Federal regulators yesterday proposed to reimpose price controls on some cable television operators, but their plan was so vaguely worded that it left the industry in the dark as to how many of the nation's 9,500 systems would be affected.
The Federal Communications Commission, by a vote of 5-0, is taking up cable reregulation following the failure of Congress to pass a sweeping cable television bill in the final days of its session this fall. Although the FCC plan does not incorporate all the features of the congressional plan, it shares the same philosophy that deregulation has in some cases hurt consumers. The FCC will now seek public comment and hopes to implement a final policy next year.
Subscriber statistics suggest that, at their current size, the D.C., Montgomery County and Metrovision system of Prince George's County would be exempt from any new regulations on the price of its basic service. What would happen with the other close-in counties is less clear.
Most cable rates were set free of regulation by legislation passed by Congress in 1984. Since then, prices have risen ahead of inflation, leading many consumer groups and politicians to accuse operators of monopolistic abuses and call for renewed controls on prices.
The National Cable Television Association, representing cable operators, condemned the proposal, saying it would force the industry to cut back on innovative programming.
The FCC's plan would, in effect, broaden its powers to authorize local governments to regulate rates. Under the current rules, 97 percent of all U.S. cable systems have been judged to face competition -- in the form of over-the-air broadcast signals -- and therefore are exempt from regulation. Under the new plan, a cable system would face reregulation unless it met one of the following three tests:
Its community has at least six over-the-air TV signals and the cable company serves fewer than 50 percent of the households that its trunk cables pass.
At least 10 percent of the homes that its cables pass subscribe to other forms of pay TV, such as microwave television or direct broadcast satellites.
The cable company provides basic service "at a competitive price level as well as a minimum level of customer service," comparable to those provided by cable operators in other cities that did face competition. The FCC would set up more specific benchmarks for this.
The Washington area has six or more over-the-air stations. According to the 1990 Broadcasting Yearbook, the D.C., Montgomery County and Metrovision cable systems fall below the 50 percent penetration standard set in the first guideline, meaning they would apparently be exempt.
The Fairfax, Arlington, Alexandria and Multivision Cable system in Prince George's County are either close to 50 percent or well above it, meaning they probably would not qualify for exemption on that basis. However, depending on how the third guideline is administered, they still might qualify for exemption.
The vagueness of the third standard left the industry yesterday scratching its head.
"We have only the vaguest notion as to what the commission is going to throw out as a proposal, much less what they will finally adopt," said Jack Goodman, special counsel to the National Association of Broadcasters, which welcomed the FCC proposal but called for change in the 1984 law.
Whatever the rules' final form, the FCC can only reregulate pricing on systems' so-called "basic tier" of programming, because that is all that the 1984 law allows. The basic tier is a collection of local broadcast stations and cable-only channels such as CNN and ESPN. Services such as the Disney Channel and HBO are normally offered at an extra price.
The National Cable Television Association concedes that rates have gone up since the 1984 law came into effect but contends that programming has improved as well.
"However moderate the intentions of the FCC," said association President James P. Mooney, "this proposal raises the prospect of the government inhibiting the future development of cable programming by crimping its economic lifeblood." The Community Antenna Television Association, which represents smaller cable operators, was more positive, warning about excessive reregulation but pledging to work with the FCC to develop workable rules.
Gene Kimmelman, legislative director for the Consumer Federation of America, welcomed the move but said the FCC's hands were tied by the 1984 bill.
"We do not think that the commission's action today will alleviate consumers' most pressing concerns about cable price-gouging," Kimmelman said. "The cable operator will still be able to raise prices at will for its most popular programming," such as CNN and ESPN, by moving that programming out of the basic tier of service.
Some cable systems have already begun moving programming out of the basic tier. However, they argue that this benefits consumers by allowing them to pick and choose what channels they want, rather than having to pay a higher amount for a basic service that includes more offerings.