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TCI Memo Called for Price Hikes, Blaming Washington

By Paul Farhi
The Washington Post

WASHINGTON

The nation's largest cable TV company urged its managers to "take advantage" of a new federal law and raise their prices -- and then lay the blame on Washington.

A top executive of Denver-based Tele-Communications Inc. (TCI), which serves the District of Columbia and has 10.4 million subscribers nationwide, outlined the company's policy in an internal memo, according to a copy obtained by The Washington Post. The memo was dated Aug. 20, 11 days before new cable rate rules took effect.

Barry Marshall, chief operating officer of a TCI subsidiary, instructed system managers and division vice presidents in his memo to raise rates for various "transaction" services, such as customer-service calls, VCR hookups and cable hookups. TCI had provided these services free or at nominal cost.

"We have to have discipline," wrote Marshall. ". . . We cannot be disuaded (sic) from the charges simply because customers object. It will take awhile, but they'll get used to it. . . .

"The best news of all," added Marshall, "is, we can blame it on re-regulation and the government now. Let's take advantage of it!" Both cable companies and the Federal Communications Commission have come under fire in recent weeks in the wake of new cable TV price rules that went into effect Sept. 1. Although touted as a way to bring down the rising cost of cable TV, the new rules written by the FCC have in some cases had the opposite effect. Many cable operators have raised charges for their services, leading to complaints that the FCC left "loopholes" in its rules.

The cable industry also has criticized the new rules, saying that they pose an onerous regulatory burden that will cut deeply into industry revenues. During the congressional debate last year, TCI and its chief executive, John Malone, were among the staunchest opponents of the bill. In recent months, however, the company has moderated its tone, saying publicly that it is actively working to accommodate all of the regulatory changes.

TCI's Marshall did not back away from his memo Monday. "My message to my people is that there are new rules, new economics in this business. There are things that we have not charged for that we can, and we should start making sure we have the discipline to charge for them."