Senate OKs Bill to Regulate Cable TV Rates

After three years of delay and political maneuvering, the Senate voted overwhelmingly Friday to allow local governments to regulate basic cable TV rates and set limits on the expansion of cable companies.

If signed into law, the legislation could slow the rise of cable TV rates around the country, according to analysts. The House is expected to adopt its own cable bill soon. But President Bush has threatened a veto.

“It’s a big victory for consumers,” said Gene Kimmleman, legislative director for the Consumer Federation of America. “This was a bipartisan vote for putting a lid on cable rates and promoting new services.”

For the powerful cable TV industry, the 73-18 vote in the Senate represents a significant setback in a yearlong campaign to convince legislators that efforts to reinstitute regulations on cable services would benefit broadcasters more than consumers.

But pro-regulation lobbyists, including broadcasters who supported the legislation, may be celebrating too soon.

The cable industry said that it intends a vigorous fight against the upcoming measure in the House and is emboldened by the prospect of a presidential veto. How restrictive the eventual bill may be--and its direct impact on consumers--could vary considerably depending on the kind of bill that lands on the President’s desk.

Cable TV rates have been a politically explosive issue since the industry was deregulated in 1987. Prior to that time, the average monthly bill for basic cable TV was about $11. Since then, the cost of basic service has more than doubled in many cities. Cable executives argued that rates were held artificially low by prior regulation and deregulation allowed the industry to invest in better programming.

The controversial bill works on two different levels. On the one hand, it would give local communities greater power in setting cable TV rates.

But on the other hand, it would benefit broadcasters, because cable operators would be required to pay for picking up and carrying over-the-air TV signals. At present, cable operators do not pay to retransmit local network affiliates or independent stations; they do pay to carry cable networks such as CNN, HBO or ESPN.

Cable executives are opposed to so-called retransmission consent because they contend that it will only drive the cost of cable TV up further. Monthly basic cable rates are expected to average $19.38 in 1992, up 46% since 1987.

The Senate bill seeks to give local franchising authorities greater power in setting rates for basic cable television service. Such measures would go beyond regulations adopted by the Federal Communications Commission last year that restrict cable rates in less than one-third of the country.

A less restrictive cable re-regulation bill lost in the Senate Friday on a 35-54 vote. That bill, which had the backing of the White House, deleted several key provisions that would have made it easier for emerging services, such as satellites, to compete against local cable monopolies. It also would have provided weaker rate regulation.

James P. Mooney, president of the National Cable TV Assn. in Washington, D.C., termed the re-regulation bill passed by the Senate on Friday “extreme.” He said the measures, besides leading to “upward pressure” on rates, were also a “subsidy for broadcasters.”

However, Mooney pointed to the lawmakers who voted for the weaker substitute bill as an encouraging sign that the Senate did not have the votes to override a presidential veto.

Earlier in the week, a memo by Mooney to NCTA board members, which was leaked to the press, caused a stir when it implied that support of the weaker bill might split Congress and once again stall the prospect of re-regulation.

“If the ‘substitute’ prevails, or if it gains 34 or more votes, the politics of controversy will be substantially altered, and the likelihood of Congress coming up with a reasonable bill will be substantially enhanced,” Mooney wrote.

The cable lobby was joined by Jack Valenti, the influential president of the Motion Picture Assn. of America, who was against the so-called retransmission consent and other provisions favoring broadcasters because they denied program fees to Hollywood producers.

In the constantly shifting alliances of Washington politics, however, few observers were willing to predict what the final legislation might look like.

But Rep. Edward J. Markey (D-Mass.), chairman of the House subcommittee on telecommunications and finance, called prospects for cable regulation this year in Congress “excellent.” He expected the subcommittee to finish working on its bill within four to six weeks.

Observers say that cable legislation could be ready for the President to sign or veto by October. But since this is an election year, pro-regulation lobbyists are betting it is unlikely that Bush would veto what is being touted as a “major consumer issue.”

The Rise in Cable TV Rates

The average cost for monthly basic service has increased 46% since cable deregulation went into effect in 1987. Here are average monthly rates for basic service, which excludes costs for remote controls, TV viewing guides, second outlets, installation charges and any pay TV channels.

1980: $7.85

1981: $8.14

1982: $8.46

1983: $8.76

1984: $9.20

1985: $10.25

1986: $11.09

1987: $13.27

1988: $14.45

1989: $15.97

1990: $17.58

1991: $18.46

1992: *$19.38

*Projection

Source: Paul Kagan Associates.