FCC to probe pricing policies of cable, Verizon

PHILADELPHIA - The Federal Communications Commission has opened an investigation into the pricing policies of major cable operators and Verizon Communications Inc.

The agency wants to ensure that customers are being treated fairly, FCC Chairman Kevin Martin said in an interview with The Associated Press.

"I'm certainly concerned with the increasing cable prices that consumers are facing," Martin said. "They are getting less and being charged the same or more."

The FCC wrote to Verizon and 11 cable companies last month about their practice of moving analog channels into digital tiers to free up bandwidth for other uses, such as high-definition channels.

To watch channels that have been moved, subscribers to analog service must either subscribe to a more expensive digital tier, rent a digital set-top box or use an adapter, which service providers are starting to offer for free.

The FCC's Oct. 30 letter went to Comcast Corp., Time Warner Cable Inc., Cox Communications Inc., Charter Communications Inc., Cablevision Systems Corp., Bright House Networks, Suddenlink Communications, Bend Cable Communications, GCI Company, Harron Entertainment, a unit of Harron Communications, RCN Corp. and Verizon. Verizon was included because it offers pay-TV through its FiOS service.

Cable providers are in a race with satellite TV and phone companies to offer the most high-definition channels. About half of the nation's 65 million cable households buy only the analog basic or "enhanced basic" tiers.

The agency also will investigate whether providers are misleading customers into thinking that when analog television channels move to the digital tier of service the shift is related to the federal government's mandate that all broadcasts be digital by February, Martin said.

The two moves are unrelated. Linking the two in customers' minds could prompt more people to opt for digital video services.

The FCC has asked companies being probed to submit information about their pricing and channel switching practices within two weeks.

Martin said it also appears consumers weren't given "appropriate notice" about the channel changes.

He said the FCC has received a "significant" number of consumer complaints about the practice of moving analog channels to digital tiers of service, which has accelerated this year.

Comcast spokeswoman Sena Fitzmaurice said the company has started offering a free digital set-top box and up to two digital adapters to "enhanced basic" customers. The adapters convert digital signals to analog.

David Young, vice president of federal regulatory affairs at Verizon, said FiOS is all-digital but it had been simulcasting in analog so customers could watch TV on analog sets in other rooms that don't have set-top boxes. Verizon stopped the analog transmissions last month.

"We told customers repeatedly that this was coming. We asked them to contact us. We told them about their options, including offering them the digital adapter for that TV for free," Young said.

Bruce Broquet, vice president of finance for GCI, said its system will be all digital by the end of the year so the subject matter will be moot for customers.

Other cable operators either declined to comment or didn't immediately return calls for comment from The Associated Press.

The FCC's letter was sent out a day after Consumers Union asked the Senate Committee on Commerce, Science and Transportation to look into the practice of moving analog channels to the digital tier.

"Consumers are left paying the same monthly rate for significantly less service, or must rent more expensive set-top boxes for each television set they own," said Consumers Union, a nonprofit consumer advocacy group.

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