Cable Television 1993: Is It the Beginning of a New Partnership between Local and Federal Government?
Kenny, John, Public Management
In 1993, the cable industry will generate $20 billion in revenue in the United States. Will your community benefit from this $20 billion in revenue and the increase in channels from 30, 60, or 100 to the promised 500?
Will cable finally reach its potential to build for local government the last mile in the information superhighway, the mile to be traveled by voice, data, and facsimile in addition to the current flow of video entertainment? Will your community become more active in the regulation of cable television rates, services, and consumer standards, or will it leave those issues to the market or the federal government?
Will your community be involved in the decision making over whether cable companies will provide telephone services and telephone companies will offer video services? If this happens, will your community get more in franchise fees or less?
This article deals with a number of these questions and informs local government administrators of federal activity that affects their ability to participate in the rapidly moving telecommunications revolution.
Federal Versus Local Regulation
There always has been a split between the federal and local governments on the issues of who should regulate cable television and how. One thing, however, always has been clear. Because cable television companies use local streets and rights-of-way, local governments (and in some cases, state governments) have had the authority to decide who would receive a franchise to provide local cable service.
Unfortunately, the clarity has ended there. The federal government has the authority to regulate the airwaves. Local television stations use the airwaves to broadcast their signals. Because, cable systems retransmit those broadcast signals, the federal government has asserted a role in the regulation of cable television.
From 1950, when cable first started in Pennsylvania, to the mids, 1980 local governments and the federal government used a hodgepodge of rules and regulations to govern cable. In 1984, the U.S. Congress, at the urging of the cable industry, dramatically changed the rules of the game and dealt a blow to localities by essentially deregulating 97 percent of all cable franchises and minimizing the local power over rates and services.
Since deregulation, monthly rates for basic cable service have risen by a whopping 40 percent in one-quarter of the nation's cable homes--three times the rise in the consumer price index (CPI) for the comparable period. In many cases, despite increased rates, cable service has degenerated.
Because of the rate increases and a general dissatisfaction with many CATV services, the U.S. Congress last year enacted (over President Bush's veto) the Cable Television Consumer Protection and Competition Act of 1992 (Public Law 102-385). A primary finding of the Congress was that "franchising authorities are finding it difficult under the current regulatory scheme to deny renewals to cable systems that are not adequately serving cable subscribers." This difficulty was due in large part to the provisions of the 1984 federal deregulation law, which had severely limited local regulation options.
The 1992 Act attempts to reverse that deregulation and provides an opportunity for local and state franchising authorities to get back into regulating cable rates and many aspects of cable service. The Act sets up procedures and standards for the franchising authority to become certified by the Federal Communications Commission (FCC) and contains many provisions of direct interest to local governments.
Figure 1 summarizes the 1992 Cable Act provisions that have an impact on local governments. The two most significant aspects affecting local government regulation of cable are rate regulation and customer service standards.
The 1992 Cable Television Act's Impact on Local Governments
* Prevents the granting of exclusive franchises, as has so far been customary, and encourages the awarding of competitive franchises. …