TO REGULATE CABLE TV OR NOT...WHAT'S THE BEEF?: CABLE REQUIRES "EFFECTIVE COMPETITION"

The past few years have seen several bills proposed on Capitol Hill dealing with cable regulation in one form or another. Our own respected Senator Danforth has proposed legislation to regulate the cable industry. Why, suddenly, are so many so concerned about cable? To regulate or not to regulate the cable industry, what's all the beef about?

Under the 1984 Cable Communications Policy Act, communities that experienced "effective competition"; i.e. three over-the-air broadcast television signals, could no longer regulate cable rates. Ninety-seven percent of the nation's cable systems fell within this category.

The definition of "effective competition" has since been upgraded by the FCC to six over-the-air broadcast television signals. It's now estimated that 34 percent of the nations 56 million cable customers will be affected by the change. However, under the new six signal test, many cable companies will continue to avoid regulation because most consumers subscribe to the non-basic tier of cable service which is not subject to rate regulation.

What is the cable industry's response to rate regulation? Their main argument against any extensive regulation is that it would hamper their ability to provide diverse programming and first class customer service. For those who are prone to believing any-old sob story, I suppose you will fall for this one as well. But please, don't bite the bait too quickly. There are a few points which must first be highlighted.

In their July 18, 1991 report, the General Accounting Office found that cable rates for the most popular basic services have risen 61 percent in the four years since the industry was deregulated. (This translates into three times the rate of inflation for this period).

The number of systems offering two or more tiers of service increased from 16.4 to 41.4 percent. In other words, the lowest tiers are stripped of the most popular programming, which is placed in the highest tier. The result is a basic tier which consists of a handful of broadcast stations and community programming channels with all other programming carried on the more expensive expanded tiers.

Gene Kimmelman, Legislative Director for the Consumers Federation of America, stated that: "Unfortunately, the FCC has done nothing to prevent cable companies from gouging consumers by overpricing the tiers of service that involve the most popular cable programs."

The powerful cable lobby has, at least up to this point, successfully eliminated its staunchest possible competitor, that being the telephone industry. You see, the telephone industry literally dwarfs the cable industry in size and power and may significantly jeopardize the cable industry's hold on the delivery of video programming. In other words, cable companies, except on rare occasions, have refused to compete within their industry. Telephone companies may, in reality, signify the only real competition willing to take-on the cable industry. (The Bush administration is strongly in favor of allowing telephone companies to provide cable services.)

The most obvious pitfall to an unregulated approach to cable television, which relies upon and assumes competition, is that not all communities are capable of sustaining more than one cable operator. Even if the opportunity to compete was present, installation costs or insufficient numbers of subscribers would quite often deter competition. Telephone companies may be able to avoid many of these pitfalls since their extensive fiber-optic network is, in many instances, already in place.

The flip side of the coin places some level of government control on the cable marketplace. In principle, the American way is based upon a competent, free-enterprise system. Where should regulation in the cable industry begin and where should it end? In my opinion, as long as competition is stifled by the powerful cable lobby, some sort of regulation needs to be applied to the industry. Ideally this would be at the local level, since local needs are best addressed locally. If telephone competition would, however, prove to add an effective competitive edge to the industry, then regulation would not be necessary.

Mary Wulfers is a member of the Cape Girardeau City Council.