Supreme Court takes up issue of Baby Bells' cable ventures


WASHINGTON -- The Supreme Court, stepping into the midst of the competition over cable TV programming, agreed yesterday to decide whether local telephone companies have a constitutional right to offer cable service to their customers.

If the court finds such a right, the seven regional "Baby Bell" companies could prepare their own cable-TV programs -- or have subsidiaries do so -- and transmit them to homes and businesses over local phone lines.

That would provide direct competition with existing cable TV operators, the kind of challenge that the National Cable Television Association and its member companies have resisted for years.

The court issued a brief order saying it would rule next year on the constitutionality of a 1984 law that bars cross-ownership of local telephone companies and cable TV companies.

But it appears that the dispute before the court could be overtaken by Congress. The Senate has approved a bill that includes a clause to allow cross-ownership, and the Baby Bells are confident that some version of that proposal will emerge from Congress after the House acts, perhaps later this year.

Eric Rabe, executive director of corporate relations for Bell Atlantic Corp., one of the Baby Bells, said "there does seem to be some feeling in Congress" that local telephone companies should be allowed to go into cable programming.

He noted that the constitutional issue is keyed directly to the 1984 law and the Federal Communications Commission interpretation of it; both would be nullified if the Senate bill or some version of it were enacted.

It is unclear whether President Clinton would sign such a measure. The Justice Department has said it fears a concentration of power in the communications industry.

The constitutional case before the Supreme Court grows out of efforts by Bell Atlantic Corp.'s Virginia subsidiary to acquire a cable-TV franchise from Alexandria, Va. The city turned down the request, relying on the 1984 law's ban on such cross-ownership, but federal courts subsequently ruled that the ban is an unconstitutional violation of free speech rights.

Bell Atlantic has announced plans to also provide cable service to customers in Baltimore and other markets.

In another action yesterday, the Supreme Court agreed to decide, in a case from Chicago, whether a 1987 federal law allows one bank to sue another in federal court for failing to notify it that a check did not have sufficient funds behind it.

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