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Supreme Court upholds 1992 Act MSO size limit (fwd)
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- Date: Thu, 22 Feb 2001 12:08:14 +0100 (CET)
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From the Chicago Tribune
February 21, 2001
COURT BACKS CABLE TV GROWTH LIMITS
JUSTICES REJECT TIME WARNER'S APPEAL OF 1992 LAW
By Tim Jones
Tribune Media Writer
February 21, 2001
The Supreme Court on Tuesday blocked an
effort by the nation's second-largest cable television operator to
expand its business beyond government-imposed limits.
By refusing to hear an appeal from Time
Warner Entertainment Co., the court effectively backed Congress'
effort to limit the growth of cable operators, which have been
consolidating rapidly in the
past several years and, through mergers and acquisitions, thwarting
the desire of Congress to create more cable competition for consumers.
Although the court's decision preserves the
intent of the 1992 Cable Television Consumer Protection and
Competition Act, many consumers may not feel particularly satisfied
with the effects of the 9-year-old law. While Congress has moved to
prevent cable concentration on a national
scale--the limits on national reach that Time Warner was
challenging--most individual markets, like Chicago, are dominated by
one cable operator. AT&T has more than 90 percent of the subscribers
in the Chicago market.
Furthermore, cable rates have jumped more
than 32 percent in the past five years, nearly three times the rate
of inflation. And the competition for video services that does exist
comes primarily from direct broadcast satellite television, which now
has about 15 million subscribers nationwide,compared with about 70
million for cable.
Creating competition has proven to be much
more difficult than Congress ever envisioned. Mergers and the high
cost of competing convinced many to stay out, even in a strong
economy. Changing technology--particularly high-speed Internet
access--became the growth engine for cable, not video services.
While the dearth of competition is most
easily measured in video service, cable operators are interested in
raising the caps on their reach in large part because of the access
it would give them to expand in the areas of greatest
growth--Internet access and telephony.
The court issued its decision Tuesday
without comment, but was clear that the result most affects the two
largest cable companies, AT&T Broadband (16.1 million cable
subscribers) and Time Warner (13 million subscribers).
"The court feels this is really a matter for
Congress to address," said Christopher Cinnamon, a Chicago attorney
who specializes in telecommunications law. A spokesman for Time
Warner declined to comment.
After the passage of the 1992 law, the
Federal Communications Commission adopted rules that limited cable
operators from serving more than 30 percent of the nation's
households. Time Warner argued that this restriction, as well as one
limiting the number of channels a cable system can offer in which it
owns a financial interest, violated its 1st Amendment rights and
claimed Congress did not have the authority to set the limits.
Last May, a federal appeals court panel said
the law "did not run afoul" of the 1st Amendment.
The actual limits set by the FCC are being
challenged in a separate case, and a ruling is anticipated at any
time. In the meantime, AT&T has been lobbying Congress to raise the
30 percent cap.
New FCC Chairman Michael Powell has
suggested he is open to the easing of restrictions on broadcast
station ownership, including the one limiting the reach of television
station owners to 35 percent of the nation's TV households.
But the commission would be reversing itself
if it were to loosen the strictures on cable. Relaxing the cable
limits to the benefit of AT&T and Time Warner could contradict the
spirit of concessions the government extracted from America Online
Inc. and Time Warner when the two companies merged earlier this year
and created a powerful cable and Internet giant. Consumer advocates
and antitrust experts were concerned that the company's wide reach in
cable would allow it to dominate Internet access and other services.
AT&T Corp., the nation's biggest cable
operator, exceeded the 30 percent cap last year when it acquired
MediaOne Group Inc., then the sixth-largest cable operator. AT&T said
it would sell its 25.5 percent share of Time Warner Entertainment and
spin off the Liberty Media Group in an
effort to comply.