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3-Year Shelf Life Likely for Basic Cable Regs

A House-Senate conference committee patching up differences in telecom deregulation legislation appears to be close to agreement on how soon cable TV rate regulation should be lifted.

Sources said Senate conferees last week offered to eliminate price controls on cable’s expanded basic tier after four years. House members countered with a 30-month phase-out plan. Beltway insiders said the two sides may compromise by settling on a three-year elimination of the cable rate reg.

Sticking point

Deregulation of cable rates has emerged as one of the central stumbling blocks to passage of the massive dereg bill. Its fate is being closely watched by broadcasters and cable operators, in part because the mega-merger mania that has swept the industry is predicated on the bill being signed into law.

President Clinton has threatened to veto the bill on grounds that it represents a boondoggle to some of the nation’s most powerful media barons.

But speculation is rife that the White House threat may be a bluff, and that in the end Clinton will sign the bill if it emerges from the conference committee with a more “proconsumer” twist.

Playing politics

The White House presumably would be able to declare partial victory on the cable front if Congress ultimately accepts phasing out price controls over three years or more. Clinton could argue the legislation is an improvement from the House bill, which would have eliminated cable rate regulation after just 15 months.

The White House could also argue that retention of price controls for three or four extra years could give telephone companies and DBS providers more time to offer meaningful competition to cable.

Meanwhile, the cable industry may also tacitly support the three-year phase-out to avoid retention of lingo added to the Senate bill. The Senate bill would retain price controls on the industry’s “bad actors” – those companies charging rates higher than the industry average.

One cable insider said the industry desperately wants a “date certain” for ending rate regulation, in part to allay Wall Street’s fears of continuing regulation by the FCC.

Consumers wary

Consumer groups will not support a “flash-cut” elimination of cable rate regulation, according to Gene Kimmelman of the D.C.-based Consumers Union. A “date certain” elimination of price controls wouldn’t enhance prospects for competition, and would only increase prospects for a telephone company buyout of cable systems, he said.

Under the legislation that’s pending in both the House and Senate, price controls would continue for the “broadcast basic” tier of programming. However, rate regulation would be lifted on expanded basic, that tier that includes popular cable networks such as CNN, Discovery and USA.

Premium cable channels such as HBO and Showtime are exempt from rate regulation.

Consolidation concerns

Clinton has also threatened to veto the bill on grounds that it would allow too much consolidation in the broadcast industry. Just last week, Sens. Paul Simon (D-Ill.) Byron Dorgan (D-N.D.), Bob Kerrey (D-Neb.) and Patrick Leahy (D-Vt.) circulated a missive among Senate members urging lawmakers to kill the telecom bill on grounds that it allows too much media concentration.

House and Senate conferees had not yet seriously discussed issues of media concentration late last week, sources said.

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