Area cable TV rates rising as FCC proposes new price regulation Cities could regain regulatory power

December 14, 1990|By New York Times News Service Rafael Alvarez of The Sun's metropolitan staff contributed to this article.

WASHINGTON -- The Federal Communications Commission proposed new rules yesterday that would give some communities more power to limit prices for local cable television service.

Under the existing FCC rules, only about 3 percent of the nation's more than 9,500 cable television systems have their rates regulated. The new rules, if enacted by the agency, could give local governments a powerful new weapon to block rate increases.

In recent years, cable television rates have doubled and tripled in many cities. The FCC proposals reflect a widespread conviction among federal officials that cable companies in many cities enjoy virtual monopolies and that cable television is no longer the young industry that Congress deregulated in 1984.

The commission's proposal follows a recent deadlock in Congress on legislation that would have restrained the cable companies' ability to set prices. The proposed rules could go into effect as early as next spring.

The new FCC rules would tighten the legal definition of "effective competition" for local cable systems. That definition largely determines whether a municipality has the right to regulate local cable rates.

Under the FCC's current definition, local cable rates are not regulated as long as there are at least three over-the-air, or broadcast, television channels in the area. In effect, that has meant that few cable systems faced any kind of regulation.

Under the proposal, the commission would define "effective competition" in three new ways.

Competition would exist in an area if viewers there can receive at least six broadcast channels and fewer than half of the households subscribe to the cable system.

Effective competition also would exist if new technologies that rival cable, such as satellite or microwave services, reach at least half of the households and capture at least 10 percent of the subscribers.

As a practical matter, one FCC official said, most cable systems would not be considered to face competition under either of these criteria.

Yet major metropolitan areas, where there are more television stations and cable systems, would generally be more likely to meet the requirement for effective competition.

But the third criterion would allow a cable company to escape local price control even if it failed to meet the effective-competition standard. It could do so by providing evidence that it is a "good actor" -- a cable company that provides basic services at prices that are comparable to those offered in cities where there is effective competition.

The FCC said it has not determined whether any of the cable operators in the Baltimore area would be affected by the proposal.

Marsha Glauberman, an FCC staff member who wrote the recommendation, said yesterday that it was far too soon to tell which cable markets would be affected.

"We haven't looked, or done any survey for specific cable systems . . . We're very vague on how this is going to work," Ms. Glauberman said. "We're unable to tell nationally how many systems will come under" the new proposal.

Some consumer groups and local officials criticized the "good actor" provision as a loophole in the proposed FCC rule. But it was not enough to satisfy representatives of the cable industry, who attacked the agency's proposal.

James Mooney, president of the National Cable Television Association, said that the FCC proposal "raises the prospect of the government inhibiting the future development of cable programming by crimping its economic life blood."

[Gene Kimmelman, legislative director of the ConsumeFederation of America, said the proposal doesn't get at the root problem, prices for the most popular cable programs, such as ESPN and the Turner networks, which cable systems typically don't offer on the basic services, the Associated Press reported.]

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