Statement of Administration Policy: S. 12 - Cable Television Consumer Protection Act of 1991

(Senate)
(Danforth (R) Missouri and 9 others)

The Administration strongly opposes S. 12 because it would impose unnecessary regulation on the cable television industry. If S. 12, as reported by the Senate Committee on Commerce, Science, and Transportation, were presented to the President, his senior advisers would recommend a veto.

The Administration opposes S. 12 because it does not sufficiently emphasize competitive principles in addressing perceived problems in the cable television industry. It has been the Administration's consistent position that competition, rather than regulation, creates the most substantial benefits for consumers and the greatest opportunities for American industry. Television viewers are best served by removing barriers to entry by new firms into the video services marketplace. The Administration, therefore, would support legislation which removes the current statutory prohibitions against telephone company provision of video programming, with appropriate safeguards.

S. 12 would greatly expand regulation of cable rates. It would require regulation of cable systems by either the Federal Communications Commission (FCC) or the local government. The number of cable systems and variety of cable programs have grown dramatically in the absence of rate regulation. Reimposing rate regulation would both hamper the development of new products and services for cable subscribers and slow the expansion of cable service to areas not now served. If it finds that additional rate regulation is needed, the FCC can provide such regulation under current law. The FCC issued new rules in June, which are expected to increase substantially regulation of basic cable rates. The Administration believes that the rules should be implemented and reviewed before new and inflexible legislation is considered.

S. 12 would restrict the discretion of cable programmers in distributing their product. Exclusive distribution arrangements are common in the entertainment industry and encourage the risktaking needed to develop new programming. Requiring programming networks that are commonly owned with cable systems to make their product available to competing distributors could undermine the incentives of cable operators to invest in developing new programming. This would be to the long-term detriment of the American public. If competitive problems emerge in this area, they can and should be addressed under the existing antitrust laws.

S. 12 would also require limits on the number of subscribers that a cable operator may serve nationwide. This provision is objectionable because current antitrust laws are adequate to protect competition. Moreover, the FCC currently has authority to adopt ownership rules if it determines they are necessary.

Finally, S. 12 would require cable operators to carry the signals of certain television stations, regardless of whether the cable operator believes the stations are appropriate for inclusion in its package of services, and regardless of whether such inclusion reflects the desires and tastes of cable subscribers. The Administration believes that such "must carry" requirements would raise serious First Amendment questions by infringing upon the editorial discretion exercised by cable operators in their selection of programming. S. 12 was amended in committee to give television stations the option to choose "must carry" or to require that a cable operator obtain the station's consent to retransmit its signal. This amendment, however, does not address the serious First Amendment concerns noted here. While the Administration supports retransmission consent (without must carry), this should be coupled with repeal of the cable compulsory license.

The Administration supports Senate passage of the Packwood- Stevens-Kerry amendment as an alternative to the reported version of S. 12, because it would eliminate or significantly modify many of the highly regulatory provisions of S. 12. Moreover, it would also remove one impediment to competition in the cable industry - - the exclusive local franchise. At the same time, the Administration wishes to work with the Congress to modify or eliminate some troublesome provisions that remain in the underlying bill. Such provisions include, for example, the lack of generalized telephone company entry provisions, reimposition of "must carry" rules, the mandatory nature of rate regulation, the very narrow definition of "effective competition," and the administrative burden on the FCC.