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Court overturns law designed to protect telco consumers.

Last week, U.S. District Court Judge T.S. Ellis, allowed Bell Atlantic Corporation to begin building a cable television system in the Alexandria, Virginia service area - the same area where it provides local telephone service. This decision overturns a portion of the Cable Television Communications Policy Act of 1984 designed to protect consumers against crosssubsidization. NLC supports competition in the cable television marketplace, but is strongly opposed to subsidizing telephone company video services with payments made by consumers for telephone services.

The Cable Act was drafted so that current telephone consumers would not be in danger of telephone rates to pay for future cable services. The law prohibits phone companies from providing cable service in areas where they currently operate phone systems. Still, telephone companies are allowed to build systems anywhere in the country outside their service area.

Bell Atlantic filed suit in Alexandria last December, calling the Cable Act of 1984 "unconstitutional" because it restricted free speech under the First Amendment. U.S. District Judge T.S. Ellis agreed saying the reastriction "concrete actual injury" to the telephone companies by denying them the ability to express their ideas through video programming.

Telephone companies applauded the federal court's decision as a giant step toward competition in the cable television marketplace. In a recent edition of the Washington Post, James R. Young, vice president and general counsel of Bell Atlantic is quoted as stating" Today, local subscribers have one cable company, take it or leave it. This whole case is about more choice for consumers."

A National Cable Television spokesperson was also quoted, saying "This ruling is bad news for consumers," telephone companies will have "powerful incentives" to raise telephone rates for consumers who may never even use telco-cable services.

It remains to be seen whether or not the ruling would apply in other areas. The government must still decide whether to appeal the ruling. Pending any appeal, the relevant portion of the 1984 Cable Act may not be enforced. Congress may also act, and Congressman Edward Markey (D-Mass.), chairman of the House Telecommunications and Finance Subcommittee of Energy and Commerce, has indicated that the intends to push for federal guidelines to safeguard local telephone ratepayers.

Bell Atlantic must now file for FCC permits before it begins to build its cable system in Alexandria. It is estimated that the system may take up to three years to build. The telco has not made any decisions on how it would package or price the video services.

Cable Regulatory Terms

The new cable regulations are creating confusion and concern for cable companies, consumers, and for city officials charged with local regulation. Following are some terms which won't transform layman into a cable expert, but, should be helpful to local officials anxious to understand what is a very complex and important local issue.

Basic Cable Service - Any service tier which includes the retransmission of local television broadcast signals.

Basic Service Tier - provided by every cable operator to subscribers; includes, at a minimum, public, educational, and governmental access, and local television broadcast signals.

Cable Programming Service - Any video programming provided over a cable system, other than video programming carries on the basic service tier and on a per channel or per program basis.

Effective Competition - Means that: (A) fewer than 30 percent of the households in the franchise area subscribes to cable; (B) the franchise area is served by at least two unaffiliated cable operators to at least 50 percent of the households in the franchise area; and the number of households subscribing to cable, other than the largest distributor, exceeds 15 percent of the households; or (C) a municipally owned system that offers video programming to at least 50 percent of the households in the franchise area.

Franchise Fee - any tax, fee, or assessment of any kind imposed by a franchising authority or other governmental entity on a cable operator or cable subscriber, or both, solely because of their status as such.

Franchising Authority - Any governmental entity empowered by Federal, State, or local law to grant a franchise.

Institutional Network - A communication network which is constructed or operated by the cable operator and which. is generally available only to subscribers who are not residential subscribers.

Multichannel Video Programming Distributor - A person such as, but not limited to, a cable operator, a multichannel multipoint distribution service, a direct broadcast satellite service, or a television receiving only, satellite program distributor who make available for purchase, by subscribers or customers, multiple channels of video programming.

Superstation - A television broadcast station, other than a network station, licensed by the FCC that is secondarily transmitted by a satellite carrier.

Competitors To Cable

Direct Broadcast Satellite Service (DBS) - A radiocommunication service in which signals transmitted or retransmitted by space stations are intended for direct reception by the general public (both individual or community reception).

Multipoint Distribution Service (MDS) - A one-way domestic public radio service rendered on microwave frequencies from a fixed station transmitting to multiple receiving facilities located at fixed points.

Multichannel Multipoint Distribution Service (MMDs) - Those multipoint distribution service channels that use the frequency band 2596 MHz to 2644 MHz and associated response channels.

Satellite Master Antenna Television Service (SMATV) - A SMATV system consists of a receive only satellite earth station that provides premium programming signals transmitted to the receive station via satellite and a master antenna for the receipt of over-the-air television broadcast signals.

Video Dial Tone - Allows telephone companies to exceed the carrier-user relationship with a video programmer or programmers and engaging in activities, not related to provision of video programming directly to subscribers by the telephone company. Telephone companies may exceed the carrier-user limitation with a video programmer(s) by, providing services, and engaging in activities, related to the provision of video programming.
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Title Annotation:includes related information on cable television regulations; telephone company consumers
Author:Ferrera, Anna Pulido
Publication:Nation's Cities Weekly
Date:Aug 30, 1993
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