For years, the cable TV industry was on its own, free to conduct business as it saw fit. But then the federal government stepped in and gave cities the power to regulate rates and services. And customers have flexed their muscles as well, sending a clear . . . : MESSAGE TO THE MEDIUM

Five times a day, Andy Steuer picks up his office phone, dials the local cable television company and clicks a stopwatch.

It’s a test.

The folks at Century Cable in Santa Monica are supposed to answer customer calls within 30 seconds under new federal rules that give cities the power to regulate their local cable companies. Steuer, a part-time staffer for the city of Beverly Hills, notes the elapsed time, says thanks and hangs up. He finds that the company flunks a lot.

Welcome to the brave new world of cable TV regulation. The stopwatch checks are just one sign of cities’ new regulatory authority over cable companies. The local power was granted by a 1992 federal law that reimposed regulation on cable firms following five years of unfettered operation--and, according to many customers--skyrocketing prices and grudging service.

Beverly Hills and West Hollywood, both with long histories of friction with Century over rates and service, have joined a handful of trailblazing cities around the country to make use of this new clout. This month, they ordered Century to cut the basic rate it charges residents.

It’s a complicated new job; most Westside cities have hired consultants to guide them through the blizzard of confusing rate rules. Local officials were once powerless to offer much more than sympathy to residents upset with prices. Now they stand to accept glory or fire for their decisions on cable service--a hot-button issue that infuriates Westsiders more than just about any other local problem.

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West Hollywood officials last year helped direct hundreds of residents’ complaints to the federal government after Century repackaged its channels in such a way that it cost about $8 per month more to keep the same programming. Lawyer Pamela Koslyn filed her complaint, and since then has taken to scribbling nasty taunts on the bottom of her payment checks to Century. Other outraged residents cut off service altogether.

“I have never seen an issue that has more people more angry and enraged than cable,” said Helen Goss, who oversees cable operations at West Hollywood City Hall.

The air was downright victorious March 7 when the West Hollywood City Council ordered Century to trim nearly $4 from its $24.08-a-month price for basic cable and to pay refunds back to the Sept. 1 start of the regulation law. Long-stewing residents, some of whom even brought cable bills to the session, applauded the unanimous vote as if the playground bully had been vanquished at last. The next afternoon, the Beverly Hills City Council ordered its own $1.68 rollback--to $22.40 a month--plus refunds.

Century executives plan to appeal the rate-rollback orders, saying the two cities overstepped their authority. Rates won’t change until the appeal is decided.

Prompting all this is the Cable Television Consumer Protection and Competition Act of 1992, which reversed a 1984 law that had unshackled the cable industry from local regulation. Facing a clamor over rising cable rates and monopoly conditions across most of the nation, Democratic lawmakers turned cable regulation into an emotional election issue and overrode a veto by then-President George Bush, the only time Congress succeeded in doing so during his four years in office.

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The industry argued that the rates had paid for more and better programming and warned that regulation would leave it handcuffed as satellite and other technologies elbowed into the video market. If prices were unreasonable, asks Continental Cablevision Vice President John Gibbs, why did the number of Los Angeles subscribers double over five years?

The law, whose central goal was to lower cable prices by 10%, resulted last year in 500 pages of regulations from the Federal Communications Commission that set off a stampede for consultants who could decipher them.

Previously, cities and towns oversaw local cable operations through franchise agreements with operators, contracts that provide the communities a fee of 3% to 5% of company revenues. But cities had no say over rates.

Now communities can set rates for basic service using FCC-devised “benchmarks” that vary from system to system. Basic service includes over-the-air broadcast channels, plus public access and government channels. The FCC regulates satellite channels such as CNN or MTV. Pay channels such as HBO and Playboy and pay-per-view channels are unregulated.

The law also laid out strict standards for customer services, such as telephone-answering time or responding to outages. Before the 30-second federal standard took effect, Century had two minutes to answer the phone under its franchise agreement with Beverly Hills. While the law toughens standards, it still isn’t clear what teeth it gives local officials who want to enforce them. Beverly Hills may soon consider fining Century for recent lapses in answering the telephone, but it would use its old franchise-agreement powers, not the new law.

All Westside cities have made the first moves to regulate rates, but none have jumped as fast as West Hollywood and Beverly Hills--a reaction to fierce public pressure after years of what Beverly Hills Councilman Allan L. Alexander calls “a rocky romance” with Century.

“They had a history of raising rates and a history of bad service,” said West Hollywood City Councilman John Heilman, noting that the city almost dropped the Century franchise because of dissatisfaction six years ago. “We finally have the ability to regulate their rates and roll back the rates. That’s what people were screaming about.”

If Westsiders seem to scream louder than most about cable--even over rate hikes that amount to mere pennies a day--there are reasons. For one, it is next to impossible to get a clear TV picture without cable in West Hollywood, Beverly Hills and Malibu (which is served by Falcon Cable) because hills nearby block broadcast signals. Cable has succeeded so well that people now view it as a utility they can’t live without.

“If I don’t have cable, I don’t have reception,” Koslyn said. “It’s a necessity.”

For another, as in most of the country, Westside cable firms operate as de facto monopolies in their franchise areas. Besides West Hollywood and Beverly Hills, Century serves Santa Monica, Marina del Rey and most of West Los Angeles. Falcon has Malibu and a tiny chunk of Pacific Palisades. Continental Cablevision covers a wide swath from Hollywood to Culver City and Venice.

That means customers can’t switch carriers when their bill goes up or the service technician shows up late.

“(People) get worked up about it because they’re trapped,” said Tracy Westen, a communications lawyer who teaches at USC. “There’s nowhere they can go.”

Experts also see psychology at work in this love-hate relationship with cable; viewers can’t complain to Dan Rather, but they can call the local cable company that sends them a bill every month. Others still resent paying for TV at all and few customers would ever think to credit their cable firm for a great HBO movie. “It’s kind of an invisible medium,” Westen said.

Century quieted much of the previous criticism over the past five years by pouring $100 million for new wiring--allowing it to carry more channels and improve picture quality--around Los Angeles. It even began winning praise for treating customers better. Subscribers who once waited 20 minutes or more to get an answer, were now reaching a human voice in less than a minute.

But last year the firm generated a tidal wave of complaints when it rebundled some satellite channels into higher-priced, optional “a-la-carte” packages. Many subscribers howled that the move was simply a bid to escape local regulation. During public hearings in West Hollywood last fall, company officials sat through scoldings from customers who were paying more to buy “a la carte” channels that once were part of their basic service.

The company says the shift is part of a coming trend to let people tailor what they watch and avoid paying for shows they don’t. Costs rose for some viewers to cover price decreases mandated by the new regulations, said Century Vice President Maggie Bellville, who runs operations in Southern California. Bellville said about two-thirds of customers saw prices fall because of new rules barring charges for items such as extra outlets.

“A lot of people’s bills went down. Those are people we don’t hear from,” Bellville said.

The rate cuts ordered by Beverly Hills and West Hollywood may not be the last on the Westside. Other cities in the area are reviewing their cable rates as the first step toward a possible rollback. In some cases the cable companies are still preparing the financial forms used by cities to see if current rates are within the federal limits. To complicate matters, the FCC is expected this week to issue new rules that will cut rates 7% more and tighten control over pricing of the disputed “a-la-carte” channels.

While cities are enjoying the long-awaited chance to rein in cable operators, their powers are limited to overseeing basic cable, not the deluxe channels. Rates cannot be set lower than the federal guidelines allow, no matter how loud the grass-roots outcry for more.

“We can only do what the law allows,” said Heilman, the West Hollywood councilman. “I’m sure there’ll be some people in the community who don’t understand that and want us to do more.”

And officials may find themselves on the hot seat for granting rate hikes that are warranted under the law--such as increases to cover the costs of inflation, fees paid to carry broadcast stations and new channels. “That makes the local government officials look like the bad guys,” Heilman acknowledged.

Beverly Hills activist Thomas A. White was on hand to back the City Council when it voted the rate cut two weeks ago, but he fears that the council’s pro-business ethos might keep it from being an aggressive watchdog for cable consumers. White said his group, the Municipal League of Beverly Hills, may ask future council candidates to address cable service questions much as it grills them on other key local issues.

Industry officials question whether small city staffs are equipped to implement the complex FCC rules and keep up with the onslaught of new video technology. “We’re imposing a layer of marketing and technology on the cities in areas that are very complicated,” said Peggy M. Keegan, vice president of the California Cable Television Assn. “I don’t know if it’s too much for them, but I think it’s a very challenging situation.”

Santa Monica is among the long list of cities paying lawyers and accountants to wade through company financial filings--the first step in determining rates. “This is all new to us,” said city cable manager Laura Greenfield. “Perhaps once we’re educated we can do it on our own. But at this point . . .”

It may seem a mountain of work to ensure a decent price for Beavis and Butt-head--that’s because cable is not considered a luxury anymore. Angry viewers may scrawl hateful notes and shake their fists at public meetings. But even critics like Pamela Koslyn cannot imagine life without cable.

“Doing without cable?” she asked. “It’s just human nature. You get something. You get used to it. You start to like it. It becomes necessary.”

A Westside Cable TV Guide

CENTURY CABLE Westside communities served: West Hollywood, Beverly Hills, Santa Monica, West Los Angeles, Marina del Rey, Pacific Palisades. Subscribers: 120,000 (includes small part of San Fernando Valley) Basic price: $22.80 to $24.08 a month for 31 to 42 channels, depending on area

CONTINENTAL CABLEVISION Westside communities served: Hollywood, Culver City, Mid-Wilshire, Crenshaw, Baldwin Hills, Palms, Venice. Subscribers: 100,000 Basic price: $8.10 to $9.23 a month for 22 to 24 channels, depending on area

FALCON CABLE Westside communities served: Malibu, Topanga and part of Pacific Palisades. Subscribers: 6,000 Basic price: $28.90 for 31 channels

Note: The federal government defines basic cable as broadcast channels, public-access and channels used by local government. Basic packages cited above vary widely from company to company. Some also offer additional channels, such as home shopping and sports channels as part of basic. Prices don’t include converter boxes. Subscriber figures are only estimates because franchises extend beyond Westside in most cases.