Marcus Cable Will Field Offers - 3/2/98

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Washington -- Rep. Edward J. Markey (D-Mass.) dropped his long-awaited legislative bomb on the cable industry last week, introducing a measure to postpone the sunset date when cable will become deregulated.

Markey has 22 co-sponsors -- including three Republicans -- for his proposal to push back the March 31, 1999, deadline for the Federal Communications Commission to cease regulating cable. "Without a legislative change to extend consumer price protections ... consumers will be hit with a cable-rate El Niño," said Markey, the lead Democratic member of the House Telecommunications Subcommittee.The cable industry, while voicing concern about the Markey bill, was confident that the Republican-controlled Congress would reject the bill.

"Theres not much sentiment in Congress right now for reregulating the cable industry," said Decker Anstrom, president of the National Cable Television Association, quickly adding that cable will aggressively fight the measure.

Anstrom said cable is more concerned over Rep. Howard Cobles (R-N.C.) copyright bill, which, he said, "has more legs." Cobles bill would allow satellite companies to retransmit local signals back into a local market, give the industry permanent compulsory licenses and eliminate the 90-day waiting period for satellite customers who were previously cable subscribers.

Most Republicans appeared to have little appetite for increasing cable regulation, preferring instead to focus on expanding competition by helping such rivals as direct-broadcast satellite companies to get greater access to programming.

"It is premature to talk about regulating before deregulation," said Ken Johnson, a spokesman for Rep. Billy Tauzin, (R-La.), chairman of the House Telecommunications Subcommittee, who said the measure lacks House or Senate Republican leadership backing.

But Johnson also said that if Congress is unsuccessful, Tauzin will consider supporting a measure to allow the FCC to continue regulating on a market-by-market basis next year."We are not going to unleash on the American public an unregulated monopoly," he said.Markeys bill calls for cable operators to win deregulation when there is "effective competition" in a market area. Thats defined as when a competitive service earns more than 15 percent of the households in a franchise area, or if a local telephone company is providing competing service."[March 31, 1999] was chosen by lawmakers two years ago on the premise that the phone industry would have entered the cable business by this point in a massive way. Clearly, such competition has not materialized in a significant way," Markey said.In fact, since Congress passed the 1996 Telecommunications Act, four local telephone companies -- Ameritech Corp., BellSouth Corp., GTE Corp. and Southern New England Telecommunications Corp. -- have entered the multichannel video market.A recent FCC evaluation of that market found that competition is lacking in most communities. Correspondingly, the report found that rates for regulated cable programming jumped 8.5 percent from 1996 to 1997.The Consumers Union and the Consumer Federation of America petitioned the agency in September to freeze cable rates. But the FCC is not considered likely to take that approach, although it might make incremental changes, such as prohibiting operators from passing on increased programming costs to consumers.

While supporting Markeys bill, Gene Kimmelman, Washington director of the Consumers Union, said he is "concerned that these protections wouldnt add up for the consumer unless the FCC tightens their regulations."In a speech last week at the Texas Cable Show, Anstrom cautioned the cable industry to "be careful, really careful," about raising cable-subscription rates."I urge you to make that a top priority," he said. "Dont give our critics hand grenades that they can throw back at us."NCTA executives reiterated the call for cautious communications in panels at the trade show. They reminded operators that a survey on rate-related customer communication commissioned by the NCTA last year showed that consumers dont buy cables two most-used rate-increase rationales -- cost comparisons (it only costs "about $1 a day") and explanations about rising programming costs -- said David Pierce, the NCTAs director of public affairs."Its like McDonalds," he said. "Customers dont care what the hamburger costs -- they only care what they pay for the Big Mac."States News Service

Leslie Ellis contributed to this story.

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