Price controls imposed on cable TV operators AH : Will your rates go down? Operators in Md. aren't sure

April 02, 1993|By Frank D. Roylance | Frank D. Roylance,Staff Writer Staff writers Eric Siegel, James M. Coram, Amy Miller, Angela Winter Ney and Karin Remesch contributed to this article.

Cable TV rates are coming down.

Maybe. Some of them. A little bit. In some communities. Some day.

Cable TV operators and the people who will soon regulate them were busy puzzling out the full impact of yesterday's action by the Federal Communications Commission, which imposed price controls on the industry for the first time since Reagan-era deregulation in 1986.

Some local companies were already restructuring their packages yesterday in a way that would minimize their exposure to regulation.

"This is so confusing," said Steven Burch, regional manager for Comcast Cablevision, which operates systems in Baltimore County, Harford and Howard counties.

"All we have now is a summary of commission rules," he said. "In order for us to figure what these rules mean, we will have to wait until we have the full text" in three to four weeks.

He believes re-regulation ultimately will drive consumer costs up, not down. "Any type of regulatory environment will increase costs," he said.

The FCC adopted rules that reopen the door for local governments to get back into price regulation. In communities where there is no meaningful cable competition, local officials may be able to cut rates for bare-bones, basic service -- which includes the broadcast networks, local access and government channels -- by as much as 10 percent from what they were on Sept. 30.

The 10 percent figure is derived from an FCC survey that found basic cable rates were 10 percent cheaper in communities with "meaningful" competition between unrelated cable operators.

The actual price rollbacks, FCC officials said, would be limited to 10 percent or to a "benchmark" established by a formula for operators of similar size and circumstances, whichever produces the smaller cut.

In Baltimore County, where Comcast Cablevision operates without real competition, the basic service now costs $6.95 a month. A 10 percent cut there would save consumers 69 cents. Only 500 households in the county subscribe to this service alone, but it also forms the core of every other subscriber's service.

Several area cable systems, including United Cable in Baltimore and PCI Cable in Annapolis, scrambled yesterday to break larger, more expensive "basic" packages into smaller, cheaper offerings, which would limit exposure to local regulators.

The FCC will have the authority to order price cuts for the much more popular "expanded" or "satellite" services. But consumers must first file formal complaints with the agency and those rates must then be found excessive.

Expanded basic service now costs $17.20 on top of the basic $6.95 fee in Baltimore County. (A 5 percent franchise tax is then added). A 10 percent cut, if allowed, would save cable TV customers another $1.72 a month.

The new regulations also require cable operators to justify the costs of charging subscribers for equipment such as remote control devices, wiring and hookups.

Pay-per-view services and premium channels such as Home Box Office, Showtime and Cinemax will remain unregulated.

Cable operators also will be allowed to argue for rates higher than the benchmark, based on their circumstances.

In all, the FCC estimates its actions could save consumers as much as $1 billion a year.

Meanwhile, the FCC order froze all basic and expanded basic cable rates for 120 days while local governments apply for FCC certification to resume regulating cable TV and the FCC gears up to do its part.

"It will take until around midsummer until everything gets into place," said FCC staff attorney Gina Harrison.

In the Baltimore area, charges for expanded basic cable service have climbed between 37 percent and 124 percent since deregulation.

The average increase nationwide has been estimated at about 60 percent, and complaints from consumers led Congress in September to pass legislation re-regulating the industry. It was the only legislation to survive a veto by President Bush.

Leonard Sacks, chairman of Baltimore County's Telecommunications Advisory Panel, said yesterday that the panel probably would seek to resume regulation of Comcast.

"Even during the period of no regulatory authority for the county, the panel remained active and used its best efforts to work on behalf of its constituents," he said.

The advisory panel took credit last month for reducing a proposed increase in Comcast's expanded basic rate to 3 percent. Although the panel has no formal regulatory authority, Mr. Sacks believes it has influenced Comcast on rates and programming issues, in part because Comcast is seeking an extension of its county franchise before it expires in 1998.

Elsewhere, cable operators were groping to understand the new regulations, which none had seen in full.

John C. Norcutt, general partner for Mid-Atlantic Cable Co. in rural western Howard County, said, "We never opposed rates based on the rate of return; basic cable service is moving from a luxury to a necessity. But it's a little murky right now as to where all this is leading."

WHAT THE FCC DID:

* Gave local government the power to regulate rates for basic cable packages and cut them by as much as 10 percent below Sept. 30 prices.

* Kept the power to regulate rates for the most popular "expanded" basic packages based on consumer complaints.

* Froze for 120 days rates for bare-bones and expanded basic packages at April 5 levels.

* Left rates for pay-per-view and premium movie channels

unregulated.

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