From: owner-cablereg-l@netcom.com Date: Sun, 13 Nov 1994 11:13:40 -0800 Reply-To: higgins@netcom.com CABLE REGULATION DIGEST Summary of regulatory news from Multichannel News 11/14/1994. Vol.1, No.46 Copyright 1994 Multichannel News. Reproduction/distribution is permitted so long as this document is left fully intact. NO CHANGES are to be made to this document without the written consent of Multichannel News. Listserver, Gopher, FTP info attached at bottom. Refer questions to John Higgins (higgins@dorsai.dorsai.org or 212-887-8390) For Multichannel News subscription information: 800-247-8080. A bargain at $78/year. Multichannel e-mail contacts: Marianne Paskowski, editor: Mpcable@aol.com John M. Higgins, finance editor: higgins@dorsai.dorsai.org Kent Gibbons, new media editor: kentgibb@well.com Leslie Ellis, technology editor: Ellis299@aol.com EDITOR'S NOTE: Welcome to the new cablereg-l listserver. Took me long enough, didn't it? Pass the subscription address along, particularly folks working at cable and telephone companies with internal e-mail systems. It is now very easy for us to mass-deliver the Digest to groups of people with cable and telco companies. Without getting into details, the more readers we generate from those sites, the longer the digest will be around. Since this is the inagural post to the new list please forgive any snags, particularly any weird garbage that appears. Let me know about any problems, and any suggested solutions (particulary if you're a Majordom wizard!) HOT NEWS * MSOs Underwhelmed By FCC Action * Programmers See Some Ground to Gain * A Look at Republicans Leading Telecom Committees QUOTES OF THE WEEK "This was a very, very complicated problem that we were looking at and we've come up with a very clear, simple solution." FCC chairman Reed Hundt, who explained going-forward rules with an odd demonstration involving cartons of colored eggs. CABLE DISAPPOINTED AS FCC GOES FORWARD Washington -- A split Federal Communications Commission last week adopted new going-forward rules intended to help cable operators add new programming to their lineups. The FCC's move, in gestation since May, was acknowledgement that its original plan was a flop that froze the industry's ability to offer new services. The FCC said operators could now collect a maximum 20 cents per month, per channel added to regulated tiers. But the FCC capped the markup at $1.20 per month until Dec. 31, 1996, effectively limiting to six the number of new channels added during that two-year period. The FCC said the cap could rise to $1.50 if the extra 30 cents is used for licensing fees and did not involve the addition of a seventh channel. Beginning in 1997, operators can add a seventh channel and collect an additional 20 cents, raising the cap to $1.70. The FCC also announced it would begin rate regulating a la carte packages as tiers. However, it will forbear from price regulating a new programming tier created under the new rules. The cable industry issued a tepid response -- on the one hand pleased that the FCC acted, but on the other hand, restive about the continued nit-picking. Hundt rammed through a complex three-year program in a display of bureaucratic muscle that overwhelmed his most vocal dissenter, commissioner Andrew Barrett. In a statement, Barrett said the two-year cap of $1.50, the per- channel adjustment` of 20 cents and the 30-cent license fee reserve were not enough incentive. He also opposed the decision to abolish unregulated a la carte packages. He said Hundt's plan disfavors new programmers and could harm operators who cannot move to a la carte status. Tension between Hundt and Barrett was palpable. At one point, Barrett stopped Hundt from interrupting while Barrett sought to quiz some of Hundt's top cable aides. Later, as Hundt illustrated the rudiments of his plan with cartons of multicolored, hard-boiled eggs, Barrett fled the meeting. Barrett returned to explain that he had stepped out to indulge his smoking habit and had seen Hundt's performance on closed-circuit monitor. Hundt had problems with the panel's other Republican, Rachelle Chong, who cast a split vote. Chong supported the a la carte decision and new product tier, but questioned the efficacy of the price caps and the license fee reserve. But Hundt had the solid backing from commissioners James Quello and Susan Ness. The Barrett and Chong defections meant going-forward rules produced the first non-unanimous vote at a public meeting since Hundt became chairman in November 1993. RULES PLEASE CAUTIOUS PROGRAMMERS New York -- Cable networks responded with cautious optimism last week about whether the Federal Communications Commission's going- forward rules would encourage operators to add new services to their expanded basic lineups and create new product tiers. "I'm a little encouraged, not overly excited," said Debra Green, senior vice president of affiliate sales of E! Entertainment Television. However, the release of the rules had very little effect on cable stocks, which generally rose just slightly Thursday. "It was very much in line with what the discussions had been," said Mark Riely, partner in money manager MacDonald Grippo Riely. Programmers said they were confident that operators with channel space would begin to add services to their regulated expanded basic tiers beginning in the first quarter of 1995 to take advantage of the $1.50 operators are now permitted to pass through to subscribers. Network executives said the main negative news in the rules was the ambiguity over whether the new program service tiers will be entirely unregulated. "The bad news is that the new program tiers are not definitively unregulated," said Roger Williams, president of The Travel Channel. "They [the FCC] reserve the right to come back and re-regulate if the prices get out of line." Programmers had mixed opinions about whether networks with little or no license fees had an edge over more expensive channels in getting onto systems' regulated tiers. "I'm sure some operators will just plow some inexpensive services in basic to boost revenues," said Joe Cantwell, senior vice president of affiliate sales and relations for Bravo and Independent Film Channel. PRESSLER, FIELDS NEW NAMES TO KNOW Washington -- Meet Jack Fields. To finance his education, he went door-to-door selling cemetery plots. Today, he is probably the most powerful House member dealing with telecommunications policy. As a result of last Tuesday's stunning midterm elections, Rep. Fields (R-Tex.) is in line to become chairman of the Telecommunications and Finance Subcommittee, the panel that referees the regulatory brawls among cable, broadcasters and telephone companies. A conservative Republican from suburban Houston, the 42-year-old Fields is one of cable's best friends on Capitol Hill. Consider the evidence: During the course of this year's telecommunications reform debate, Fields advocated a flexible approach on in-region telco-cable buyouts. He sponsored an amendment that would have barred local governments from collecting franchise fees based on cable revenues derived from telecommunications services. When it appeared legislation was dying in the Senate because of pre- election maneuvering, Fields reportedly went to see Senate Minority Leader Robert Dole (R-Kan.) to urge that he help bring the Senate bill to the floor. With Fields poised to take command on Jan. 3, cable leaders in Washington were hardly gloating about its good fortune that Rep. Edward Markey (D-Mass.), a chief author of the 1992 Cable Act, has lost power. Other cable sources said while they were pleased Fields was taking over, making public comments hailing his ascendancy helped no one. Telco executives were also crowing. Ameritech chairman Richard Notebaert last week told reporters that "Based on statements by Senators Dole, [John] McCain [R-Ariz], [Robert] Packwood [R-Ore.] and others, our hope would be that we'll see less onerous legislation in terms of the amount of regulatory oversight and a more trusting attitude toward the consumer and the forces of competition." Last week, Fields indicated he was ready to advance a telecommunications bill early next year. Sen. Larry Pressler (R-S.D.), the new chairman of the Senate Commerce Committee by virtue of the GOP's electoral triumph, pledged his support for early action. Pressler was a co-sponsor of the lead Senate bill, S. 1822, sponsored by Sen. Ernest Hollings (D-S.C.), who also finds himself a minority member. Pressler is concerned with bringing the information superhighway to rural America. He was part of the so-called Farm Team in last year's Senate debate that produced at least one negative for cable: exemptions for rural telcos from equal access and interconnection requirements. FCC ISSUES FIRST REFUND ORDERS Washington -- Pressured by consumer and city groups, the Federal Communications Commission last week issued its first orders -- and promised more soon -- requiring cable operators to refund subscribers for overbilling. In a move pending for months, the FCC told two cable operators to pay refunds totaling about $500,000. The largest single refund was for about $300,000, FCC sources said. Viacom Cable was found to be overcharging in two Tennessee cities, Nashville and Goodlettsville. Comcast Corp. was cited for the same violation in Baltimore County, Md. In both cases, Viacom was told its $12.22 monthly charge should have been $11.70 between Feb. 28, 1994, and May 15, 1994, in Nashville and between Jan. 7, 1994, and May 15, 1994, in Goodlettsville. Comcast was told its $15.33 charge should have been $14.55 during a comparable period of time. The FCC could not provide a breakdown of the refunds by franchise area, but FCC Cable Bureau spokesman Morgan Broman said Comcast's refund would be the largest. The FCC said its first rate orders responded to 36 complaints, some of them duplicative. It issued 11 orders in all, three in which refunds were ordered and eight in which complaints were dismissed. The FCC had been taking some heat for its slow decision-making, but the cable bureau's Broman defended the process. "I think just being careful led to delay. When you are ordering a refund, it's is a serious matter," Broman said. AMERITECH LAYS OUT DELIBERATE VDT STRATEGY Chicago --- With the political winds at their backs, Ameritech Corp.'s top strategists last week laid out an aggressive content- oriented video strategy pegged to their planned programming and packaging alliance with The Walt Disney Co. The venture, which is still being negotiated, also includes BellSouth Corp. and SBC Communications Inc. (formerly Southwestern Bell), and may soon add other telephone companies, said Pat Campbell, executive vice president for corporate strategy and business development at Ameritech. He listed packaging, content ®MDNM¯development and marketing, including development of a navigator, as key tasks. Campbell and chairman and CEO Richard Notebaert, in a meeting with reporters at Ameritech's headquarters here, stressed that an "overarching" packager of analog services is essential to their video dial tone marketing plans, suggesting that, aside from a server-based video-on-demand service, interactive consumer services will take root more slowly. "The first real acceptance and usage [of interactive broadband services] in many cases will start in the commercial sector and will cascade over to the consumer market later," Campbell said. Assuming the FCC approves Ameritech's Section 214 VDT filings by year's end, the regional Bell company will launch service on a commercial basis at the end of the third quarter of 1995, with fiber/coaxial hybrid networks passing some 500,000 by the end of that year, Campbell predicted. "Thereafter we should pass 1 million more households per year, reaching six million by 2000," he added. FCC CLARIFIES ACCESS RULES -- SORT OF Washington -- The Federal Communications Commission said last week it has authority to award damages in program access cases, but it declined to adopt a rule that would create such a remedy under the 1992 Cable Act. FCC officials said their program access rules were working and monetary damages were not necessary at this time. Cable Service Bureau chief Meredith Jones said 17 program access cases have been filed and 11 adjudicated. She said two more decisions would be released soon. "I think what the low number of complaints shows is that our rules are working and people are abiding by them without filing complaints," Jones said. The cable law requires integrated MSOs to sell their satellite- delivered programming to multichannel competitors at non- discriminatory prices. FCC general counsel William Kennard said the Commission can award damages under his reading of the law. Commissioner James Quello said awarding monetary damages was not a desirable option. NCTA TARGETS SIX STATES FOR TELECOMM REFORM Washington -- The cable industry last week said it was targeting Ohio, Virginia and four Sun Belt states for telecommunications reform lobbying in the months ahead. The National Cable Television Association said it would work in an alliance with long-distance companies and competitive access providers to encourage state lawmakers to change their laws. The other states identified were North Carolina, Florida, Georgia and Texas. The alliance picked a few states where it felt it could make the most progress in the short run. The shift to the state level on telecommunications reforms comes after the collapse of federal legislation that called for preempting state barriers to competition. The Clinton administration is planning a federal-state summit on Jan. 9 in Washington to highlight the need for state reforms. *---------------------------------------------------------------------* HOW TO GET THE CABLE REGULATION DIGEST: E-MAIL - To: listserv@netcom.com Subject: Ignored Body: subscribe cablereg-l FINGER - higgins@dorsai.dorsai.org FTP - ftp.vortex.com/tv-film-video/cable-reg GOPHER - gopher.vortex.com/*** TV/Film/Video*** WWW - www.vortex.com *--30--*