Cable TV Industry Fights Proposed Federal Rules Consumer Groups Say Bill in Congress Will Cut Prices of Television Services and Foster Competition; Cable Firms Say Requirements Would Raise Taxes

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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 consumers.

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 free.

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. …


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