House OKs Bill to Restore Some Cable TV Regulation

The House voted Monday to impose some re-regulation over cable television, empowering the federal government to review prices if local governments complain.

The unanimous voice vote came amid broad criticism of the industry, which many have accused of functioning as an unfettered monopoly since it was deregulated in 1984 by the Reagan Administration. Left unresolved, however, is perhaps the most controversial question in cable TV’s future--whether telephone companies should be allowed to offer cable services.

Within hours, the White House threatened to veto the legislation, which in similar form is still waiting a vote on the Senate floor.

The move to defy a veto threat by the Bush Administration, which has a perfect record of upholding 13 vetoes in a row, represents the latest signal of the political momentum for ensuring a low price and good service for audiences.

“From everything I know this veto threat is not going to affect what is going to happen in the Senate,” said Rep. Matthew J. Rinaldo, a New Jersey Republican who co-sponsored the bill in the House. Others on the Hill privately agreed, although some in the cable industry said Senate passage is less certain than it seemed a few weeks ago.

“I think the Administration veto threat is grounded in the fear of over-regulation, and that is not the case with this bill,” Rinaldo said.

The House bill would empower the Federal Communications Commission to set rates for a “basic tier” of service, meaning traditional over-the-air stations, public TV and government channels. It would also grant the government power to review rates for all other programming, such as HBO and CNN, if local authorities thought rates in their area “unreasonable or abusive.”

The bill also would ensure that cable programmers carry all over-the-air stations on the same channel positions that the stations use. Further, it would allow cable programmers to continue to sign exclusive contracts for certain kinds of programming, as long as those exclusivity contracts did not significantly impede the development of competing technologies.

Agreement on the provisions was considered an unexpected accomplishment for a bill given little chance of passage earlier in the year.

Rep. Edward J. Markey, the Massachusetts Democrat sponsoring the bill, said it was “addressing real problems . . . in a surgical and balanced manner,” and Rep. John Bryant (D-Tex.), said it was “the best bill that could be produced under the circumstances.”

Some in industry argued that the real impact of the bill would depend on how the FCC interpreted and used its new authority.

“I think that this bill gives the FCC broad new authority over cable TV and opens up a number of inquiries and rule makings for the FCC,” said John Mansell, senior analyst for Paul Kagan & Associates, an industry analyst group. In particular, Mansell said the FCC would have to determine what sort of exclusive contracts were anti-competitive and which were not.

The phone company amendment lacked the votes to pass this year, but lobbyists for the Bell companies and others vowed they would push it again next year. The decision not to press the issue this year allowed the bill to pass the House.

But the entry of telephone companies has the support of the Administration, which views it as key to developing competition in cable.

Advocates argue that allowing phone companies to own the data that travels over their lines is crucial to America’s development of a modern fiber optic telecommunications network.

But others, including the TV, newspaper and cable industries, argue that phone companies would engulf and monopolize America’s information future if they owned both data and the means to carry it.

Although the Administration supports the involvement of telephone companies in cable, it opposes allowing the FCC to set or review cable rates, to govern distribution of programming or to restrict foreign ownership of U.S. cable systems. It is also opposed to requiring cable operators to carry over-the-air TV channels on their systems, even though cable operators have agreed to do so.

The Administration’s opposition to the House bill puts it at odds even with some of the potential competitors of cable the White House says it wants to encourage by maintaining deregulation.

For instance, the Wireless Cable Assn., a fledgling alternative technology to underground cable, called the bill a “major step toward bringing true competition to the cable-television marketplace.”

Consumer groups also were supportive of the bill.

“I can’t believe the Administration would be so anti-consumer to veto a bill that will stabilize and bring down cable rates and make satellite dish reception cheaper, while at the same time opening the door to competition,” said Gene Kimmelman, legislative director of the Consumer Federation of America.

Several on Capitol Hill and in the industry said they still have doubts the Administration really intends a veto. Others said the veto threat may be designed more to complicate the vote in the Senate, which already is being pressed by delays in the budget negotiations and by hearings relating to the Persian Gulf crisis.