The Senate took up a complex and controversial bill to deregulate the cable television industry yesterday, but the real topic of discussion was the cost of telephone service.
Rural senators, led by Sen. James Abdnor (R-S.D.) argued strenuously that the bill drafted by the Senate Commerce Committee is a threat to rural and residential phone service because it would allow unregulated cable companies to offer data transmission services now provided by telephone companies.
They said this would erode telephone company revenues and drive up residential rates.
Commerce Committee Chairman Bob Packwood (R-Ore.) tried to head off the phone rate debate by arguing that it had nothing to do with the cable TV bill. He said it was "simply not true" that local telephone companies would have to raise rates sharply because the cable TV bill might result in the loss of revenues now provided by data transmission clients such as banks.
He promised that he and Sen. Barry Goldwater (R-Ariz.), chairman of the communications subcommittee, soon would introduce legislation to deal with the issue of subsidizing local telephone service after the breakup of the American Telephone & Telegraph Co. on Jan. 1, 1984, strips the former Bell local operating companies of long-distance revenues.
At present, the telephone companies to be spun off from AT&T derive only 1 percent of their revenue from data transmission, and it is "misleading the public" to suggest that potential loss of this income would drive up local phone rates, Packwood said.
Abdnor said he supported the overall intent of the cable bill, which is to encourage the expansion of cable service by limiting federal and local regulation, but he said the Senate should not "replace the ghost around the image on the TV screen with the ghost of what was the world's finest telephone service."
No votes were taken on any of the proposed amendments. The cable bill is scheduled to be the first order of business when the Senate reconvenes today.
The bill would limit to 5 percent of revenues the fees a cable operator would have to pay local franchising authorities, would bar local governments from regulating the services offered by the system, and would permit local authorities to acquire a system when its franchise expired only by paying fair market value.
After months of negotiations, the cable bill was endorsed by the National League of Cities--although New York and some other large cities still oppose it--and by the National Cable Television Association. This led Senate Majority Leader Howard H. Baker Jr. to predict that the bill would move quickly to a vote scheduled for today, but Abdnor insisted on introducing amendments aimed at protecting local phone service against what he said was the threat from cable competition.
His first amendment, which Packwood and Goldwater said they would accept, would say that it is the intent of Congress to ensure the provision of "universal telephone service at reasonable rates" and to require that "all providers of telecommunication services share in the obligation of providing universal service." Aides to Packwood said he accepted this because he already had made clear his intention to spread throughout the communications industry the burden of supporting local phone service to hold rates down.
The second amendment, which Packwood opposed, would require services offered by a cable company to be subject to the same regulation as competing services offered by a regulated utility--namely, the telephone company.
Abdnor said his intention is to enable telephone companies, which are subject to state regulation, to compete for clients for other services on the same basis as the cable companies, which would be largely unregulated. Packwood, however, objected that the practical effect would be to impose state regulation on a variety of telecommunications services that are not regulated under current law.