From: John Higgins <[email protected]>
Subject: Cable Regulation Digest 11/07
Date: Fri, 4 Nov 1994 19:28:08 -0500 (est)

 CABLE REGULATION DIGEST
 Summary of regulatory news from Multichannel News 11/7/1994. Vol.1, No.45

 Copyright 1994 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]

 HOT NEWS
 * Is There Someone Bigger Than TCI?
 * Cable Ops In Big for PCS Auction
 * FCC Going Forward on Rate Regs

 QUOTES OF THE WEEK
"U S West is clearly hoping to establish itself as a national
broadband player by becoming the dominant East Coast cable operator
while upgrading its telco plant in western states, where it will
compete head-on with local cable operators, primarily TCI."
   Money manager Marc Riely

"There are enough big players in there to goose up the money," but if
the auction goes much higher than $10 billion "there's going to be a
lot of poor bankers."
    Telecom consultant William Bane on the coming broadband PCS
    license auction.

 U S WEST: NO. 1 MSO?
 New York -- The massive portfolio of investments being amassed by
U S West Inc. would make the telco the largest owner of cable
operations, displacing Tele-Communications Inc.
 A lot of talks would have to bear fruit and existing agreements
actually close, but at the end of the day, U S West could wind up with
interests in systems serving 14.4 million subscribers. That outpaces
the 12.8 million subscribers TCI owns directly or indirectly, or even
the 13.5 million the MSO would control if pending acquisition of
TeleCable Corp. goes through.
 Some cable executives dismissed the ranking as insignificant, noting
that U S West's only owned-and-operated systems will be the Wometco
group in Atlanta.
 However, Mark Riely, partner in money management firm MacDonald
Grippo Riely, believes that U S West is mimicking the path TCI used to
ascend to the top. Riely noted that TCI's strategy has been to take
partial stakes in other operators and acquire them outright, an
approach that conserves both capital and management resources.
 "U S West is clearly hoping to establish itself as a national
broadband player by becoming the dominant East Coast cable operator
while upgrading its telco plant in western states, where it will
compete head on with local cable operators, primarily TCI," Riely
said.

 MSOS STEP UP TO PLATE IN PCS AUCTION
 Cable operators seem ready to be big bidders in the auction of new
wireless telephone frequencies.
 Even with the absence of No. 2 MSO Time Warner Cable, the list of
declared bidders for 99 wireless licenses in each of 51 metropolitan
trading areas has plenty of cable names.
 Analysts saw few surprises among the big-name players, or among the
big-name no-shows. Time Warner and MCI Communications Corp. had said
previously they did not intend to bid. They could join other bidders
later as minority partners.
 AT&T Corp., which owns the nation's biggest cellular company; ALAACR
Communications, owned by Craig McCaw, who built the cellular firm that
AT&T owns; the combination of Bell Atlantic Corp., Nynex Corp., U S
West Inc. and AirTouch Communications; and GTE Corp. applied for the
right to bid in most markets. All seven regional Bell operating
companies applied to bid.
 Continental Cablevision Inc., on paper, could prove one of the
biggest bidders of all. The Boston-based MSO told the Federal
Communications Commission it might go after licenses in all 51 MTAs,
either alone or with MSO Cablevision Systems Corp. (in Boston and
Cleveland). Heavy costs of bidding would make such a sweeping strategy
unlikely. A Continental spokesman would not comment on the company's
PCS applications.
 As expected, the new alliance of Tele-Communications Inc., Cox Cable
Communications Inc., Comcast Corp. and Sprint Corp. said it would be
very active in the auction. At the Oct. 28 deadline, the venture,
calling itself Wirelessco L.P., said it might bid together or
separately in 44 of 51 MTAs.
 Cox already has been awarded a technological pioneer's license in
the second-biggest trading area, the Los Angeles and San Diego MTA.
After the auction it must pay the government a percentage of what
other licenses sell for. Cox  also applied to bid on licenses in the
Richmond-Norfolk, Va., and Omaha, Neb., MTAs where it has cable
systems.
 Comcast Telephony Services said it might bid separately on licenses
in three MTAs: Charlotte, Greensboro, Greenville, Raleigh, N.C.;
Cleveland; and Jacksonville, Fla.
 Cablevision declared an intention to bid on licenses in the biggest
MTA -- New York -- by itself and in the Boston and Cleveland MTAs with
Continental as a partner. The two MSOs have cable clusters in those
markets.

 GOING-FORWARD TO GO FORWARD THIS WEEK
WASHINGTON -- The Federal Communications Commission is scheduled this
week to adopt "going-forward" rules despite cable industry concerns
that the rules will restrict a la carte options.
 Although cable is concerned about the a la carte plan, it
nevertheless is pleased the issue is coming to a head after FCC
chairman Reed Hundt promised in May to give the matter his attention.
 "We are glad going-forward is going forward. It's an important issue
for the industry," an NCTA spokesman said.
 Hundt placed the going-forward issue on the Nov. 10 agenda, but he
could decide to withdraw it if resistance continues from commissioners
Andrew Barrett and Rachelle Chong.
 Barrett and Chong are siding with the cable industry on a la carte,
but it was unclear late last week whether they will break with the
chairman when it comes time to vote.
 As of late last week, FCC sources said Barrett and Chong were still
a la carte holdouts, disturbed that Hundt's plan denied cable the
regulatory certainty it desired.
 Hundt's staff, along with staff from the offices of commissioners
James Quello and Susan Ness, hoped to use the front end of the week to
forge a consensus.
 "We would like a 5-0 vote," an FCC source said.

 FCC NARROWBAND CONTINUES WITH $436 MILLION
 Washington -- Bidding continued late last week as the Federal
Communications Commission's narrowband PCS auction pot inched up to
$436 million. Benbow P.C.S. Ventures Inc., one of the 10 remaining
bidders, made the highest single bid: $31 million for a 50/50-kHz
channel license.
 With only a handful of bidders left in the war room, bidding
activity on the 30 regional personal communications service licenses
slowed down dramatically.  PCS Development Corp. and Lisa-Gaye
Shearing, are bidding on two regional 50/50-kHz licenses and Mobile
Media PCS Inc. and Pagemart II Inc. are bidding on one 50/12.5-kHz
license.
 Overall, the FCC is pleased with the simultaneous multiple round
system, which keeps all licenses open until bidding stops
collectively, allowing bidders to strategize. "We want the license to
go to the person who wants it the most," said Greg Rosston of the FCC
Office of Plans and Policy.
 Although the FCC has no speculation on a closing date, bidder Louis
Parchman of USA Mobile said the auction has taken longer than he
expected. "We've just requested that the FCC speed it up and raise the
minimum (accepted bid amounts)."

 PROGRAMMER TRADE GROUP PLAN STILL ALIVE
 New York - The formation of a trade group separate from the National
Cable Television Association to represent the cable programming
networks will be reconsidered on Dec. 7, according to a letter to
network executives from Ray Joslin, vice president of The Hearst Corp.
 Joslin, whose company owns parts of ESPN, Lifetime Television and
A&E Network, has been spearheading the programmer trade group
discussions.
 Many network executives -- and many cable operator executives --
believe that the NCTA's lobbying efforts on certain issues run counter
to the interests of programmers.
 Joslin said that the issues programmers most want to communicate
remain the same as earlier this year. Joslin said the issues boiled
down to the going-forward prices cable networks could charge, the
creation of incentives for operators to add new services, and for
operators to be able to recover their costs for new programming.
 Joslin declined to comment whether he believed the programmers need
to form the trade group.
 "I'm the facilitator," said Joslin. "I really don't want to get in
the way of the issues."

 GTE FIRST TELCO TO LOSE ON CABLE SERVICE
 Washington -- A federal court in California has ruled against GTE
Corp. in the telco's bid to continue offering cable service in
Cerritos, Calif.
 In a 2-1 decision last week, the Ninth U.S. Court of Appeals in San
Francisco said GTE's right expired in July when a five-year waiver
from the cable-telco cross-ownership ban expired.
 The court, however, did not explicitly rule on the constitutionality
of the cross-ownership ban, saying the First Amendment question became
moot when the the waiver granted by the Federal Communications
Commission in 1989 expired.
 The California Cable Television Association praised the ruling.
 "The decision provides the first victory for the cable television
industry in any of the pending cases brought by the telcos challenging
the 1984 Cable Act cross-ownership ban," said Jeffery Sinsheimer,
CCTA's director of regulatory affairs.
 "It indicates the appeals courts are going to take a very close look
at these cases at what Congress intended to do in enacting the
legislation," he added.
 GTE spokeswoman Julia Spicer said it was too early to tell whether GTE
would have to discontinue service because of the court defeat. Despite
GTE's setback, other major telcos have been on a roll in the courts as
four Baby Bells have won decisions opening entry to the cable business.
 The latest winner was Ameritech Corp.; a federal judge ruled Oct. 27
that the ban in effect since 1984 was unconstitutional.
 Ameritech, like the six other regional Bell operating companies
(RBOCs), was created in 1984 in the wake of the court-ordered break up
of AT&T Corp. The Chicago-headquartered Baby Bell serves five Midwest
states, including Illinois.

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

 BUT THEY ALL RAN FIVE MINUTES SLOW...
 Can somebody defuse this thing? ... Microsoft doesn't mess around
when it keeps speakers on a rigid time schedule. At its high-tech
summit last week, more than 150 communications execs were given nifty
wristwatches, which, in true Get Smart style, are also electronic date
books that can read info from an infrared link to a PC. At a cocktail
party on the opening night, attendees were invited to hold their
Timexes up to a PC screen to receive the next day's schedule. One
small glitch: some overzealous programmer accidentally marked each
break time with an audible beep. So, at the next day's 10:15 a.m.
break 100 preprogrammed watches let out a mad, beeping chorus. "It's
one of those classic technology ideas with one small problem that
nobody anticipated," one attendee laughed. The beep-fest continued at
the lunch and afternoon breaks, he said.

 Cable folks may call FCC officials heavy-handed, they ain't stupid.
The agency's critics have long puzzled over what games might go on in
the 30 days or so between a commission vote on an issue and the
release of the official text. Well, the General Accounting Office,
Congress' investigative arm, tried to determine whether staffers made
"revisions" without the approval of the Commissioners. Try as they
might, the GAO came up empty handed because the FCC leaves no paper
trail. The GAO's report to Rep. Edward J. Markey (D-Mass.), urged the
FCC to create a trail between the time draft orders are approved and
the release of the final product "to allay potential criticism that
released documents may not accurately reflect what the Commissioners
decided."

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