House telecommunications subcommittee chairman Ed Markey (D-Mass.) says it’s time to consider lifting a law barring telephone companies from taking an ownership stake in television programs, so long as it results in more competition in local cable TV delivery.

Markey’s comments came in a letter to the Federal Communications Commission and were prompted by last week’s announcement that telco giant Southwestern Bell is buying two of Hauser Communications’ cable systems in the D.C. suburbs.

The Southwestern Bell deal prompted raised eyebrows on Capitol Hill, where lawmakers had long presumed no telco would buy a cable system outside its own local service area.

Southwestern Bell’s cable venture beyond its own territory raises a number of public policy questions, Markey said, including whether it is “time to reexamine the prohibition on content ownership enacted through the Cable Act of 1984.”

Markey said Bell Atlantic — another Baby Bell company that has expressed a desire to provide cable service in the D.C. area — would be put at a disadvantage in competing against Southwestern Bell if existing laws and FCC rules are not changed.

Legal telco hangup

Federal law bars telcos from owning cable systems in their local service area. Bell Atlantic had planned to provide cable service to its D.C. customers over the FCC’s so-called video dialtone plan, an ambitious proposal that would allow telcos to distribute programming on a first-come, first-served basis to all providers.

Markey hinted that he could support lifting the ban against Bell Atlantic taking an ownership interest in programming, but only if it builds a new cable delivery system to compete against Southwestern Bell’s cable systems.

Markey said he has “consistently opposed telephone company purchase(s) of existing cable systems in their service area and will continue to do so.” Markey addressed members of the U.S. Telephone Assn. trade organization yesterday and said telcos “can only be permitted to get into the cable business the old-fashioned way: by building a new system.”

Markey also said that as the cable industry moves to a 500-channel world, Congress should “take a fresh look” at whether cablers should become common carriers who would be barred from discriminating against various providers of programming.

Markey said he envisions a “network of networks” maintained by private industry that will be “made seamless and transparent by government standards.”

The issue of allowing telcos into the cable industry has gained momentum with the election of Bill Clinton to the White House. Attendees at the USTA confab yesterday said Vice President Al Gore’s prominent support for such legislation will provide a boost for bills that are expected to be offered in both the House and Senate in coming weeks.

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