[Congressional Record Volume 144, Number 106 (Friday, July 31, 1998)]
[Extensions of Remarks]
[Page E1509]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


 INTRODUCTION OF THE VIDEO COMPETITION AND CONSUMER CHOICE ACT OF 1998

                                 ______
                                 

                         HON. EDWARD J. MARKEY

                            of massachusetts

                    in the house of representatives

                         Friday, July 31, 1998

  Mr. MARKEY. Mr. Speaker, I rise to join Telecommunications 
Subcommittee Chairman Billy Tauzin (R-LA) in introducing this bill 
today. The legislation we are proposing today will help to promote 
competition to our nation's cable monopolies and will help to provide 
consumer protection.
  The legislation will promote greater competition to cable monopolies 
in a couple of important ways. First, the bill will expand program 
access rules to reflect the highly-concentrated nature of the current 
cable programming market and enable competitors to obtain the 
programming they need to compete effectively. Program access is a key 
provision that is the lifeblood of many of cable's fledgling 
competitors. The program access provisions are expanded to include all 
cable programming, not only programming that is from vertically-
integrated programmers and delivered via satellite. Exclusive 
programming arrangements for incumbent operators may be permitted, but 
only by obtaining a public interest waiver from the FCC for such 
channels as locally-produced and locally-originated cable news 
channels, for example.
  Second, the bill will establish a low-cost basic tier so that Direct 
Broadcast Satellite (DBS) consumers--or potential DBS customers--who 
today cannot receive local TV channels as part of a DBS service may 
obtain a lifeline basic tier over the cable wire. This will permit 
consumers to obtain their local channels in a way that will affordably 
complement their satellite service. Both the program access and low 
cost basic tier provisions will help to promote greater competition to 
cable monopolies. I also want to note at this point that I look forward 
to working with Chairman Tauzin on legislation that will allow 
satellite competitors to broadcast local TV stations back into local 
markets via satellite. Hopefully Congress can address that issue as 
well in the near future.
  With respect to consumer price protections, the bill seeks to protect 
consumers by permitting local franchising authorities to certify that 
an incumbent cable monopoly is not offering consumers an acceptable 
range of choices and thereby retain FCC consumer price protections for 
an additional year. This does not mean that the bill is mandating a la 
carte cable offerings, but rather it means that we'd like to see a 
greater range of cable programming packages, or ``mini-tiers,'' that 
cater to particular programming interests of consumers.
  This approach also attempts to deal in part with the faulty premise 
of the FCC's so-called ``going forward'' rules, which went into effect 
in 1995 and reversed the good job the Commission had been doing up 
until that point and which has saved consumers approximately $3 
Billion. The premise of the Commission's rule change was that the cable 
monopolies needed an incentive to launch new cable programming 
channels. The new rules allowed for programming costs to be passed on 
to consumers, plus operators were allowed to charge an extra 20 cents 
per subscriber per month on top of that for each of up to 6 new 
channels. Cable operators responded by adding more channels and today 
claim the high cost of providing those channels as part of the 
rationale for why cable prices are increasing so drastically.
  One obvious result of the FCC's adjustments to its rates is that too 
many cable consumers are paying excessive monopoly rents to cable 
operators who blissfully allow their programming units to let costs 
rise because the cable operator is allowed under the Commission's rules 
to simply pass these costs along to cable subscribers. No need to ask 
advertisers to shoulder part of the burden--all of it can go on the 
cable bills of many working Americans or those on fixed incomes. (Most 
American companies see their stock prices rise when they are able to 
announce that they are effectively controlling their costs. Cable 
companies gleefully see their stocks rise as they fail utterly to hold 
the line on their programming costs.)
  Yet this failure to control programming costs also means that 
incumbent vertically-integrated programmers cannot only pass these 
inflated costs on to their customers, but also means that the costs 
borne by new entrants competing against them get inflated as well. 
These higher programming rates unnaturally inflate the costs of 
competitors attempting to take on the entrenched cable club. This is 
clearly anti-competitive.
  In addition, the FCC's ``going forward'' rules also wound up forcing 
many consumers to pay more for programming that they have little to no 
interest of ever watching. The grievance of paying for unwanted 
programming on a 35-channel cable system is exacerbated when we move to 
a 60 or 80 or 100 channel universe. A more robust marketplace would 
help ensure that consumers would not have to pay for all of these 
unwanted channels and would more adequately reflect the programming 
demands and desires of different cable consumers.
  But we do not have anything remotely close to a competitive cable 
marketplace today. And the current marketplace is so overwhelmingly 
concentrated in the hands of monopolies that the cable club has little 
interest in catering to consumer choice.
  That's why we are introducing this bill today. Chairman Tauzin and I 
have lived this cable odyssey together for many, many years. We are 
familiar with the industry--both its promise and its problems. And we 
are familiar with all of their tired arguments as to why rates keep 
going up and up even as inflation stays at near record lows. Chairman 
Tauzin has been driven in his pursuit of promoting cable competition 
and so have I. The legislation that Chairman Tauzin and I are proposing 
today will help address pending cable problems. It says that cable 
systems are deregulated on March 31, 1999 unless a local franchising 
authority certifies that the incumbent cable company does not offer an 
acceptable level of choices in the programming offered to consumers. 
This means that local franchising authorities can help ensure that 
consumers get additional, smaller programming packages and do not have 
to take all of the unwanted programming.
  Right now, cable rates are rising multiple times the rate of 
inflation. The massive assault on cable markets that we had expected 
from the phone companies has not materialized and, except in a few 
scattered communities across the country, the phone industry has 
largely pulled back from plans to enter the market in a big way. And we 
have this deregulation date looming in March of next year. I want to 
applaud Chairman Tauzin for the leadership he is demonstrating in 
taking on this vitally important issue for consumers, for the economy 
and for innovation. And I am happy to be an original cosponsor of this 
proposal.

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