11.19.2007 08:57 AM
FCC moves to increase regulation of cable

The FCC is considering a proposal that would impose new price and ownership caps on cable TV operators. The cable industry is fighting back with a vengeance.

Under a proposed rule circulating at the commission, cable companies such as Comcast and Time Warner Cable would have to reduce the price they charge smaller TV programmers to lease access on spare cable channels. FCC chairman Kevin Martin is moving for a vote on the so-called “lease access” rule at the FCC meeting scheduled for Nov. 27.

Also under consideration is a national ownership cap that would prevent one company from having more than 30 percent of all cable subscribers.

Martin is making his move because recent data indicates that 70 percent or more of U.S. households now pay for cable television. If the number is 70 percent or higher, broad FCC regulations set in place by Congress more than 20 years ago can kick in, capping the growth of big companies and forcing open the marketplace to smaller competitors.

The 1984 Cable Act, which largely deregulated cable systems to allow them to compete against the then entrenched broadcast TV industry, created the “70/70 provision,” stipulating that if cable television becomes available to 70 percent of U.S. households, and 70 percent of those who can subscribe to cable do, the industry can once again be regulated.

Over the past year, Martin has aggressively been trying to persuade cable companies to offer their channels on an á la carte basis to subscribers, instead of requiring consumers to purchase tiers of channels. The industry has resisted and he has been largely unsuccessful with the effort.

“In every other industry regulated by the FCC, there have been significant decreases in the price of services, such as in long-distance rates and wireless rates,” Martin told the “Washington Post.” “But the one exception to that is cable rates, which have gone up almost 100 percent” over the past decade.

The cable industry contends the proportion of its subscribers is about 60 percent. However, in an interview with the “Post,” Gene Kimmelman, a vice president at Consumers Union, pointed to a recent court decision in Connecticut that ruled that cable TV service offered by a phone company is designated as cable service, even though it comes over a phone line.

That means that phone-based cable television service, such as Verizon’s FiOS, may now push the national rate of cable subscribers over 70 percent, Kimmelman said, if they are included in the studies the FCC is using.

“The [70/70] provision itself is a relic of decades old regulation and there is no basis for reviving it now; twisting statistics in order to breathe life into this rule is simply another attempt to justify unnecessary government intrusion into a marketplace where competition is thriving and new technology is providing consumers more choices, better programming and exciting new interactive services,” Kyle McSlarrow, president of the National Cable and Telecommunications Association, said in a statement.

McSlarrow accused Martin of using the threat of regulation to pressure cable companies into offering channels on an á la carte basis, which would let subscribers pay for only the stations they want.



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