McMillen says cable bill will slow the rate increases, bring more competition

September 23, 1992|By Leslie Cauley | Leslie Cauley,Staff Writer

For cable subscribers in Maryland, the passage of the cable bill yesterday means that rates probably won't continue going up with their usual speed -- assuming the bill becomes law.

That's because, under the bill, cable companies can't raise rates as easily as they have in the past.

But rates probably won't come down a whole lot, either. At least not very quickly.

The reasons are that federal authorities still have to work out a formula for setting rates, a process that could take some time to complete.

The same is true for local jurisdictions. And nobody knows how much retransmission rights will wind up costing cable companies, but everyone agrees those costs will ultimately be passed along to consumers.

Still, the bill offers a lot of positives for cable consumers, contends Maryland Democrat Tom McMillen, a member of the House telecommunications and finance subcommittee, which drafted the original version of the landmark legislation.

"There will be limits on the amounts cable companies can increase rates because of the regulation in the bill," said Mr. McMillen, who authored two amendments to it.

One McMillen amendment increases the amount of educational programming that must be offered by cable companies. Another calls for a study to determine the effect of pay-per-view sports programming on consumers and sporting organizations. Mr. McMillen said he is concerned about the increasing dearth of local sports, like Orioles baseball games, on free television.

Mr. McMillen agreed that some provisions of the legislation might lead to some modest increases in cable rates in some markets over the short term. Those increases would likely result from cable companies passing along costs that they incur to comply with some provisions of the cable bill, such as upgrading their systems to meet new technology standards.

But over the long term, Mr. McMillen said, the bill should help consumers.

In particular, Mr. McMillen said he expects the bill to encourage competition in markets where there is none -- which is the case in most of the nation's 11,000 cable markets.

Much of that competition is expected to come from the satellite industry, which has long complained of anti-competitive practices by the cable companies that are designed to keep satellite companies at bay.

The bill passed by the Senate yesterday addresses a number of those concerns, including one that forces cable companies to sell programming to competitors at fair prices.

Over time, increased competition should give cable companies a much-needed dose of incentive to improve service and keep rates in check, Mr. McMillen said.

"In the long run, clearly, we'll see more competition developing as a result of this legislation -- and that only brings bills down," he said.

That view is shared by the Consumer Federation of America (CFA), which lobbied vigorously in favor of the bill. The CFA has contended that implementation of the bill could eventually lead to cuts of up to 30 percent in the $19-a-month average price of basic cable service.

"This bill is an excellent thing for consumers," said Brad Stillman, legislative counsel for the CFA, a national consumer advocacy group based in Washington. "Consumers will save billions of dollars each year in overcharges in services."

The cable companies don't share that view.

Steve Burch, general manager of Comcast Cablevision, which serves Baltimore and Howard counties, believes the pending cable legislation would only drive up cable rates without doing much to improve services.

Under the terms of the bill, cable companies that carry local and national broadcast stations -- and virtually all do -- might have to start paying broadcasters for the right to carry their signals.

With 60 percent of all cable-viewing time devoted to watching network broadcasts, cable companies would be hard-pressed to drop those shows, even the ones that demand high payments for retransmission, for fear of driving away viewers, Mr. Burch said.

Mr. Burch's prediction: Cable companies might have to fork out big bucks to hold on to network broadcasts, and consumers would wind up paying for it in the form of higher rates.

Euan Fannell, general manager at United Artists, the sole cable provider in Baltimore, agrees. "This bill is very bad for consumers," he said.

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