THIS week the United States Senate is likely to vote to regulate
the cable television industry, which consumer advocates say has
gouged consumers with monopoly prices.
The question - hotly debated in recent weeks - is whether the
legislation would raise or lower the cost of cable services to
President Bush has threatened to veto the legislation, saying it
contains "costly, burdensome, and unnecessary requirements."
But Gene Kimmelman of the Consumer Federation of America says
the bill would cut subscription costs, since the law requires
regulators to "emulate the competitive market" in setting maximum
rates for basic services.
Mr. Kimmelman says there is competition among cable operators in
only 50 of 11,000 local markets in the US. In those 50, he says,
prices are an average of 30 percent lower than in markets where
cable is a monopoly.
In addition to rate-setting rules, the bill "does a lot of
things to spur competition," Kimmelman says. The measure would bar
cable companies from getting exclusive rights to any market, a
privilege companies have often worked out with cities in the past.
The cable industry, however, argues that the bill adds costs
that would force it to raise rates.
"It's not a consumer bill; it's really a special-interest bill,"
says Michael Luftman, spokesman for Time Warner Cable, which
operates cable services in 36 states.
One provision would allow broadcasters to charge cable operators
for the right to retransmit their programs on cable. For broadcast
networks, struggling against cable competition, this could be an
important new source of revenue.
Broadcasters would have the option of either negotiating for
payment or requiring that cable operators carry the programming for
The bill would also prohibit cable companies from requiring
customers to subscribe to an additional tier of programs, above the
basic tier, in order to purchase programming on a per-channel or
per-view basis. To meet this rule, many cable providers would have
to install a $100 box in viewers' homes. The bill would give
companies 10 years to do this.
Congress has never overridden a veto by Mr. Bush, and Kimmelman
says it is still unclear whether the Senate will pass the bill by a
large enough margin for an override. Last Thursday, the House of
Representatives passed the bill 280 to 128, a margin big enough to
sustain a veto. …