Congress nearing vote on reregulating the cable TV industry Debate hinges on whether law would raise or lower rates

September 16, 1992|By McClatchy News Service

WASHINGTON -- Cable television subscribers nationwide ar supposed to see lower rates and better service, under controversial legislation that could come up for a House vote as early as tomorrow morning.

The legislation already agreed upon by House and Senate negotiators is trumpeted by supporters as the most significant consumer bill of the year, and there's no disputing its effects could be felt in households nationwide. But what the consequences would be is now a matter of debate and lobbying.

The cable industry is fighting back hard, with national newspaper and television ads, and President Bush is threatening to veto the measure. The leading question on Capitol Hill this week is whether supporters can muster the two-thirds vote necessary to override a veto.

Outside of Capitol Hill, however, the vote-counting and political maneuvering matters less than what the legislation would actually do.

The measure is the first effort to impose new controls over cable since Congress deregulated the industry in 1984. Deregulation was supposed to ease and speed up cable's penetration into households. By most measures, this goal was accomplished.

In the past seven years, the number of U.S. households with cable grew from 37 percent to 61 percent. During the same period, cable television's advertising revenue increased five-fold, from $600 million in 1984 to about $3 billion last year.

The bad news, reformers say, is that cable rates have skyrocketed.

A General Accounting Office survey of 1,505 cable systems nationwide found that in the first 4 1/2 years of deregulation, monthly charges for the most popular basic service grew by 61 percent -- more than three times the rate of inflation. Lawmakers further cited a 1991 Consumer Reports survey of 200,000 subscribers, which found that one-quarter of the customers were dissatisfied with their service.

"There's agreement out there we need rate regulations . . . said Rep. Richard Lehman, D-Calif., a member of the House panel wrote the cable bill. "Ultimately, it's competition that will keep rates down."

Lawmakers would give the Federal Communications Commission the power to regulate basic cable rates and give customers the right to appeal rate increases. More explicit guidelines would spell out customer services cable companies must provide, and exclusive franchises would be phased out to allow competitors in.

"Maybe not overnight, but consumers could see their cable rates fall by 30 percent," said Gene Kimmelman, legislative director for the Consumer Federation of America. "Within the first six months, we'll have a very strong case for [rate] roll backs."

The rate decreases can occur both as the FCC identifies and reduces unfair rates and as customers file complaints, supporters believe. Over the longer term, bill supporters say, the FCC's monitoring and increased competition will keep a lid on rates -- in the 55 communities where there's more than one cable company, rates are 30 percent lower than average, Mr. Kimmelman said.

But in ads running over the past week and in interviews, cable industry officials assert the precise opposite -- that customers will pay more.

"We certainly believe the bill will, in fact, cause rates to go up," said Bob Hargrove, vice president for Continental Cablevision in Fresno, Calif. "Obviously, program expenses are a significant part of our costs, [and] those costs will be passed on to the consumer."

Mr. Hargrove predicted that most broadcasters will negotiate payments from cable companies, the industry officials say, and many communities will have to buy new equipment. The prospects of tighter FCC control over rates likewise makes the industry jumpy.

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