FCC to Study Letting Phone Firms Carry Cable, Video : * Telecommunications: Cable operators object to the plan, noting voice telephony is a regulated monopoly.

The Federal Communications Commission on Thursday took the first step toward allowing telephone companies to carry cable programs and enhanced video services over their wires.

Such “video dial tone” offerings would “ensure that cable operators face direct, head-to-head competition in the delivery of cable services to consumers,” Commissioner Sherrie Marshall said.

The cable industry quickly responded with several criticisms of the proposal, including a suggestion that phone companies might subsidize the ventures from profits generated by basic telephone service, which is a regulated monopoly with guaranteed profits.

“Until and unless the (telephone companies’) monopoly in voice telephony is ended, no level of government safeguards against cross-subsidies will be effective,” said James Mooney, president of the National Cable Television Assn.

“We’re talking about ground rules for future development,” said Robert Pepper, the FCC’s chief of planning and policy. He said an FCC ruling could eventually allow cable companies to offer telephone service.

“There’s a real opportunity here to see competition move in both directions,” he said.

The FCC voted unanimously to seek public comments on the issue, even though most of the five members expressed some reservations.

Commissioner Ervin Duggan said he was concerned that the technology “may not even exist today to provide the kind of video dial tone” envisioned. Duggan also said he was concerned about whether the proposal was being driven by demand for the new service or “by mere desire.”

Commissioner James Quello said such a service could provide the “greatest in economies of scale” if voice, video services and cable could be transmitted to homes over one wire. However, he said, it also could create “the greatest monopoly known to man.”

Some members of Congress and the Bush Administration, as well as FCC Chairman Alfred Sikes, have suggested that allowing phone companies to carry cable programs is the best way to inject competition into the cable industry.

Bell Atlantic Vice President James R. Young said in a statement that the FCC action would “create competition and offer consumers more choices. . . . Let’s hope it’s a beginning to the end of turf wars, so the industry can focus on its real challenge: meeting customer needs for the 21st Century.”

Most cable companies are monopolies, and the industry has been vigorously fighting an effort in Congress to restore the power of local governments to regulate cable prices.

The FCC did not propose allowing phone companies to produce any type of programs or originate them. They would be allowed only to carry programs produced by others over their lines and would have to serve any qualified programmers.

The FCC proposal would allow phone companies to carry such things as graphics, video images and pay-per-view movies and sporting events. The catch is, the 1984 Cable Act doesn’t allow phone companies--either long-distance or local--to originate those services, and FCC rules forbid them from even carrying them.

The FCC would relax its rules to allow the companies to carry the programs.

The commission acted the same day that representatives of the newspaper industry, consumer groups and others asked Congress to keep the seven regional Bell telephone companies from offering such services as stock quotes, sports scores and want ads by phone.

U.S. District Judge Harold Greene, who presided over the 1984 breakup of the AT&T; system, reluctantly allowed the companies into information services.