Trying to untangle the different lines on the cable bill

October 05, 1992|By David Zurawik | David Zurawik,Television Critic

President Bush says it's unnecessary regulation that will somehow result in the "loss of American jobs." Democratic vice presidential candidate Al Gore says it's long-overdue relief for consumers against "cable monopolies and the rich friends of George Bush who soak the little guys."

The powerful National Association of Broadcasters sides with Gore. The equally powerful National Cable Television Association sides with Bush.

The bill to re-regulate cable TV has become the political news of the day -- with votes expected in the Senate and House today to try to override Bush's veto. But it's bad news for voter-viewers that the bill has come up in an election year and ultimately has come down to this kind of rhetoric about loss of jobs and soaking the little guy.

The cable TV industry desperately needs to be regulated, but both sides have generated so much confusion with partisan rhetoric and the bill itself has become so encrusted with special-interest amendments that no one seems to understand at this point what it will actually mean in real dollars and cents to the consumer -- the person who simply wants to receive CNN, MTV, C-SPAN and the other basic cable channels and is willing to pay a reasonable fee for them.

Here are a few things you should know, as we wait to see whether or not the cable bill becomes law. The information and analysis come from independent cable experts and the literature on cable -- not from advocates for either side.

* Your cable bill will probably never come down from where it is today.

Dampen price increases

"It is consumer legislation, I think, in that it should ultimately dampen the price increases," said Dr. Douglas Gomery, who teaches courses on the economics of the cable and broadcast TV industry at the University of Maryland College Park. "But, no, I don't think it will [automatically] make for a decrease."

* Your cable bill could actually go up initially, as Bush and the cable industry have said it will, if the bill becomes law.

"It [cable bills] might even go up at first, absolutely, while the commission [the Federal Communications Commission] is working it out," Gomery said.

The bill gives the FCC -- one of the most political and, arguably, least effective of all government agencies -- the power to set "reasonable rates" for basic cable service when local authorities feel they can't do it on their own. Neither the FCC nor the sponsors of the bill have any idea yet what such a rate would be -- though it would surely be less than the outrageous 61 percent rates have risen since 1984 when Ronald Reagan's deregulation mania hit cable.

But, while the FCC is determining that rate -- a complicated process to say the least -- cable operators are likely to raise your bill to cover their anticipated cost of paying broadcasters for the right to carry their signals. That right, by the way, is pork barrel the NAB has managed to attach to this bill and could be a logistical nightmare with local station owners and cable system operators also ending up in court in city after city.

Can FCC do it?

Is the highly politicized FCC up to the incredibly complicated task of regulating the thousands of cable systems now in place? "That's going to be very interesting," said Dwight Teeter, media-law scholar and dean of the College of Communications at the University of Tennessee. Teeter said he has serious doubts about the FCC's ability to do that.

* No one, probably, is ever going to knock on your door and offer you a competing cable TV service.

G. Kent Webb, in "The Economics of Cable Television," argues that cable is a "natural monopoly." In part, what he means is that one cable company operating as a monopoly can offer lower rates than two companies competing, because of the duplicate costs of laying or stringing wires and everything else connected with delivering cable service. That's one reason monopoly franchises were granted in the first place.

Can you imagine how much it would cost a second cable company in start-up costs to try to move in on a city like Baltimore? And why would anyone come to an urban area with all its problems when they can go to the richer suburbs? But the barriers to entry are now so high, even most suburbs won't get firms willing to compete.

As for the city itself selling bonds to support its own cable system, can you imagine Mayor Schmoke asking for money to run a cable system today instead of money for police or schools?

* The competition that the bill provides for is several years away at best. The bill opens the door for satellite and other forms of wireless competition, especially by stipulating that cable programmers -- like MTV and CNN -- have to make their programs available to everyone.

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