funds to upgrade their systems during the contract term.

Hard to take someone seriously when they have such a basic misunderstanding of the facts.

[smiley]

6. party pooper...

- just kidding.:hi:

[Blue Owl]

4. call it the propaganda tax

Hey, corporate-manufactured reality piped in your home 24/7 ain't free.

[JohnWxy]

5. haven't you heard? Alan Greenspan say the market will police itself!