Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, June 17, 1990 TAG: 9006140534
SECTION: BUSINESS PAGE: C5 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Long
Homes still have lawns. The grass still grows. You need a lawn
You could jump into the car and zip across town to a hardware store or shopping center. Instead, you walk to the family room. Sitting in an easy chair in front of your screen, you make a call.
Moving a joy stick, like the ones kids use to play video games, you "walk" your way through a store that sells lawn
You pass through a back door, walking between the blenders, toasters and lamps. You turn right. The paint counter is on your left. Straight ahead are the mowers.
You pause to look them over. You ask a salesman about their features. You lean back in your chair and consider a purchase.
Shopping, banking, stock trading, taking college classes and making simple medical tests are just a few of the things people will do at home in the future.
Just how soon these services will be available has been linked by Rep. Rick Boucher, D-Abingdon, to congressional efforts to re-regulate the cable television industry.
The move to re-regulate cable television, which was freed from rate regulation by a 1984 federal law, is being fueled by consumer complaints. And it's being pushed by lobbyists representing broadcast television networks, which have lost viewers to cable, and phone companies, which want to offer the wide variety of new video-based communications services.
On June 8, the U.S. Senate Commerce Committee approved 18-1 a bill that would re-regulate cable television. The bill would establish a basic cable service consisting of local broadcast channels and public-access channels that a company must provide. It allows municipalities to regulate rates for basic service if a company has no competition from another multichannel service, such as another cable company.
Boucher stars in the re-regulation show in the House of Representatives, where a House subcommittee will vote on its own bill later this month. Boucher's proposal has the lead with 92 co-sponsors.
Boucher's proposed Cable Competition Act seeks to control rate increases by allowing telephone companies to compete with cable television companies.
The Senate committee plans to hold hearings this summer on a bill by Sen. Conrad Burns, R-Montana, that would amend its re-regulation bill to allow phone companies to own 25 percent of subsidiary cable television companies.
The Bush administration has said it will oppose any re-regulation bill that does not let competition control rates. The cable industry doesn't expect a new law before next year.
The telephone companies are eager to get into cable business, as cable operators themselves, carrying TV signals to homes for other cable operators. With the money they can make from cable television, the phone companies say they can speed the installation of fiber optic cable into American households.
The Chesapeake & Potomac Telephone Co., a Bell Atlantic subsidiary that serves the Roanoke Valley and much of Virginia, plans to run fiber optic lines to all of its customers. "We're ultimately going to get there, but right now there's no economic incentive for us to move that rapidly," said Hugh Stallard, C&P's president.
If C&P were allowed into the television business, it could add another $100 million to its $400-million-a-year construction budget, Stallard said, and the time needed to rebuild the distribution system in fiber could be reduced from four decades to one.
Bell Atlantic has been testing fiber optic cable hookups to the home and the new services that fiber makes possible in the Washington suburbs and in Pennsylvania. Fiber can be readily deployed once legal barriers are removed, T.B. Jones, C&P's Western Virginia director, said in a recent letter to this newspaper.
Jones pointed out C&P will install the fiber whether it gets the right to offer cable TV or not. But without a law allowing phone companies to offer television, the fiber will be strung in urban areas long before it's installed in rural America, Boucher aide Larry Clinton said.
The danger, Clinton said, is in the creation of two Americas - one information rich and the other information poor. Why, he asked, would a company want to bring a new plant to a Bristol, Va., with old-fashioned copper phone lines when it could locate in a Silver Spring, Md., equipped with fiber cable, capable of handling the latest in information technology? Boucher's bill would encourage phone companies to speed the installation of fiber cable to rural areas, such as Boucher's own 9th District.
Numbers to compare
In the three years since the rate spigot was fully opened by the Cable Act of 1984, cable TV rates in his district have risen by 50 percent, Boucher said. Cable company profits have increased while the quality of service has declined, he said.
Nationwide, a survey by the U.S. General Accounting Office found that cable rates rose by 29 percent from October 1986 through October 1988.
Between 1986 and the present, the rates of Cox Cable, which serves much of the Roanoke Valley, have increased from $7.50 to $9.50, or 27 percent for basic cable, and from $10.50 to $16.25, or 55 percent for Cable Plus, the company's second-tier service.
Boucher points out that in the few areas of the country where there is competition between cable companies, rates tend to be lower and the service better.
In Chula Vista, Calif., for instance, a survey in March showed Cox Cable offered customers 28 channels for 41 cents per channel in a part of town where it had competition and 28 channels for 62 cents a channel in an area without competition. At Warner Robins Air Force Base, Ga., where Cox has a competitor, it offered 34 channels for 29 cents a channel. In nearby Macon, Cox sold 34 channels for 51 cents a channel.
Local elected officials, who field complaints about high rates and poor service, welcome the prospect of more say in the operations of local cable companies.
Jack Via, a Christiansburg councilman, said the town allowed its cable company, Simmons, to close its office in town to reduce costs, but the town didn't benefit. Instead, the company has raised rates 50 percent over the past four years, Via said.
Erv Strauss, Simmons' manager, says the closing was an economic measure and hasn't inconvenienced customers. As for rates, Strauss said Simmons offered 11 channels for 81 cents a channel in 1979; it now offers 34 channels for 54 cents a channel.
Howard Musser - a Roanoke councilman and chairman of the Regional Cable Television Committee, which represents Roanoke, Vinton, and Roanoke County on cable matters - supports re-regulation. Control of rate increases should be returned to the localities, Musser believes.
Musser would also like a say in programming changes by the cable company. Musser said he was surprised when practically no one turned out for hearings the committee held last fall on renewal of Cox's franchise. "I had a notebook full of letters from people," he said.
Over three years ago, Cox asked the committee to renew its franchise, which expires Dec. 31, saying it needed a new franchise to justify spending more money to improve service.
A Maryland consultant, hired by the committee with Cox's financial help, is studying Cox's performance. In two to three weeks, the report should be ready and the committee will schedule a meeting to begin working on the franchise renewal, Musser said. But even with a new franchise, Cox's future in the valley is uncertain, Bernie Langheim, Cox's manager in Roanoke, said.
If Congress lets the telephone companies get into the cable TV business, it will kill Cox, Langheim said.
Think about it, he said: The first thing a homeowner does when he moves in is have his power turned on, and the second is to have his telephone hooked up. "Where does that leave us?" he asked.
Jim Matthews, manager of Salem Cable TV, has a similar view. "We just feel it would give the telephone companies too much power," Matthews said. Cable operators point out that the phone companies have gross revenues 10 times greater than their own.
The phone companies would probably use telephone customers to help pay for the start-up of their television business, Matthews said. Pending legislation, however, contains provisions to prevent that kind of cross-subsidy.
Matthews says he expects some form of re-regulation to come out of Congress, but he's not sure what its going to be.
Langheim said Cox hopes to get a law that will allow it to continue to do business and continue to diversify programming.
The cable companies say they are wrongly criticized as being unregulated monopolies that are able raise rates at their whim. They face plenty of competition from over-the-air broadcast stations, video-cassette recorders and satellite-dish companies, they say.
And the companies say that despite the 1984 law they still are regulated. Localities must still give their permission for a company to exist and can set performance standards for cable. The Federal Communications Commission imposes technical standards, channel-use and fairness requirements.
Which wire to use?
The central issue in re-regulation is rates. Between 1972, when the first major federal cable regulations went into effect, and 1986, when rate regulation was eliminated, cable rates fell 72 percent behind the rate of inflation, says the Community Antenna Television Association, which represents independent cable operators.
"We have not, as an industry average, even caught up with the shortfall from inflation we suffered during the years of political regulation at the city level," the association stressed in a February newsletter.
While rates have gone up since deregulation, in most cases the increases can be justified, Community Antenna Television Association said. Since 1972, cable companies have rebuilt their systems three times, increased channel capacity from 12 to 35, and increased program diversity, the association said.
The association said the phone companies are using the cable TV competition argument as a justification for replacing a good copper system with fiber optic cable. The copper lines the telephone companies use to the home can do most anything but transmit video, the association said.
But there's a big difference in what the copper phone lines and even the coaxial TV cable can do compared with the fiber optic lines the telephone companies plan to install.
For instance, the standard coaxial lines in use by cable TV companies are capable of carrying the high-definition television signals that will be the standard for the future, but fiber optic cable has the capacity to carry those ultra-sharp pictures and many more complicated services simultaneously.
The carrying capacity of fiber optic cable compared with coaxial cable is greater by at least 10-to-1, says Richard Claus, director of the Fiber Optics Center at Virginia Tech. Practically the only limitation on the carrying capacity of fiber is the sophistication of the electronics at each end. One hair-thin fiber can carry 10,000 phone calls at one time.
The Japanese, said Clinton, plan to have fiber lines installed in every single home by the end of this year. The West Germans plan to do the same by 1995, he said.
The United States has no policy on fiber conversion at all, he said. What Congress must decide is whether letting phone companies into the cable TV business is the right way to develop one.
by CNB