Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, June 17, 1994 TAG: 9407130002
SECTION: EDITORIAL PAGE: A15 EDITION: METRO
SOURCE: MICHAEL J. POHL
DATELINE: LENGTH: Medium
For those in the remote locales of Virginia and other states, who are hundreds of miles from major cities, being part of this electronic highway is critical. And key to that are the small cable-television operators who service millions of customers through thousands of systems nationwide.
In Virginia, with 162 separate cable systems, many residents in remote locations are served by cable companies with fewer than 450 subscribers each. If these small cable operators go out of business, rural residents could be run off the information highway, becoming the have-nots of the U.S. economy.
The Coalition of Small Systems Operators, representing 25 percent of cable systems nationwide, strongly supports the Hollings bill that the Senate Commerce, Science and Transportation Committee is considering this month. But the coalition is proposing amendments that would help level the playing field for small cable systems by allowing the telephone and cable industries to fairly enter into each other's business and by easing the regulatory environment.
The Hollings bill, as drafted, contains many provisions that would help ensure a more competitive environment for small cable systems, including:
A mandate for equal franchise requirements for rural cable operators and rural telephone companies that provide competitive video services.
A provision to allow rural cable companies to interconnect with rural telephone companies - thus combining resources (such as cables) to help build the superhighway.
Removal of state and local barriers to competition to allow small cable companies and others into the business of providing telephone service.
The coalition also is looking to the Senate committee to add the following amendments:
To protect consumers' interests, require rural telephone companies wishing to provide cable service not only to supply documented proof of compliance with the equal access and interconnection requirements (as the Hollings bill requires), but also to make this documentation available to both the FCC and the public for review.
Preclude franchising authorities from extending their cable franchise to cable's provision of telecommunications services. Unless this is adopted, franchising authorities will be in a position to establish barriers that may slow or halt a cable operator's ability to provide telecommunications services.
Eliminate certain regulatory barriers to joint ventures and mergers in rural areas to ensure that the information superhighway reaches into the countryside.
Unlike small telephone and electric companies, rural cable systems have been built entirely with private funds, the vast majority between 1984 and 1992 when rates were not regulated. Operators invested in areas that larger cable operators and small telephone companies shunned because they offered lower profit margins.
Small cable systems - which average 23 subscribers per mile, less than half the national figure - face far higher construction, operational and maintenance costs per customer than do larger systems. For example, small operators must pay the same fixed costs for the equipment to add new channels as do larger operators, but have many fewer customers to absorb these costs. What's more, many smaller systems do not enjoy the benefits of local paid advertising, pay-per-view movies and added premium channels due to the cost of the equipment and, thus, forgo as much as $20 per subscriber in monthly revenue. Small rural cable companies also face greater difficulties securing loans for significant capital investments.
Operators are not asking for handouts to run our businesses. All we ask for is relief from excessive government regulations and the ability to compete fairly with the rest of the telecommunications industry. Fair competition, more than anything else, will enhance the formation of the information infrastructure - which rural America deserves and needs to be part of. While the Hollings bill is a good first step in addressing the needs of the rural cable operator, we believe that Without the introduction of our proposed amendments, many small systems could shut down. And because of the financial barriers and limited profitability associated with serving rural areas, competing telecommunications systems may decide it's not worth the investment. The big losers then would be the people of rural Virginia, and rural America, many of whom cannot enjoy television without cable. They could indeed be the first roadkill on the information superhighway.
Michael J. Pohl is senior vice president of the Douglas Communications Corp. and a spokesman for the Coalition of Small Systems Operators.
by CNB