What the New Cable TV Law Does

A new law regulating cable television, which took effect on Dec. 29, provides the following guidelines:

Strips local governments of the power to set customer rates, beginning Jan. 1, 1987. Until then, cable companies can increase rates a maximum of 5% each year.

Prohibits municipalities from requiring cable firms to make special payments for local programming at the time franchises are issued or renewed.

Allows local governments to continue levying a 5% maximum annual tax on a company’s gross profits.

Requires cities to determine that companies have not provided a “reasonable” level of services before terminating franchises.

What does the new law mean for consumers?

The most immediate impact involves cable television rates. Subscribers in any city could receive 5% hikes in each of the next two years and unlimited increases after that.

What about companies that provide poor service?

Local governments are allowed to fine such companies as well as cable operators that do not build their systems on time.

Can a municipality refuse to renew a cable franchise?

Yes, but the law is vague on this point and industry observers expect that litigation will clarify the legislation.

What if a cable company asks for permission to cut back promised services?

The law sets up a procedure for cable firms to request such cutbacks, but does not establish guidelines for settling such disputes.