CABLE RULING MAY RETURN REGULATION POWER TO THE CITY

Reaction was mixed Thursday to a Federal Communications Commission decision to allow local governments to regulate the prices charged by about 60 percent of the nation's cable systems.

Warren Wells, Cape Girardeau's city attorney, called the decision "encouraging." But Roger Harms, manager of the cable TV system serving Cape Girardeau and Jackson, said rate regulation will ultimately hurt the consumer.

The local cable system is operated by TCI Cablevision of Missouri Inc.

The Bush administration-backed revision in commission rules would exempt from rate regulation only systems facing competition from at least six over-the-air broadcast stations or another multi-channel operator.

Harms said the exemption would apply to only a minority of cable systems. "Most communities don't have six over-the-air broadcast channels available to them."

The commission voted 5-0 to overhaul the rules under which about 97 percent of the nation's 9,600 cable systems had been exempt from rate regulation.

Under the 1984 Cable Act, cable systems were exempt from local price regulation, beginning in 1987, if they were found to have "effective competition" as determined by the FCC.

The FCC defined effective competition as three broadcast stations in a cable system's market. That definition freed all but a small portion of cable systems from rate regulation.

But consumer groups and city officials nationwide have since complained about rapidly increasing cable fees, and called for a return to rate regulation.

Wells said he had not yet seen a copy of the ruling and was uncertain if the rate regulation would apply to basic service or to the entire menu of channels offered by the cable system.

But, he said, any rate regulation "certainly sounds encouraging."

Wells said, "I think except for the cable company, everyone agrees that an unregulated monopoly, that's what you have in effect here, has to be bad news for the consumer.

"Anything that would help put a lid on the unbridled increases is bound to be an improvement," he said.

Wells said the FCC ruling could have an impact regarding the drafting of any new cable TV franchise agreement. The current agreement with the existing cable operator expires in December 1992.

A city committee is currently gathering information "so a decision can be made whether to renew the franchise," he said.

"The question is to what degree does this change the rules of the game during this franchise renewal process," said Wells.

Harms said that the ruling would apparently allow affected cable companies to raise their rates by 5 percent a year without city approval. Rate regulation would apply only to rates above that percentage.

But he said rate regulation is still a bad idea. "Rate regulation is going to hurt somebody and I can tell you who it is going to hurt, it is going to hurt the customer."

Harms said, "The customer wants more service. They want more channels. They want better programming. That all costs."

If costs can't be passed on to customers, then the quality of programming and the service offered will suffer, he said.

Harms said returning to rate regulation "may curtail new innovative programming and new technology because it takes capital investment to do anything."

He maintained that the cable industry is already "one of the most heavily regulated industries in the United States."

Harms said, "Regulations are not new to us and we will abide by the regulations set down."

The cable industry has been operating under various regulations for years. The FCC ruling adds rate control to those regulations, he said.

Harms doesn't view the local cable system as a monopoly. "I have a non-exclusive franchise in this community," he said. "People have a choice; they don't have to have TCI."

In addition, he said, cable TV must compete with other forms of entertainment such as movie theaters and video rental.

Harms said rate regulation will hurt the cable industry, but it won't be a death blow. "We want to make this industry the best it can be. It's going to hinder it, but it won't kill it."

Some information for this story was provided by The Associated Press.