Cable Industry

CHICAGO - With the nation's two largest cable-TV operators reportedly poised to complete their $17.6 billion purchase of rival Adelphia Communications Corp., the race to bring high-speed Internet service into American homes appears likely to intensify. As technical advances have revolutionized the methods by which entertainment and information are delivered to consumers, the nation's telephone-service and cable providers have squared off in a high-stakes tussle over providing customers with everything from telephone service and Internet access to pay-per-view TV and standard cable television.

In a debate that will shape the future of high-speed Internet service, the Supreme Court will hear arguments today to determine whether cable companies must open their networks to competitors. The court could decide, in effect, how companies can compete to deliver high-speed Internet access to a rapidly growing market and how much choice consumers will have. The case pits the Federal Communications Commission and National Cable & Telecommunications Association, representing cable companies including Comcast Corp.

SBC Communications Inc., as part of its effort to compete head-on with the cable industry for television subscribers, plans to announce today that it will pay $400 million to Microsoft Corp. for software used to deliver TV programming over high-speed data lines. It would be a crucial move into unproven territory for SBC, which, like the other regional telephone giants, wants to grow by expanding beyond phone and Internet services and into entertainment. To do that, SBC expects to spend more than $4 billion over the next three years on its fiber-optic network in order to offer faster Internet connections capable of carrying digital video programming.

WASHINGTON - Cable TV customers saw their rates rise an average of 8.2 percent last year, the Federal Communication Commission reported yesterday. The jump in rates for programming services and equipment marked the fifth straight year that cable prices had sharply outpaced general inflation, a trend that some consumer experts say reflects an industry monopoly. The FCC's annual report, for the 12-month period ending July 1, 2002, shows that average monthly charges increased: 3.7 percent for basic service, from $13.93 to $14.45.

OFF TO ONE side of the massive, humming, "head-end" computer center in White Marsh where Comcast broadcasts its signal to 350,000 customers in the Baltimore suburbs, there's a small room lined with wall-to-wall monitors, set-top boxes and other gadgets that are the future of cable television. In one corner, you can flick a remote control and download the latest headlines from the Internet, check out the movie schedule at the cineplex down the road or browse the menus at local restaurants, all on a regular television set - no computer necessary.

If you ask Jim Cologie what the Next Big Thing in the cable television industry will be, he points to a very old piece of technology: the telephone. Cable operators big and small will begin offering local telephone services bundled with TV programming, and they'll do it sooner rather than later, thanks to the miles of fiber-optic cable being laid coast to coast, he says. "Telephony services are really where the action's going to be," predicts Cologie, president of the Pennsylvania Cable and Telecommunications Association.

Comcast Corp., the dominant cable television provider in the Baltimore metro area, will announce today that its Baltimore County viewers will be the first of its customers to be offered video-on-demand and interactive TV services. Company executives said the new digital offerings - including hundreds of movies that can be paused, forwarded and rewound whenever a viewer wants to watch them - will be rolled out in the county in the fall. A firm date has not been set. Before year's end, Comcast also plans to announce dates for rollouts in Howard and Harford counties.

The cable television industry prevailed yesterday in a struggle for control of a key gateway to the Internet as two Maryland General Assembly committees rejected legislation that would have opened their high-speed lines to competitors. The House Commerce and Government Matters Committee voted overwhelmingly to kill the bill favored by Internet service providers and consumer groups. Instead, the panel voted to set up a commission to study the issue. But last night the Senate Finance Committee voted to kill a broader Internet-access bill, raising questions about whether even the commission bill has a chance before that panel.

On Oct. 6, Leo J. Hindery Jr. set the telecommunications industry atwitter with his sudden resignation as the chief executive of AT&T Corp.'s rapidly growing cable television operation.Yesterday at the Baltimore Convention Center, Hindery gave his first speech since quitting, a long-scheduled keynote address for the East Coast Cable trade show.Hindery's address attracted more than casual interest. After all, rumors and questions about his departure have been flying around like the trio of party-crashing finches that were flitting through the cavernous ballrooms and hallways of the convention center yesterday.

This week, regulations on the most popular tier of cable offerings will disappear, and many consumer advocates, government officials and analysts predict the cable industry will respond by jacking up monthly bills."