NCTA Urges Restraint on ITV Regulation

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The Federal Communications Commission should reject calls to define or
regulate interactive-television services before they even have the chance to
develop a marketplace presence, the cable industry said Monday.

In an FCC filing, the National Cable Television Association said regulatory
intervention designed to protect the interactive-TV marketplace was premature
because the market barely exists, ruling out the possibility of market failure
that typically triggers government intervention.

'Here there is not even an identifiable market, let alone an identifiable
market failure,' the NCTA said, adding that government regulation of interactive
TV could infringe on the First Amendment rights of cable operators.

The association also said the 'threat of regulation can only serve to
exacerbate' the Wall Street 'meltdown' that has decimated Internet stocks and
companies developing interactive-TV products.

Interactive TV is a service that combines traditional television programming
with Internet functionality, allowing viewers to make purchases, call up
additional graphics or data and ship electronic-mail messages.

At the urging of consumer groups and The Walt Disney Co., the Federal Trade
Commission refused to approve America Online Inc.'s merger with Time Warner Inc.
unless the companies agreed not to use their cable systems to discriminate
against competing Internet-service providers that have carriage deals with the
company. The FTC's order, however, expires in five years.

In January, the FCC issued a notice of inquiry that asked whether cable
operators should be barred from discriminating against unaffiliated
interactive-TV providers.

The National Association of Broadcasters, in separate comments, endorsed
nondiscrimination rules, claiming that the interactive-TV market was developing
rapidly. The NAB said rules were needed today to prevent more intrusive
regulation at a later date.

The FCC's review of the interactive-TV market has developed a split between
cable operators and major programmers.

Disney -- joined by Viacom Inc., USA Networks Inc. and Univision
Communications Inc. -- filed comments with the FCC saying MSOs had the market
power to extinguish competing interactive-TV providers and they should be barred
from doing so.

'There is no sound basis for believing that vertically integrated broadband
distribution providers with market power will voluntarily refrain from
discriminatory practices and skewing consumer choice,' the Disney-led group
said.

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