A Ceiling for Cable Rates? Congress and the FCC Are Considering New Controls for a Maturing Industry. TELEVISION: REGULATION

Article excerpt

IN rural Henderson, Tenn., where citizens can tune in only fuzzy far-away television signals off the airwaves, cable television is a life-line to the world of news and Hollywood entertainment.

It wasn't until local cable rates jumped 40 percent overnight - launching a battle worthy of a prime-time soap opera - that Mayor Charles "Eddy" Patterson realized just how much of a necessity cable had become. "It's kinda like running water in the house. Once you become accustomed to it, you don't want to do without it."

It is this view - shared by many others - of cable television as less a luxury than a basic American necessity that is behind a growing movement to rein in an industry that exists in most communities as a monopoly.

Congress and the Federal Communications Commission (FCC) are both looking to re-regulate the cable business. Under Reagan-era de-regulation, cable fluorished: A booming $15 billion-a-year business, it's high-tech tendrils reach 50 million homes or about 60 percent of households with televisions. But there are few controls on its rates, programming, or quality of service.

Henderson's experience is symbolic of the cable boom which has steamrolled through America, says Mayor Patterson. "We're a prime example of what can happen. ... (We have licensed) a monopoly."

Last June, the town's cable franchise, MultiVision Cable TV, hiked the basic monthly rate for 17 channels 40 percent to $19.95. Local outrage led to an unusual gambit: Henderson offered a second franchise license to CableAmerica Corp. to build a competing cable system.

By November the town of 5,000 was wired with two working cable systems. Locked in competition, both offered three months of free cable service to new subscribers and basic monthly rates of under $12 for an expanded offering of 40-plus channels.

Henderson residents thought they had found a way to make their economic clout felt, says Mr. Patterson, who was even called to testify before the US Senate on the effects of competition in Henderson.

But the community was stunned last month to learn that CableAmerica was selling out to MultiVision and basic cable rates would rise to about $15 a month.

It is controversies like Henderson's as well, as a long-term concern about the control of video technology, that give momentum to the new regulatory effort.

The industry is already feeling the effects of the uncertainty over the possibility both of re-regulation and of competition from telephone companies and direct satellite video systems, says John Mansell, a Washington analyst with the consulting firm Paul Kagan Associates.

"Cable stocks have been hit very hard; some are down, in many instances 30 to 40 percent," he says. Looking for market stability, industry operators themselves have even gone on record supporting some regulation. "We're now at a point where there is a refocus on what cable television should be. ... It's clearly a business, but (because of the) larger community policy questions we are not going to ignore it as if they were selling widgets," says Donna Lampert, a fellow in the Washington program of the Annenburg School of Communications.

Indeed, the growth of cable and its technological importance as the conduit for video communications of all sorts has become more than a question of how much it will cost the consumer to flip from NBC to HBO.

"There's a very strong argument that any individual television program is not a necessity. But television has become so important in the fabric of society - to our national identity and at times of crisis - (that it plays) a unique role in post-industrial democracy," says an FCC cable official who asked not to be identified. …