From: [email protected]
Date: Sun, 26 Feb 1995 06:22:36 -0800
Reply-To: [email protected]

CABLE REGULATION DIGEST
Summary of regulatory news from Multichannel News 2/27/1995. Vol.2, No.9
Copyright 1995 Multichannel News. Reproduction/distribution is permitted
so long as this document is left fully intact. NO CHANGES are to be made
to this document without the written consent of Multichannel News.
Listserver, Gopher, FTP info attached at bottom.
Refer questions to John Higgins ([email protected] or
212-887-8390)
For Multichannel News subscription information: 800-247-8080. A bargain
at $78/year.

Multichannel e-mail contacts:
Marianne Paskowski, editor: [email protected]
John M. Higgins, finance editor: [email protected]
Kent Gibbons, new media editor: [email protected]
Leslie Ellis, technology editor: [email protected]

 QUOTE OF THE WEEK

 "Somehow I have an intuitive feeling that AT&T and John Malone and Bell
Atlantic will somehow survive."
      Sen, Robert Packwood on worries that some companies will face
unfair competition under his scenario for deregulation.

 "I just want an opportunity to change the rules a bit."
      Former CBS preisdent Howard Stringer on his new gig leading an
      entertainemt venture for three telcos

 PACKWOOD SAYS TELECOM REFORM FACES LONG WAIT
 Washington -- Senate Republicans and Democrats remain far apart on
telecommunications reform, probably dashing hopes of passing legislation by
mid-year.
 That was the bleak assessment of Sen. Bob Packwood (R-Ore.), an influential
member of the Senate Commerce Committee who is pushing for the rapid
deregulation of cable television.
 "I don't think there will be a bill before Labor Day out of both Houses that
is agreed upon in conference, and sent to the President," Packwood said in
remarks to the Media Institute here last week.
 Packwood said the Senate was deadlocked for now because "there is no
consensus on this bill and there isn't going to be a consensus."
 However, Packwood later predicted in his speech that at some point enough
Democrats would swing around to help the GOP-controlled Senate pass a bill.
 "My hunch is that when this bill is done, it's going to have pretty broad
support and we're going to reach the compromises we need to," he said. "My
guess is that when we finally draft a bill, half the Democrats will agree with
it; there will be four or five that won't."
 Commerce Committee chairman Sen. Larry Pressler (R-S.D.), who wants to pass
legislation before the July 4, declined to comment when asked if he agreed
with Packwood's timeframe that pushed Pressler's top legislative priority off
until the fall.
 Senate sources said they were surprised by Packwood's comments because
progress was being made in talks between Senate Republican and Democratic
staff members.
 Sources said Senate staff had nearly reached agreement on universal service
and interconnection rules. The sides, however, have not been able to patch
differences on cable rate issues.
 In draft legislation last month, Pressler called for cable price
deregulation one year after his bill passed. Senate Democrats, led by Sen.
Ernest Hollings (D-S.C.), refused to budge on cable rates and permitted telco
entry into cable immediately, while Pressler kept the telcos out for a year.
 Packwood said repeal of the 1992 Cable Act was still "a high, high priority
for me in the bill." He voiced disappointment that the cable industry favors
deregulation of upper tiers but not of the basic tier.
 "I wish they wouldn't give up so easily," Packwood said.
 Packwood said he would be willing to compromise on cable rates if others
give a little on opening all telecommunication markets at the same time --
what he calls "the Le Mans start ... gentlemen, start your engines."
 Packwood said he wasn't concerned about unfair competition taking place
under his scenario for deregulation.
 "Somehow I have an intuitive feeling that AT&T and John Malone and Bell
Atlantic will somehow survive," he said.
 Senate sources said they felt Democrats would agree to some amount of cable
rate relief. In the House, Telecommunications and Finance Subcommittee
chairman Rep. Jack Fields (R-Texas) wants to introduce bipartisan legislation
that includes upper-tier rate relief as a consensus position.
 If, in fact, the telecommunications reform debate pushes past Labor Day,
Packwood said passage of a new law was still possible this year but probably
unlikely because the crowded Senate calendar toward the end of the session
gives opponents an advantage.
 "It becomes easy for anybody to hold up a bill in the Senate, not so much in
the House," he said. "The leader just doesn't have four or five days to spare
on any bill of any kind."

 U S WEST FLESHES OUT OMAHA MENU
 Perhaps showing that if you build a broadband network the content will come,
U S West Inc. last week named a long list of program suppliers for its Omaha,
Neb., video-on-demand service.
 Because the programming will be part of U S West's own TeleChoice service,
the telco was able to assemble a balanced lineup of movies, games, pay-per-
view events and specialized videos such as travel and cooking how-to's. It was
not forced to take on any programmers that stepped up to lease space on a
"common carrier network." That packaging power is part of U S West's
unregulated, "enhanced gateway" service, the telco said.
 Audley Webster, executive director of U S West Communications' TeleChoice
Video Services, said he managed to accommodate all interested suppliers.
"Obviously, we went into this thing consciously" trying to create a marketable
mix, Webster said.
 Content suppliers will choose what programming to provide and how much to
charge subscribers, except for video games, which U S West said it will price.
 Film suppliers that have signed deals with U S West include Metro Goldwyn
Mayer Inc., Universal Pay Per View Development Inc., New Line Television Inc.
and Graff Pay-Per-View. The telco has agreements in principle with Columbia
TriStar International Television and Video-On-Demand Distributors,
representing Warner Bros. films.
 U S West has agreements in principle with Sega of America Inc. to supply the
Sega Channel, which distributes Sega Genesis games to subscribers with
adapters on Genesis players, and with The 3DO Co. to provide 3DO games. U S
West's Omaha trial features Scientific-Atlanta Inc. set-top decoders using
3DO's operating system. NTN Communications Inc. will supply its interactive
football and trivia programming.
 Other suppliers either with signed deals or agreements include: Showtime
Event Television Pay-Per-View (events and movies), Jones Educational Networks
(educational programming), National Geographic Television (nature and travel
shows), Reuters Newmedia Inc. (news and documentaries), RSVP (patient-specific
health information)
 Two other U S West interactive services, the GOtv entertainment information
service and USAvenue shopping forum, also will be part of the telco's
offering. The 18-month trial in Omaha is scheduled to start this spring.
 Content providers will choose their own prices, except in the case of video
games, which U S West will price.
 Webster said content providers will be paid along traditional lines. Movie
suppliers will get a revenue split, which he would not disclose. Others will
be paid in a "variety of arrangements," including on a per-subscriber basis,
Webster said.
 The range of providers under U S West's own brand stands in contrast to the
scarcity, so far, of video providers planning to lease analog or digital
channels to go against U S West in the 45,000-home, $37 million trial.
 So far, only one other programming packager has firmly decided to compete
against U S West for digital television service in Omaha. That rival is a
startup company in New York called Telephone Video of America. USA Interactive
Video Corp. initially said it was interested but has given mixed signals in
recent weeks.
 Telephone Video president Simon Naparstek said the U S West list showed that
getting programming is not going to be a problem for broadband networks.
"Right now, content is not the problem," he said. "It's the computer people --
getting their technical act together."
 Naparstek also said he was confident he could assemble enough content to
make a go against the host telco. "We'll get the same content," he said.
"Maybe they have a marketing advantage, but we'll have the same content. It's
going to be a question of how we package it and price it."
 U S West's dominant presence on its own digital platform could also fuel the
cable industry's argument that only the telcos are well-positioned to play on
their own ground, said Peter Price, chairman of the Video Dialtone Association
and president of Liberty Cable Television in New York.

 ME/U CENTER OF GINGRICH COMPLAINT
 Washington -- A Jones Intercable Inc. education network has been thrust to
the center of a new Capitol Hill storm swirling around House Speaker Newt
Gingrich (R-Ga.)
 An ethics complaint filed Thursday by three House Democrats charges that
Gingrich illegally accepted up to $200,000 in free air time from Mind
Extension University, a Jones affiliate. ME/U is broadcasting the GOP leader's
two one-hour college lectures every Saturday between Jan. 7 and March 11.
 Reps. Pat Schroeder (Colo.), Cynthia McKinney (Ga.) and Harry Johnston
(Fla.) say the deal violates House rules and federal law and asked the ethics
committee to investigate.
 Gingrich, who has been hit with other allegations of misconduct, angrily
rejected the latest charges and accused Democrats of mounting a smear campaign
out of vindictiveness and political desperation.
 Jones spokesman Jim Carlson termed the charges "political," and said the
broadcast of Gingrich's lectures are "certainly nothing dark or sinister." He
called the charges "so misleading you don't know where to begin to start
correcting all the inaccuracies."
 The $200,000 figure, he said, "is fabricated out of thin air."
 Schroeder spokesman Dan Buck said the estimate came from cable sources
quoted in news reports. He added that some cable buyers had independently
confirmed such air time would be worth about $7,500 to $10,000 an hour.
 But Carlson said that those estimates can't be applied to the arrangement
struck with Georgia's Reinhardt College, where Gingrich lectures, and that
even Jones can't assign a value.
 "Of course we don't have a figure," Carlson said. "We don't charge
universities."
 "It would be hard for them to argue the air time has no value," countered
Buck. "What's improper here is them giving the time."
 "This is not a gift," responded Carlson. "We're an education network. We
have to program that time anyway."
 Carlson said that Jones is attempting to work out a deal to continue
carrying Gingrich's lectures in which it would split the tuition fees with
Reinhardt for students enrolled in the course over the network. He said Jones
has such agreements with 35 universities around the country for other courses
carried over ME/U, which reaches 26 million homes.

 SMALL OPS REQUEST EMERGENCY RELIEF
 Washington -- Citing prohibitive costs, small cable operators have warned
the Federal Communications Commission that many in their ranks will go out of
business if forced to participate in the new Emergency Alert System.
 The FCC had solicited comments on whether EAS requirements should be waived
for certain "small" systems.  The filing deadline was Wednesday.
 Three cable trade associations recommended that all cable systems with
 5,000 subscribers or fewer be exempted from mandatory EAS participation,
which will require equipment costing an estimated $10,000 to $15,000 per
headend. They argued that certain other operators be allowed to seek EAS
waivers on a case-by-case basis.
 Cable groups said that EAS requirements should be extended to video dialtone
systems -- among others -- an idea that telephone companies opposed in
separate filings.
 Meanwhile, the National Association of the Deaf asked the FCC to require
cable systems to provide video warnings on all channels, something the
industry opposes for being even more costly. The current rules only mandate
video warnings on one channel, though systems must be able to provide audio
warnings on all channels.

 SPRINT-CABLE STILL PCS BID LEADER
 Washington, D.C. -- Bids on broadband wireless licenses came close to $6.5
billion in total last Friday with the "Sprint-cable" group still the biggest
bidder.
 Some auction watchers suspect the bidding finally is winding down, having
grown in increments of tens of millions, instead of hundreds of millions, in
total bids the past week.
 Others, though, say players such as Craig McCaw's ALAACR Communications Inc.
still have money left and have not grabbed their target markets.
 William Bane, of Mercer Management Consulting Inc. in Washington, D.C., said
the 30-MHz licenses are already overpriced. "I'm actually quite concerned that
it's not over, and that macho has reared its ugly head," he said.
 Slow bidding in the early going gave rise to skeptics who said the auction
would fall short of the government's goals. But deep-pocketed bidders such as
McCaw, the Baby Bells and long-distance calling giants AT&T Corp. and Sprint
Corp. have sent values rocketing, especially in the biggest markets.
 The biggest bidders are still WirelessCo L.P., the consortium of Sprint and
MSOs Tele-Communications Inc., Comcast Corp. and Cox Enterprises Inc.; AT&T
Wireless PCS Inc.; and PCS PrimeCo L.P., the venture of Bell Atlantic Corp.,
Nynex Corp., U S West Inc. and AirTouch Communications Inc.
 The bidding levels already have priced seven companies or groups off to the
sidelines, including MSO Century Communications Corp., a Comcast telephony
services affiliate and a partnership between Continental Cablevision Corp. and
Cablevision Systems Corp. that was bidding on Boston and Cleveland markets.

 NEXT PITCH: WANT SPRINT WITH YOUR STARZ!?
 New York - Tele-Communications Inc. subscribers will soon be getting
discounts on their monthly cable bills by saying they want Sprint along with
their Starz! and Encore.
 While the connection between a long-distance calling plan and a premium
cable channel may not seem obvious, Tele-Communications Inc. sees a way to add
a new source of income, boost its own pay channels and learn a few lessons
about marketing new services.
 Along with TCI, which has been quiet up until now about its plans to pitch
Sprint Corp. long-distance plans, other MSOs are moving into non-cable
communications services. Time Warner Inc. has begun reselling cellular phone
service in Rochester, N.Y., and Adelphia Communications plans to offer paging
services to cable subscribers in parts of Florida within a couple of months.
 Analysts think the moves are logical ones that, if marketed properly and
supported with customer service, can expand the cable base as well as add new
sources of income.
 "The market research we do shows: Customers will buy bundled services," said
Joseph Kraemer, managing director of communications industries consulting at
EDS Corp. in Washington, D.C. The key is to convince customers they will save
money by switching their long-distance or cellular service over to the cable
company, he said.
 The main goal of TCI's big joint venture with Sprint Corp. -- which also
includes MSOs Comcast Corp. and Cox Enterprises Inc. -- is to build a
nationwide wireless communications network. But a quiet and more immediate
side effect is that the MSOs will begin selling Sprint service as a sort of
premium channel.
 Will Gardenswartz, director of market development for TCI, said that the
Sprint resale venture will launch in April in these TCI systems: Biloxi,
Miss.; Brookhaven, N.Y.; Hartford, Conn.; Topeka, Kan., and Tacoma, Wash. He
said those systems were chosen for operational reasons, not because of
subscriber demographics.
 "They have really good customer service and sales representatives" and the
most flexible billing systems, he said.
 The long-distance business is known for cut-throat marketing, so it is hard
to impress an AT&T Corp., MCI Communications Inc. or Sprint customer with free
minutes or other discounts. Instead, TCI plans to offer the discounts on cable
services, Gardenswartz said.
 Specifically, new Sprint customers will be offered, for a year, $4.95 per
month off TCI's typical $14.95 package of Starz! and Encore along with one
premium service such as Home Box Office or Showtime, Gardenswartz said. "It's
the equivalent of getting Starz! and Encore for free," he said.
 Sprint is subsidizing the discount, the TCI official said, to the extent
that the offer "is interesting to us." So the Sprint offer becomes a way to
promote the TCI house brands of the two mini-pay services.
 TCI subscribers who don't take the Starz!/Encore package will get a $2
monthly cable discount by taking Sprint, Gardenswartz said. The offer applies
only to subscribers who are new Sprint customers or who have switched back to
Sprint. Other offers will be made to TCI subscribers who already have Sprint,
he said. The plan is to offer Sprint throughout TCI by late summer.
 Kraemer, the EDS analyst, said the caveat to offering these unrelated
services is "it will require some real talent to price, to position, to
package, to sell. It's not going to be something where you put an ad in the
paper and the phone rings. It's going to require some sophisticated selling."

 BIG THREE NETWORKS DISBANDING NTVA GROUP
 New York -- Faced with a changing environment, the Big Three broadcast
networks last week announced they were pulling the plug on the Network
Television Association, the group they created in 1990 to jointly promote
themselves to Madison Avenue.
 In a terse two-paragraph press release, ABC, CBS and NBC said that the New
York-based NTVA would be disbanded effective March 31. "Responding to the
evolving network broadcasting landscape," the Big Three networks said they had
agreed "to develop alternative mechanisms to promote the value of network
television for advertisers and viewers." For example, they plan to host
conferences for senior ad officials.
 "Different times have different needs," said Marcella Rosen, the NTVA's
president and CEO. "It's a changing world, and this doesn't fit today's world
the way it once did."
 She noted that since the NTVA (originally called the NTA) was founded the
Fox, UPN and Warner Bros. networks have come on the scene.
 According to an ABC spokeswoman, "We'd be better served if we did our
marketing as a unit, rather than through that organization, that structure. We
wanted a more hands-on, direct approach."
 According to ad agency officials, the NTVA had lost its direction in recent
years.
 "It lost focus about what its mission was, and has not been fulfilling its
function," said Allen Banks, media director at Saatchi & Saatchi Advertising.
"There was a real role for it to play: reminding people who brought them to
the party, national broadcast, which is very important for mass consumption
products."
 In its initial years, when it was headed by Peter Chrisanthopoulos, the NTVA
was very aggressive in it its advocacy of broadcast television, and its
benefits over cable. It did a number of studies on topics such as commercial
clutter and out-of-home viewing, and held periodic press conferences.

 STRINGER WILL LEAD BELLS VIDEO VENTURE
 New York - The Baby Bells finally roped their Stringer.
 Howard Stringer, the 53-year-old president of the CBS Broadcast Group, last
week was named to head the new technology and content-acquisition venture
created by Bell Atlantic Corp., Nynex Corp. and Pacific Telesis Group. CBS
said Peter Lund, who was Stringer's chief lieutenant, will replace him.
 Stringer becomes the first star brought to the Bells' fold by Creative
Artists Agency, the Hollywood talent shop run by Michael Ovitz. CAA is
consulting the Bells and has had close ties to Stringer since he hired CAA
client David Letterman.
 Industry observers said Stringer's big-name status among programmers and
advertisers could help the Bells establish credibility in a hurry.
 Craig Gugel, senior vice president of interactive media and research at
advertising agency Bates USA, said it will matter to Madison Avenue and to
Hollywood that Stringer knows both of those worlds.
 Stringer's signing means the Baby Bells "have finally arrived in the video
programming market. I think he'll be a force to be reckoned with."
 PacTel chairman Philip Quigley said in a conference call on Thursday that
Stringer, who rose from a clerk at CBS 30 years ago, had "the creativity and
the relationships" in the media industry to make the new venture a success.
 Stringer's availability prompted the Bells to combine what had been two
separate ventures, one developing joint technology standards for a digital
platform and the other acquiring "branded" content for the networks. Quigley
said "we were very much headed" toward combining the two anyway, but
Stringer's status clinched the decision.
 "I don't think you can produce interesting offspring unless you marry
technology with the content," Stringer said in the call.
 Stringer made clear that interesting content was much on his mind in moving
to the new company, which still has no name but does have 100 to 150
employees, home bases in four cities and $300 million in startup funds from
the Bells.
 He said interactive technology was exhilarating and spoke of having the
chance to target audiences in an uncynical and "innocent" way. That doesn't
mean producing just "good-for-you" programming, he said, but rather that
television can be targeted to audiences (a la Home Box Office) without always
having to generate massive ratings.
 "I just want an opportunity to change the rules a bit," he said.
 The three Bells have stated plans to build video networks throughout their
territories, which include more than 30 million homes and six of the seven top
media markets.
 Stringer did not say who is being considered for the operating chief jobs at
the two units. He also would not say whether he will have an equity stake in
the new venture.

 -=-=-=-=-=-=-=-=-=-=-=-=-=-=And Finally...-=-=-=-=-=-=-=-=-=-=-=-=-

 NO MATTER THE SECURITY, PIRATES KEEP ON TRUCKIN'
 Seems like every move against cable pirates creates its own problems.
Breaking into installers' trucks to snatch converters has long been a popular
source of supply for converters in need of boxes to "chip." (Hit 'em in the
morning on techs' first call of the day when their load is highest.) As a
result, some systems and contractors have turned to "hard" trucks looking like
mini-armored cars -- heavy steel cargo areas, high-end locks plus another
tough lockbox bolted down inside just to store the converters. The good news
is that the protection really does keep thieves from breaking in. The bad news
is that now they're stealing the whole truck. System executives around New
York City estimate that two dozen high-security trucks were stolen off the
streets last year. Rick Thomas, a partner in installation contractor RTK
Corp., said he recently recovered one of his trucks that thieves had obviously
spent hours trying to crack open. "They must have just wailed on it with
sledgehammers," Thomas said.

 Welcome to telco land...  FutureVision of America, the outfit that will
program much of Bell Atlantic's Toms River, N.J., broadband network, had what
it thought was a nifty sales office in a brand-new mall in town. Light, airy,
cathedral ceilings, prominent signs, decent rent -- everything you need to
establish a presence as a high-tech overbuilder. Only one problem: It was 200
yards beyond the local area calling boundary to which Bell Atlantic can
transmit video signals. FutureVision CEO Robert Schena said CSRs wouldn't have
been able to turn on a TV to show off its service. FutureVision will be in a
former electronics store in the center of town, instead.

 -------------------------------------------------------------------------

HOW TO GET THE CABLE REGULATION DIGEST:
E-MAIL - To: [email protected]
Subject: Ignored
Body: subscribe cablereg-l
FINGER - [email protected]
FTP - ftp.vortex.com/tv-film-video/cable-reg
GOPHER - gopher.vortex.com/*** TV/Film/Video***
WWW - www.vortex.com

*--30--*

You are viewing proxied material from infinitelyremote.com. The copyright of proxied material belongs to its original authors. Any comments or complaints in relation to proxied material should be directed to the original authors of the content concerned. Please see the disclaimer for more details.