FCC Will Monitor Cable Redlining

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New York — The Federal Communications Commission has
put the cable industry on notice that it will not tolerate redlining of critical digital
services and technology.

The FCC will launch a series of public hearings in urban
markets around the country in the next few months to ensure that operators are deploying
advanced telecommunications services to lower-income communities, as well as to affluent,
white neighborhoods.

But operators and local municipal regulators said redlining
of advanced cable services is not an issue.

Calling the issue "the civil-rights challenge of the
next century," Deborah A. Lathen, chief of the FCC's Cable Services Bureau.said FCC
chairman William Kennard will move to ensure that urban markets are not forsaken for more
affluent neighborhoods as operators roll out their new digital services, including
high-speed Internet access, said

Lathen, speaking at the National Association of Minorities
in Communications' Urban Markets Conference here last week, said the FCC will implement
public hearings over the next few months under the provisions of Section 706 of the
Telecommunications Act of 1996.

Section 706 requires the FCC to take "immediate
action" to promote broadband deployment if it finds that advanced telecommunications
capability is not being deployed to all Americans in a "reasonable and timely
fashion."

"We are required, under law, to make this
investigation, and if we determine that deployment is not happening in a reasonable and
timely fashion, we are directed, under law, to take immediate action," Lathen said,
declining to be more specific.

The issue of redlining is a very touchy subject for the
cable industry. In the late 1970s and the early 1980s, when the nation was being wired,
low-income, urban neighborhoods often took a backseat to affluent white neighborhoods.

But while most urban markets are now wired for cable, some
observers are concerned that they will be the last areas to get access to important
digital services like high-speed Internet access. With the Internet providing a wealth of
information and services, the FCC is worried that any delay in access to such services
will severely handicap the education of children in low-income, inner-city areas.

Lathen stated that there are already signs that the chasm
between the haves and have-nots is widening: 78 percent of schools in affluent
neighborhoods have Internet access, while fewer than one-half of schools in urban areas
can log on to the Internet.

And kids in affluent households are more than three times
as likely as those in urban households to own personal computers.

While the cable industry is leading the charge toward
digital technology and high-speed modem access, Lathen said, thus far deployment has been
in white, affluent neighborhoods.

"Deployment has not begun in these communities where
the computer penetration is substantially less than in the affluent, white
communities," Lathen said.

But operators said they are aggressively rolling out
advanced technology to urban markets.

Julie Berg, executive vice president and chief marketing
officer of MediaOne, denied that the MSO engages in redlining of new services.

"In all of our markets, we are not making distinctions
or prioritizing [rollouts] based on economic circumstances. We are planning to upgrade
entire markets as quickly as we can," Berg said.

South Central Los Angeles — a diverse community with a
population that is 48 percent Hispanic and 43 percent African-American — was the
first California community served by MediaOne to be upgraded to receive advanced
video-programming services over a 550-megahertz system, the company said.

To date, redlining has not become an issue for municipal
regulators, as their franchises are usually written in such a way as to prevent the
practice.

"We're certainly mindful of it when we're negotiating
franchises for our areas," said Jane Lawton, incoming president of the National
Association of Telecommunications Officers and Advisors and cable administrator for
Montgomery County, Md.

In Denver, meanwhile, where Tele-Communications Inc.'s
franchise covering 108,000 subscribers expires next June, regulators expect their new deal
to include a construction deadline for upgrading the network. They will also want to
complement that clause in the deal by insisting on language mandating that cable-modem
services will be available to every resident in the city.

"We want to ensure that we don't have a community of
technological haves and have-nots," said Dean Smits, director of the Denver Office of
Telecommunications.

Some operators, however, said privately that it is not
cost-effective to aggressively rebuild some cities. After spending millions of dollars on
upgrading plant, operators want to generate quick and easy cash flow.

One operator, who wished to remain anonymous, said cable
companies tend to build first where the ability to build is simplest — for example,
where plant is aerial, rather than underground.

While observers conceded that operators face intense
capital outlays to upgrade densely populated urban markets, the industry will reap the
benefits in terms of the potential revenue that can be generated from urban households,
NAMIC president Clayton Banks said.

Indeed, minority viewers tend to purchase cable products
and services at higher levels than whites. African-Americans, for example, have a 60
percent pay-to-basic penetration, compared with only 40 percent for white households,
according to Black Entertainment Television.

Also, minority viewers tend to be more frequent purchasers
of interactive programming, such as pay-per-view, PPV executives said.

"We don't want the trend that's happened in the
broadcasting and TV industry to happen in the advancement of new technology, and that is a
lack of [minority] participation in the future of the telecommunications industry,"
Banks said. "I think that operators will see a great return on their investment by
tapping the urban markets."

Other civil-rights organizations are vowing to keep the
pressure on cable. Recently, officials with the Rainbow/PUSH Coalition — a group
headed by the Rev. Jesse Jackson — raised concerns about possible redlining by TCI
during the MSO's annual meeting in Denver.

In May, the group complained that systems in low-income
areas of Jefferson County and Louisville, Ky., were scheduled to be the last to receive
fiber optic upgrades.

At the time, Charles King, regional vice president for
InterMedia Partners, said, "We don't redline. It's illegal."

National Cable Television Association officials and TCI
president and chief operating officer Leo J. Hindery Jr. assured Jackson that they were
committed to equal access.

TCI labeled the Kentucky issue as "random" and
"happenstance."

Nevertheless, the FCC intends to determine for itself
whether operators are employing their advanced telecommunications systems to urban markets
in a thorough and timely manner.

"Essentially, the chairman has decided that he will
take the [meetings] to each and every neighborhood in the United States so that we can
hear who's being served and who's not being served," Lathen said.

Joe Estrella contributed to this story.

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