Cable Rates Arent Stirring Voters

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Washington -- Just wait until Congress returns from the
Christmas-New Year's recess: Then you'll see the cable-rate issue really take
off.

That was the line that pro-regulation forces on Capitol
Hill and elsewhere fed the media a few months back, when two House bills surfaced
demanding tighter price controls on cable rates.

But the prediction, it appears, has not come true.

Rate-freeze legislation hasn't piled up co-sponsors,
and Rep. Edward Markey (D-Mass.) is still attempting to round up supporters for his bill
to keep cable regulated beyond March 31, 1999.

Moreover, lawmakers who are not viewed as
'players' in Congress on telecommunications issues revealed in interviews that
cable-rate issues just aren't registering as a legislative priority with the voters
back home.

'I have had five letters, and I think that we've
had a couple of calls, too,' said first-term Rep. Jay Johnson (D-Wis.).
'I'm surprised that there weren't more, but I guess it's not that big
of an issue right now.'

A few lawmakers noted that instead of getting buried under
heaps of cable-complaint letters, they have been showered with an astonishingly high
number of letters about rising satellite rates due to higher copyright fees that took
effect Jan. 1.

'I've had more than 1,100 letters from my
constituents decrying the substantial increase in their rates,' said Sen. Olympia
Snowe (R-Maine). Snowe's in-flow represented more than 1 percent of the state's
home-dish owners.

Chet Lunner, press secretary for Rep. Amo Houghton Jr.
(R-N.Y.), said Houghton has received 2,000 letters from direct-broadcast satellite
subscribers in his upstate New York district about higher DBS-programming fees.

'It's a serious sign of discontent,' Lunner
said. 'We've heard more from them than from cable people.'

Over at the Federal Communications Commission, where FCC
chairman William Kennard is directing a likely crackdown on cable-rate increases, large
numbers of cable subscribers aren't badgering the agency to take action.

According to FCC figures, the agency received about 200
e-mails and between 50 and 60 letters concerning cable rates in a typical month last year.
For every written complaint that the FCC received in 1997, cable operators added about 400
subscribers.

Stephen Effros, president of the Cable Telecommunication
Association (CATA), said the cable industry has done a good job explaining rate increases
as cost-based and value-enhancing.

'There are not a lot of consumers yelling at the
legislators,' Effros said, 'because, I think, of a long-term campaign by CATA,
by the National Cable Television Association and by the industry in general to get our
message out and to get it understood that ours is not a declining-cost business.'

Some expected the cable-rate-freeze bill, sponsored by Rep.
Peter DeFazio (D-Ore.), to attract large numbers of co-sponsors after lawmakers took
enough heat from voters during the holiday recess.

Going into the break, DeFazio had lined up 11 co-sponsors.
In the month since Congress has been back in session, DeFazio has added just four names to
the list.

Snowe, for example, said cable rates were not a hot topic
at sessions with Maine residents while she was home during the break.

Rep. Ernest Istook (R-Okla.) said he typically hears from
voters on cable issues when a TV station gets dropped in must-carry disputes.

'But about [cable rates], we haven't heard too
much,' Istook said.

Although rates are rising, Istook said cable operators are
adding new services. He ventured that cable rates might not resonate with voters in
Oklahoma City because their rates on average might be lower than rates in other parts of
the country.

Johnson brought up a topic that is central to the cable
industry's response to rate critics: programming costs. He said cable subscribers do
not see or understand the link between their rates and network costs to acquire sports and
entertainment programming.

'I told the cable people that they're going to
have to get that message out to people,' Johnson said.

Lunner, Houghton's press secretary, said the impact of
cable-rate increases has been softened somewhat by channel additions and by new services
such as high-speed Internet access.

Other lawmakers interviewed -- including Rep. John Sununu
(R-N.H.), Rep. Scott Klug (R-Wis.) and Rep. Thomas Allen (D-Maine) -- agreed that cable
rates were not a pressing matter.

Even lawmakers who are telecommunications-policy veterans
indicated that the forces organized to battle the cable industry in Washington right now
lack the muscle that widespread consumer anger would provide.

Sen. Joseph Lieberman (D-Conn.) said he is personally
concerned about the impact of rising cable rates on people with fixed incomes --
'people on the bottom.'

However, Lieberman said cable subscribers in Connecticut,
which has the third-highest cable penetration in the country, have reacted
'some' to rate hikes, 'but not as much as I would have guessed.'

Sen. John Kerry (D-Mass.) said he's hearing about
cable-rate increases, but it was premature to predict whether Congress would enact a new
law.

'I wouldn't put it at deluge rate yet,'
Kerry said, referring to constituent mail. 'But it's a level of serious concern,
and one that merits evaluation.'

Kerry said the cable industry could avoid a political
backlash by moderating rate increases.

'If they press too far, too fast, they will invite
it,' Kerry said.

Soaring cable rates (up 8.5 percent in 1997), coupled with
cable's still-robust 87 percent market share, has some key Washington policymakers
looking for a way out of near-total cable deregulation in 13 months.

Sen. John McCain (R-Ariz.), chairman of the Senate Commerce
Committee, said he's ready to reregulate cable, if necessary, and Rep. Billy Tauzin
(R-La.), chairman of the House Telecommunications Subcommittee, said he is willing to
extend cable regulation if pressure mounts early next year.

Kennard is pushing his staff to see whether cable-rate
adjustments due to programming-cost increases should be offset in part by advertising
revenue and programmer payments to cable operators.

Effros said he expects the FCC to 'tweak' the
rules, even though the commission's authority to regulate the retail price of
networks such as Cable News Network, Discovery Channel and MTV: Music Television would
expire a few months after the new rules took effect.

'I think that they are making an assumption that rate
regulation will not be gone,' Effros said.

States News Service reporters Laura Maggi and Adam Marlin
contributed to this report.

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