A deeply divided Federal Communications Commission yesterday gave the cable television industry the right to bring to a community virtually anything carried over the airwaves.
The 4-to-3 decision, which was made in the face of intense opposition by the broadcasting and motion picture industries, substantially deregulated the cable industry.
"The FCC has removed the regulatory debris of a previous decade; we have thus expanded the choices that consumers will have in the future," said FCC Chairman Charles Ferris.
"Cable has not and will not destroy broadcasting, as was once feared," Ferris added. "Broadcasting profits have continued to grow at a fast pace despite cable's rapid expansion."
Under the FCC's previous rules, cable systems could carry only a certain number of signals, a calculation based on the size of the market it served. For example, a cable system in one of the nation's 100 largest markets could provide no more than two independent commercial stations and one station affiliated with each of the networks. There were no restrictions on noncommercial stations.
The commission's decision yesterday leaves intact only two major FCC regulations dealing with cable programming.
The first sets blackout restrictions for sports events. The second rule bars a cable system from offering a network program at the same time a local affiliate is showing it.
The decision will permit cable systems across the country to bring in as many independent stations as is technologically feasible. The cable franchises would continue to pay royalities to a copyright agency in order to gain access to the programs.
Cable systems would also be permitted to show syndicated programs to their viewers, even if a local station has carried those shows on another day.
The broadcasting industry, which immediately said it would challenge the decision before a federal appeals court, has maintained that by granting cable systems the right to provide almost unlimited programming to smaller communities, local broadcasting service would be threatened.
Calling the ruling "ridiculous," National Association of Broadcasters President Vincent T. Wasilewski said the FCC has permitted cable systems "to use an unlimited amount of broadcast programming for token fees without bargaining either with the producer or an owner of the programming or with the broadcast station that airs it."
Wasilewski said that local television service is at stake in the FCC decision. "It is irresponsible for a federal regulatory agency to expand cable's distant signal subsidy at the expense of local service," he said.
But Thomas Wheeler, president of the National Cable Television Association, hailed the decision as a "monumental victory for consumers who desire additional choices in television viewing.
"For nearly 15 years, the FCC had regulated cable television in a manner to protect broadcast stations from imagined harm," Wheeler said. "After an extensive economic inquiry into the relationship between the two industries, the commission has decided to cease regulating one business for the benefit of another, at the expense of the consumer."
The broadcasting and production industries have argued that the fees paid to an agency, the Copyright Royalty Tribunal, are too low to cover the revenues lost by permitting the free flow of signals envisioned by the FCC.
Further, the program producers have argued that they would lose considerable amounts of revenue garnered through the process of syndicating their shows to local stations.
But the FCC staff, while noting that some local stations may lose some revenues, concluded that in many markets cable television raised station profits by improving the quality of weak signals.
But FCC member Robert E. Lee, who joined with commissioners James Quello and Abbott Washburn in dissenting form the opinion, said the FCC "has chosen to upset the marketplace without providing for any reasonable period of adjustment."
Lee said that under a system by which the broadcaster and supplier negotiate for programming rights, a cable system "takes the programming without participating in the marketplace and without any regard for the contractual rights of those who have participated."
But FCC chairman Ferris called the current regulatory system "artificial" and said the program market will adjust to a new reality where advertising rates will reflect both the distant as well as the local viewer."