Calif. Rep. Shocks Cable With Hard-Line Measure

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The introduction in California of a wide-ranging bill to
regulate cable caught operators flat-footed.

Assemblyman Jack Scott's measure attacked a multitude
of hot-button issues, including late fees, ownership of inside wiring and the creation of
a 'discount tier' that is cheaper than anything currently labeled
'basic.'

'He [Scott] completely blindsided us on this
one,' said Dennis Mangers, vice president of governmental affairs for the California
Cable Television Association, adding that the bill shows a 'serious lack of
understanding of how competitive industry works.'

Cable-industry representatives sought an audience with
Scott after he launched his bill, but staffers told the CCTA that the legislator
isn't ready to talk with them, Mangers said.

'We are opposed, unalterably, to every segment of the
bill,' Mangers said.

The CCTA was planning its next move during a Palm Springs,
Calif., retreat last week. Executives are concerned that the state action might fuel the
reregulatory fervor that is growing in the nation's capital.

Scott's hometown operator, Charter Communications
Inc., was also caught off-guard. Rate-increase notices just went out, but the 5 percent
increase is on service tiers and only in upgraded areas where new programming was added,
said Tom Schaeffer, senior vice president of operations, Western region for Charter.

Staffers in Scott's offices did not respond to several
calls for comment.

Attorneys for the cable industry are poring over the many
proposals in the bill, but they said it has major jurisdictional and constitutional
problems. For instance, the inside-wiring issue is currently the subject of a rulemaking
by the Federal Communications Commission; late fees are already addressed in a
one-year-old state law setting fee amounts and trigger dates; and it calls for a new tax
for rights-of-way usage.

Specifically, the bill:

• Limits cable franchises to five years;

• Limits late fees to $2.30 per month, to be assessed
36 days after the service is delivered;

• Assigns ownership of wiring in multiple-dwelling
units to the building-owners and gives 'nominal' compensation to operators in
some instances if the plant is less than five years old;

• Creates a tier cheaper than basic, including only
broadcast stations, to be marketed statewide under the name, 'discount tier';
and

• Calls for the state Public Utilities Commission to
examine cable charges not already under review by the FCC.

'Legislators are always going to propose cures for
what they see as problems in the industry ... but the fixes that they've proposed in
the past have not fulfilled the needs of the public,' said Marc Nathanson, CEO of
California-based Falcon Cable TV Corp.

The National Cable Television Association said it is
opposed to legislation that would result in 'additional government
micromanagement' or put at risk the industry's substantial investments in system
upgrades.

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