FCC Chief Urges Cable to Solve Own Problems

[Gregg Lengling]

Tue June 10, 2003 05:56 PM ET
By Kenneth Li
CHICAGO (Reuters) - U.S. Federal Communications Commission Chairman Michael Powell told the cable industry on Tuesday it needs to work out its own problems before appealing to regulators for remedies.

At an otherwise congenial appearance at the annual cable sector conference in Chicago, Powell ended his morning comments on a cautionary note.

"Don't blow it," said Powell. "Be careful what you ask for."

Specifically, he highlighted hot button issues that have driven a wedge between cable companies and local broadcasters, including carrying over-the-air channels.

Currently, cable companies are required by law to carry local broadcast channels. But broadcasters are also hoping regulators will eventually force cable companies to carry both digital and analog signals during the broadcasters' transition period to new crisper digital signals.

Cable companies argue that if they were forced to carry both a broadcaster's regular analog signal and digital signals, it would significantly deplete their capacity to air other channels.

These must-carry rules may come under review in the next several months, said analysts.

"We've been told it will be resolved in September," said analyst Richard Doherty of Envisioneering, a technology market research firm, referring to discussion with FCC officials on Tuesday.

"There will be a final resolution," said Powell, regarding must-carry rules. "We hoped we'd see industries come together and resolve it. We have been disappointed it hasn't happened faster."

For its part, cable industry executives said they would rather not have the government be involved in their affairs.

SOARING CABLE PRICES

Senate Commerce Committee Chairman John McCain, an Arizona Republican, had said he preferred allowing consumers to only pay for the cable channels that they want.

This type of pricing, known as "a la carte" pricing, is expected to lower cable bills, which have skyrocketed in recent years. A la carte pricing would end the practice of cable companies charging a higher basic price that includes bundled programming such as the Walt Disney-owned ESPN Network.

Cable operators have complained privately and publicly that the rising cost of programming, specifically sports programming such as ESPN, continues to force them to raise prices.

"Whatever happens in Washington (D.C.), it will probably not have the intended consequences of solving challenges in our industry," Michael Wilner, chief executive of cable system Insight Communications told Reuters. "We have always solved it ourselves."

ESPN Inc. President George Bodenheimer agreed. "These are private business negotiations, it has been for 25 years," Bodenheimer told Reuters. "It's in our collective interests that they stay that way."