FCC chief bows to industry, scales back his cable reforms

The Baltimore Sun

WASHINGTON -- In the face of a lobbying blitzkrieg by the cable television industry, the head of the Federal Communications Commission said yesterday evening that he had scaled back his proposal to more tightly regulate the industry to salvage the effort.

The chairman, Kevin J. Martin, and some consumer groups said the agreement could help to make programming more diverse and ultimately reduce cable costs.

The compromise was a significant, though not total, victory for the cable industry, whose executives and lobbyists had worked to erode support on the commission for Martin's agenda.

Among other things, the agreement would postpone for months a formal finding - proposed by Martin but disputed by the industry and its supporters in Congress - that the cable television industry had grown so dominant that the agency's regulatory authority over it had expanded.

"The bottom line is, we dodged a huge bullet," said a top industry lobbyist who asked not to be identified before the commission took a formal vote.

As part of the lobbying effort, top cable executives and lobbyists met last week with senior White House officials.

Politically, the compromise enabled Martin to say that he had won something for consumers.

"As a package, these are all important steps," Martin said in an interview yesterday evening, referring to both the cable provisions and others that he said the agency would adopt, including one that would enable small, lower-power radio stations to get on the airwaves.

Martin is a rare Republican appointee of President Bush who has not been afraid to impose stiff regulations where he says there are market failures. In the case of the cable industry, he has complained about increasingly higher prices, vulgar programs and market tactics that he has said have discouraged competition from other paid television providers.

In the process, he has alienated cable television executives, who have complained to senior White House officials and lawmakers that Martin had overreached.

They say that he has sought to change the business models of the industry's largest players in an ill-advised effort to help the telephone companies, which have begun to challenge the cable industry by offering their own paid television service.

Besides the measures on industry dominance and access for independent programmers, Martin had proposed to set up a new complaint procedure that would impose arbitration to resolve disputes between the cable operators and broadcasters like the NFL Network and the Hallmark Channel.

But he abandoned that after it became clear yesterday morning that he did not have the support he had originally expected.

A third proposal, to make it less expensive for independent programmers to lease access to channels, is expected to be approved, officials said. But it will not go into effect immediately as was first suggested.

Martin had thought earlier this month that he had the support of two of the agency's Democrats for the proposals, which would have given him a majority on the five-member agency.

The commission's two Republicans had in varying degrees publicly questioned some of the proposals, and they were expected to support the industry by opposing them.

But after the recent lobbying barrage, one of the Democrats, who is up for renomination soon, began to express reservations about the proposals.

The proposal that drew the most fire was a finding that the industry had become so dominant that the agency should have expanded powers to impose more regulations.

Martin had called for the agency to invoke this authority under the so-called 70/70 rule of the Cable Communications Act of 1984. Under that provision, the agency may adopt any rules necessary to promote "diversity of information sources" if the commission concludes that cable television is available to at least 70 percent of American households and that at least 70 percent of those households actually subscribe to a cable service.

The data originally used for the finding was based not on direct numbers from companies, but on surveys by industry analysts.

Under the compromise, cable companies will have two months to submit the numbers of customers and size of their markets, which the agency could use next year to determine whether the industry had reached the threshold for more regulation.

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