Government took a beating on Tuesday at the Big Picture Media Conference, an annual Gotham event sponsored by Variety Inc. and Wertheim Schroder. From cable execs griping about regulation to film producers decrying “censorship,” top industryites made it clear that Big Brother was a bother.

That mood came to a head duringthe three main speeches of thedaylong gathering, which attracted a capacity crowd of more than 800 to the Pierre Hotel.

Time Warner chairman Gerald Levin, Bell Atlantic chairman Ray Smith and Federal Communications Commission chairman Reed Hundt all said they believe the United States is on the cusp of the interactive future. But they disagreed on how to capitalize on it.

Lauding Orlando

Levin, in the keynote address, touted his company’s Full Service Network experiment in Orlando and took roundhouse punches at the telco competition and the FCC.

Claiming coaxial cable is the most effective means of delivering interactive services, Levin said that gave the cable industry the edge in the interactive future over the phone companies, which have “antiquated technology” that needs replacing at substantial cost.

“You can attach all the bells and whistles you want to soup it up, stick new names on it, but to paraphrase Gertrude Stein, copper twisted pair is copper twisted pair is copper twisted pair.”

But Levin saved his most-pointed barbs for Congress and the FCC, claiming the government was a major obstacle to construction of the information superhighway.

“I can’t speak about the big picture for our business and pass over the ill-considered actions taken by the FCC to enforce a second round of regulation on the cable industry,” Levin said.

“It’s bewildering to me how a commission that preaches growth of new technologies — creation of jobs, the rebuilding of our international competitiveness and the re-engineering of government bureaucracy to make it more efficient — can with one action negate all these goals.”

Indeed, those were the goals the FCC’s Hundt outlined in his luncheon address , fully aware that the FCC has become the favorite whipping boy for the industry. “I wasn’t invited to lunch; I was invited for lunch,” quipped Hundt.

While Levin, echoing comments heard throughout the cable industry, claimed new regs got in the way of competition, Hundt said they were put in place because in most markets true competition didn’t exist.

Hundt defended cable rate regulation and said it was the result of the government responding to public demands. He kept repeating the theme that the direction of the FCC was to foster competition, adding that the new cable regs call for rate constraints to disappear when a competing delivery service enters a given market.

“No one wants to see government trying to micromanage cable or any other industry,” Hundt said. “Government should not dictate content or tell cable whether to add or subtract channels or design business or marketing techniques. Similarly, government should not tell telephone companies how to increase productivity under price caps or design business or marketing techniques. In short, government policy is to foster competition, not to do business management.”

In an afternoon speech, Bell Atlantic’s Smith also lobbied for a

free marketplace. But in part because of his many years operating in a heavily regulated industry, he struck a more conciliatory tone toward the FCC and claimed the commission had the best interest of the industry in mind.

He refuted Levin’s claim that the telcos were lagging behind in their quest to build interactive networks. He said his company’s current Stargazer video-on-demand test was “exceeding all expectations” and a test for a full-service network was moving ahead after some early delays.

Life after TCI

Smith added that Bell Atlantic’s failed merger with cable giant Tele-Communications Inc. was an impediment to his company’s move into the entertainment business. He said the company would continue to seek out alliances , albeit on a project-by-project basis, to keep the telco’s entrance into the interactive future as flexible as possible.

In doing so, Smith hinted that Bell Atlantic’s next attempt at an alliance might be with a studio or other software provider.

“We are learning what Ford, Chrysler and GM learned,” said Smith. “The barriers between product designers and manufacturers have to come down in order to succeed.”

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