Broadcasters told Congress this week the cable television industry has grown into a multibillion-dollar monopoly in the absence of federal controls and should be re-regulated to ensure the survival of free over-the-air TV.
But cable executives, in testimony before a Senate subcommittee, denied that they were unregulated monopolies and said the American public had benefited tremendously from the introduction of cable TV since the early '70s.A consumer advocate said cable companies are overcharging consumers by at least 50 percent or $6 billion.
Gene Kimmelman, executive director of the Consumer Federation of America, urged Congress to re-regulate cable in a "not too intrusive" manner to assure that charges are in line with costs.
Sen. Howard Metzenbaum, D-Ohio, cited a study that showed cable rates have increased 27 percent in Ohio since Congress deregulated cable in 1984.
"Nationally, basic cable rates have now risen 32 percent since deregulation," Metzenbaum said. "The government reports that the price consumers pay for cable service increased at a greater rate than any other commodity or service in the entire United States."
But James P. Mooney, president of the National Cable Television Association, defended the rate hikes and said cable's "great construction" has ended and that cable is still a good value compared with the cost of movie tickets, newspapers or video cassette rentals.
"More and more money is going into programming, and the difference will become even greater. Cable operators are taking part of their cash flow and calling it back into new programming to further make good on the promise of our medium. Additionally, the focus has also turned to improved customer service and upgrading and modernizing current plant and equipment," he said.
The broadcasters said the 1984 Cable Act essentially deregulated the cable industry, and cable companies that once were poor cousins to traditional broadcasters now dominate the local TV marketplace.
"In 1984 when Congress passed the Cable Act, cable characterized itself as a struggling, infant industry," said Edward O. Fritts, president of the National Association of Broadcasters.
"That act, which in essence removed all regulatory oversight, has become the communications equivalent of anabolic steroids. Today, cable television operators enjoy an unregulated monopoly. Amazingly, only 32 of more than 8,000 cable systems have any direct competition," Fritts said.
Fritts said cable TV now is a $14 billion industry that is available to nearly 80 million U.S. homes. He said the five largest cable companies account for more than 40 percent of current subscribers.
He said cable rates are going up and cable companies are siphoning off sports programs that once were broadcast free.
"We ask Congress to lift the thumb that has caused the imbalance in the competitive scale," Fritts said.
Fritts testified before the Senate Judiciary subcommittee on antitrust, monopolies and business rights.
The subcommittee is studying the cable industry and the antitrust implications of the proposed merger of Time Inc. and Warner Communications. Time already has the nation's second largest cable system, American Television & Communications Corp., while Warner has Warner Cable Communications.
Opponents fear the "horizontal concentration" of cable interests that the merger would create, and the "vertical integration" of giving the nation's largest pay-cable programmer, Time Inc.'s Home Box Office, direct access to cable systems.
Metzenbaum has expressed doubts about the proposed $18 billion merger, saying Home Box Office could withhold its programs from non-Time-Warner cable systems.
However, the Justice Department last week gave the merger its blessing.
Sen. Dennis DeConcini, D-Ariz., has reintroduced legislation that would require cable systems to carry all local broadcasters (known as "must carry rules") and keep cable operators from changing the channel assignments for local broadcasters.
The courts have struck down the Federal Communications Commission's must carry rules twice.
Mooney has said the cable industry is willing to work with broadcasters to adopt new must carry rules that will satisfy the courts.
But Preston R. Padden, president of the Association of Independent Television Stations, said that "despite the best of intentions by cable trade association executives and industry leaders, local independent television stations continue to suffer anti-competitive conduct at the hands of cable system operators."