Information Age May Hinge on Cable TV Regulation : Media: Congress is on the verge of action concerning the industry. A key issue involves the role of telephone companies.

On Long Island, angry sports fans have picketed congressmen’s homes because fewer Yankees games are being shown on over-the-air television stations. In Los Angeles, the price of basic cable service has risen 67% in the last three years.

And wherever cable television exists, it seems, too many people have called their local company with problems, only to have the phone ring--and ring--and ring--without an answer.

Amid rising complaints that prices are out of control and that service is poor, Congress is on the verge of re-regulating the cable industry, a business that some have called America’s newest uncontrolled monopoly. Sessions scheduled this week will help decide whether legislation will be passed this year.

And as telephone, computer and television merge into one technology, what lurks beneath the proposed law--and what may well scuttle the legislation--is a fight over how best to manage America’s journey into the coming Information Age and which of the powerful communications industries will be positioned to profit.

Moving toward collision over the issue are such influential forces as the television networks, film studios, newspaper publishers, the phone companies and the cable industry.

The Administration, the Federal Communications Commission and many Republicans are hesitant to regulate, even in monopoly situations. So as the debate has evolved, it has moved in the direction of how to control rates and service in cable by encouraging more competition.

This is the question--who will compete for cable and evolving new technologies over the long term--that has made the legislation more complex and potentially more significant.

Will the future of television be in such fledgling technologies as satellites and wireless cable? If so, should cable programmers be forced to make their programs available to competitors of cable operators to encourage these new technologies?

Or will homes in the future be linked by a single fiber-optic network that carries voice, data and video signals in one cable, in a sense the interstate highway system of the 21st Century? If so, should phone companies be allowed to enter the television business now to encourage the development of this network?

The House Energy and Commerce Committee is expected to begin work on its bill this week, while a Senate panel is expected to conduct a key hearing. In addition, the FCC is expected to release a four-year study on the cable television industry.

The wild card is the question of whether telephone companies should be allowed to enter the television business. Sen. Ernest F. Hollings (D-S.C.) has said that, if amendments allowing the phone companies entry into television are added to the legislation, the death of the bill would result. A Senate commerce, science and transportation panel is expected to hear testimony on the matter Tuesday.

The Bush Administration may prefer to see Congress pass no legislation this year. The Administration would like to reform the industry largely through encouraging competition, although finding the best way to do that is likely to take longer to work out. But taking some steps to try to control cable television has political momentum and many think that the Administration would be hard put to justify a veto of any bill that Congress passes.

A General Accounting Office report last month found that, nationally, the price of basic cable television service rose more than 43% between 1986 and 1989, the period since Congress deregulated the cable industry. The industry argues that the price increases were justified to pay for adding new channels and to finance risky cable programming.

The House and the Senate both would have the FCC set rates for a “basic tier” of service. This would be limited to only standard over-the-air programs and, in the House version, to public service channels. Everything else--from Cable News Network to ESPN to HBO--would not be regulated, although the FCC would be permitted to roll back prices if they were deemed too high.

One area of remaining dispute is over the question of exclusivity clauses, which forbid programmers from selling their shows to competing cable operators. Critics argue that these clauses have blunted the growth of potential rivals to cable and the development of new technologies.

“The only way competing technologies such as direct broadcast satellite and wireless cable will develop is if they have access to programming,” said Andrew J. Schwartzman, of the Media Access Project, a consumer group.

But the cable industry argues that having exclusive rights to programming is fundamental to competition. “When NBC selects one station in a town to be its affiliate and gives it its programming, that is an exclusivity agreement,” said James Mooney, head of the National Cable Television Assn.

The question of whether the seven regional phone companies, perhaps the most logical competitors, will be allowed to enter the fray is also thorny.

The argument for including the phone companies is that they already are wired into virtually every home in the nation, own the utility poles that cable operators use and are trying to develop the fiber-optic network that potentially could carry voice, data and video in one wire. Hence they represent the best potential competitor to cable, particularly since wireless and direct broadcast satellite technology are years away.

“It is illogical to deny the largest industry that delivers to the home entry into yet a broader range of information,” said Rep. Rick Boucher (D-Va.), sponsor of an amendment in the House that would permit phone companies to carry television programming.

The phone companies argue that access to the home video market would give them an opportunity for additional revenue, which would help them install the fiber-optic network sooner. “Does fiber come to the home 30 or 40 years from now or in the next decade or decade and a half?” asked Chip Shooshan, a consultant to the phone industry.

If America waits, he argued, the Japanese and Germans could pass America in fiber-optic technology with broad economic and competitive implications. The phone companies face heavy opposition, however, from the cable industry, over-the-air networks, independent broadcasters and the newspaper industry.

Broadcasters suggest having the phone companies enter the television business--and perhaps eventually other businesses such as news--but only as carriers, not as producers or packagers of programming. Under such a plan, consumers would get television over telephone lines and pay for it on their telephone bills.

Staff writer John Lippman in Los Angeles contributed to this story.