Bill to Limit Cable TV Rates Passes House

The House approved a bill Thursday to control the rates charged to 55 million households with cable television, opening the way for the first price controls on basic cable service in eight years.

The vote was 280 to 128, with a sufficient margin to override a certain veto by President Bush. The bill goes to the Senate floor for action next week, with the industry hoping that it can muster the 35 votes needed to sustain a veto and kill the measure.

Both sides in the heated debate over the bill claim to be on the side of cable customers, who have faced rapidly rising rates and sometimes poor service since Congress eliminated federal and local regulation of cable TV in 1984.

“A yes vote is for the consumer, a no vote is for the cable industry,” said Rep. Edward J. Markey (D-Mass.), one of the authors of the bill. He claimed it would save cable customers as much as $6 billion a year when rates are reduced under FCC regulation.

But Bush, in a letter to Congress promising a veto, said the bill would “drive up cable industry costs, resulting in higher consumer rates, not rate reductions . . . “

The bill allows the Federal Communications Commission to determine a “reasonable” charge for basic cable service--the programs carried on local outlets of ABC, CBS, NBC and the Fox network; local independent, government and educational channels; and public TV stations.

While there would be no formal rate regulation of other services, such as the plethora of second-tier channels carrying news, sports, music videos and religious and children’s programming--the FCC could intervene if customers file complaints about excessive price increases.

The legislation leaves unregulated the rates charged for the premium channels, such as HBO, the Disney Channel and Showtime. It also does not deal with special programs available on a pay-per-view basis, including rock concerts, and boxing and wrestling matches. Cable companies are fighting hard against the bill because it would force them to pay for the rights to carry programs beamed on local TV stations. This would be a lucrative new source of revenue for broadcasters and an added expense for cable companies.

Hollywood studios are angry about the bill because, although they produce much of the programming carried on the TV stations, they would be denied any share in the extra revenues going to the broadcasters.

Rep. William J. Hughes (D-N.J.), who voted against the bill, said that the measure had been “hijacked” by the TV broadcasting industry and would add billions of dollars to the charges paid by cable subscribers.

The broadcasters were jubilant after the House action. “The cable monopoly and the foreign-owned Hollywood studios took their best shot and still failed to prevent a clear two-thirds majority vote in support of this legislation,” said Edward O. Fritts, president and chief executive officer of the National Assn. of Broadcasters. “We are confident the votes are there to override a veto.”

The broadcasters had some unaccustomed political allies in their campaign for the bill, including the AFL-CIO, the American Assn. of Retired Persons, the Consumer Federation of America, the U.S. Conference of Mayors and the National League of Cities.

Gene Kimmelman, the CFA legislative director, said the President’s vow to veto the bill demonstrates White House support for “rip-offs by monopolies.”

Congress has been unable to override any vetoes by the President in the last four years. But this likely veto, which would be the 32nd by Bush, takes on added political importance because it comes in the midst of a tough election campaign.

Cable industry lobbyists are hopeful that they can persuade some Republicans who voted for the bill Thursday to switch and support a veto. They will also try to enlist other members of Congress from both parties who skipped Thursday’s vote, which dealt with the final version of the bill adopted by a House-Senate conference.

The original bills were approved earlier this year by a vote of 340 to 73 in the House and 73 to 18 in the Senate.

“It’s clear the word is spreading that this is an anti-consumer bill that will make rates go up and not down,” said James P. Mooney, president and chief executive of the National Cable Television Assn. He noted that “55 House members who voted for the bill in July voted against the conference report this morning. At this rate of change, it is quite possible that a presidential veto could be sustained.”

At the nation’s largest cable operator, Denver-based Telecommunications Industry Inc., which has 9 million customers in 48 states, senior vice president Bob Thomson said: “We think it is being turned around as we speak.”

Stephen Effros, president of the Community Antenna Television Assn., predicted that “a lot of Republicans who chose to favor their (TV) broadcaster today are likely to support the President in a veto fight.”

The measure was supported by 208 Democrats, 71 Republicans and the House’s lone independent, Bernard Sanders of Vermont. It was opposed by 38 Democrats and 90 Republicans.

The President’s key man in the House, Minority Leader Robert H. Michel (R-Ill.), voted for the bill in a rare act of defiance against the White House.

In addition to having the FCC set “reasonable” rates for basic cable service, the bill approved Thursday:

--Establishes standards to guarantee that customers get rapid responses to service problems and breakdowns.

--Sets “reasonable” prices for initial installation of cable services.

--Abolishes, after 10 years, a cable company’s ability to force customers to buy two tiers of service to purchase premium channels and pay-per-view events. This means a subscriber could buy only basic cable and then select a single rock concert sold as a one-time broadcast.

--Establishes limits on the number of subscribers that can be controlled by a single company.