FCC Chief Warns Cable Industry

Cable companies will introduce millions of consumers to the digital world, but the industry should be careful not to abuse its position as a market leader, warns the nation’s top telecommunications official.

Michael Powell, head of the Federal Communications Commission, saluted cable executives at their annual convention Tuesday for their aggressive moves to enter the digital era. Doing so will allow cable companies to give consumers new TV channels, high-speed Internet access, phone connections and interactive services.

“The industry has all the tools it needs to succeed in the great digital revolution,” Powell said. But, he asked, “Will it last?”

The industry’s history makes that question necessary, he said, and the answer depends on the ability of companies to address change.

“How you exercise advantages and how well you can serve consumers will be vital,” he said in his address at the National Cable & Telecommunications Assn. meeting.

Cable operators can control what new digital or interactive content reaches consumer TV sets and computers through their services. Internet providers are concerned that cable companies selling Web access will offer customers only affiliated services and will restrict access to competitors’ products.

TV programmers have their own fears: They are developing interactive content that would allow consumers to do things like get more information about a team by clicking a button on the TV screen.

Those creating content are worried that cable operators won’t pass on all these special features to consumers.

Both programmers and Internet providers want the government to place more requirements on cable operators to prevent them from favoring their own content or restricting offerings by rivals.

The FCC currently is studying both issues. But Powell warned companies against using their role to thwart competition.

“Cable will be one of the great digital gateways to the consumer,” Powell said. But, he said, “you must be cognizant of not misusing that power.”

If companies don’t heed that advice, it “could result in the erosion of the healthy regulatory environment that currently exists,” Powell said.

He recommended other steps for the industry to take to preserve goodwill with Washington and consumers.

Broadcasters and cable companies have butted heads on a number of issues related to digital TV. For example, broadcasters want both their analog and digital signals to be carried on cable systems until they begin airing shows only in digital. Cable companies say such a requirement will use up too much space, forcing them to drop popular cable networks.

The two industries also have tussled over technology to make sure that consumers will be able to see digital broadcast TV channels as part of their cable lineup. That’s important because most consumers watch TV via a cable connection.

Powell also warned companies that hiking their rates will tempt more regulation.

Consumer advocates said Powell’s efforts to prod the industry into good behavior do not go far enough.

“His urging doesn’t openly protect consumers,” said Jeff Chester of the Center for Digital Democracy. Chester said Powell’s remarks won’t stop cable companies from using their networks “to make the openness of the Internet into a closed system.”