A bit of good news...
FCC vote seen as benefit for AT&T
Loosened rules assist its MediaOne purchase
By Stephen Labaton
NEW YORK TIMES NEW SERVICE
October 9, 1999
WASHINGTON -- The Federal Communications Commission yesterday decided to substantially loosen the rules that keep one company from controlling too much of the cable television industry.
The new rules clear the way for AT&T to own more than a third of the nation's franchises offering subscriber television, telephone and high-speed Internet services as well as major interests in a number of major video producers and television programmers.
Coming in the wake of a wave of huge telecommunications mergers, the decision lays down the second important policy marker of the week -- that the federal government is willing to tolerate heavy concentration in one industry, such as cable television, if it holds the promise of offering competition in another, such as local telephone service.
In the name of promoting local service outside their areas, the FCC Wednesday approved the proposed $72 billion merger of two regional telephone companies. That ruling permitted SBC Communications Inc. and Ameritech Corp. to form the largest Bell operating company in the United States.
Yesterday's vote, coming just two months after the FCC relaxed the ownership rules for broadcasters, sets a framework to permit AT&T to become the nation's largest cable operator by completing its $58 billion purchase of the MediaOne Group.
The old rules would have required AT&T to make significant divestitures, while the new rules may force, at most, some limited sales. But the commission, which has been bombarded by AT&T lobbyists and executives in recent weeks pleading for a relaxation of the rules, practically invited the company to seek waivers for some of the few remaining restrictions on its deal.
Precisely what impact the new rules will have on consumers, prices and quality of service is a matter of dispute. FCC and AT&T officials said they would lead to greater competition in local markets, and thus lower prices, as well as faster development of high-speed Internet service. But consumer groups, which had argued for tougher rules, said the result would be more concentration of cable properties, robbing cable subscribers of what little competition exists, and could ultimately lead to higher prices.
By a vote of 5-0, with two commissioners partially dissenting, the FCC redefined the rules and relevant markets in a way that may make it possible for AT&T to offer local telephone service to more than 40 percent of the nation's homes. Although the current 30 percent cap was technically not changed, the revisions to the definitions of markets and cable ownership effectively raise the ownership cap for cable television to the rough equivalent of 36 percent.
The FCC also changed the rules to enable AT&T, after some corporate restructuring, to maintain other properties it gets from the MediaOne acquisition that produce broadcast programming, including its 25.5 percent stake in Time Warner's cable systems, its HBO network and its Warner Bros. film studio. But AT&T will now have to present a plan to the FCC demonstrating that programming decisions are sufficiently insulated from the cable transmission operations.
FCC Chairman William Kennard said the rules were reworked in an effort to balance the 1992 cable law, which was intended to reduce ties between cable companies and programmers, and the 1996 Telecommunications Act, which instructed the FCC to take steps to encourage the development of high-speed Internet access and foster competition in local telephone markets. Rapid advances in technology have enabled the companies that AT&T has been acquiring to offer all these services through an upgraded cable wire.
The laws, Kennard said, failed to fully appreciate how quickly technology was changing the marketplace. |
