U.S. Probes Cable Pricing Ahead of Switch to Digital

WASHINGTON(Reuters) – Federal regulators have launched a probe into whether cablecompanies are raising prices as consumers prepare to switch to digitaltelevision.

The U.S. Federal Communications Commission said on Wednesday it sentletters to 12 companies after receiving complaints that some areratcheting up prices for programing packages or requiring customers tobuy digital set-top boxes for fewer channels, ahead of the change.

Television broadcast signals will switch to digital from analog onFebruary 17 under a congressionally-mandated order to free up airwavesfor emergency and other uses.

FCC Chairman Kevin Martin and consumer groups have long complainedabout rising cable prices, especially when rates for othertechnologies, such as cellphones, have fallen.

Now, critics say cable companies may be using the digital switch as an excuse to reset rates for packages.

"We are asking why some companies have taken steps to requirecustomers to pay higher cable prices after the digital switch for thesame channels that they received through analog signals previously,"Martin told reporters on Tuesday on the sidelines of an FCC meeting onunrelated matters.

Prices for cable television nearly doubled in the decade ended in 2005, according to the FCC.

An industry spokesman said cable companies are moving their optionsto digital as part of the transition, which necessitates differentchannels and packages, and requires a set-top box.

Brian Dietz, a spokesman for the National Cable and Telecommunications Association, called the FCC inquiries "perplexing."

"The Bureau’s actions are clearly contrary to the FCC’s own policies encouraging the roll-out of new digital services," he said.

Specifically, the FCC is questioning whether companies are movingcertain analog channels to digital only, putting them out of reach ofcustomers who do not obtain a company-supplied set top box.

Last month, Consumers Union wrote to lawmakers questioning whetherComcast Corp and other cable companies were fueling growth by "reachinginto the pockets of their subscribers."

The consumer group cited Comcast’s 38 percent growth in third-quarter profits and rising prices.

The FCC letters went to Comcast, Time Warner Cable Inc, Bend CableCommunications, Brighthouse Networks, Cablevision Systems Corp, CharterCommunications Inc, Cox Communications Inc, GCI Co, HarronEntertainment Co, RCN Corp and Suddenlink Communications.

Verizon Communications Inc, a telephone company that provides services that compete with cable TV, also received a letter.

Company spokesman David Fish sought to differentiate Verizon fromcable companies. He said Verizon has never had separate tiers foranalog and digital channels.

(Reporting by Kim Dixon, editing by John Wallace and Andre Grenon)