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Senate Panel Votes to Unleash Phone, Cable Companies

March 23, 1995

WASHINGTON (AP) _ After significant concessions to Democrats, a Senate panel approved a bill Thursday that would free telecommunications companies to provide a much wider variety of services.

Consumer groups assailed the package, saying it would lead to higher cable and telephone rates and create giant companies that will control people’s access not only to telecommunications services, but to news and entertainment.

Supporters, including the nation’s seven regional Bell companies, say it will do just the opposite: Lower prices, boost consumer choices and create millions of jobs.

The Senate Commerce Committee approved, 17-2, a proposal by Chairman Larry Pressler, R-S.D., who is already consulting with Senate Majority Leader Bob Dole of Kansas about when to bring the package to the floor.

``This will cause an explosion of devices and services for consumers at lower prices,″ Pressler predicted in an interview. ``I predict cable rates will go down ... telephone rates will go down eventually.″

Before the hearing, Pressler and ranking committee Democrat Ernest Hollings of South Carolina reached a compromise on several hotly contested provisions in the bill: the terms by which local and long-distance telephone companies may get into each other’s businesses; cable rate deregulation; and broadcast deregulation.

Under the new agreement, Pressler said he believes floor fights can be avoided on the first two provisions. But he was not as sure about the third, which has the broadcasting industry enraged.

On the long-distance part of the bill, the compromise imposes slightly tougher conditions on local phone companies entering the long-distance business and takes away a virtually guaranteed right to enter the business within three years.

The compromise also makes it easier for potential competitors to enter local telephone markets by adding provisions ensuring that access to existing local telephone networks and services is available at cost-based rates. It also gives authority over selling such services to state and federal regulatory bodies, rather than leaving it with the existing local phone company.

Long-distance companies welcomed, but were not satisfied, by the changes. ``There is a lot more to be done,″ AT&T said in a statement.

The cable compromise would maintain rate regulation on the lowest tier of service, which generally consists of broadcast signals, access channels and a few cable networks, until local competition develops.

And it would deregulate rates for all other program services unless a cable company’s rates exceeded a national average.

Under a new test, rates could be deregulated as soon as a telephone company begins providing video service in a market served by a cable company.

``There is no good news in there for consumers,″ said Bradley Stillman, legislative director of the Consumer Federation of America. He predicted cable rates would soar.

And Gene Kimmelman, co-director of Consumers Union, said, ``This legislation invites a new generation of robber barons to dominate both telecommunications and media markets, driving up prices to consumers and limiting the development of competitors.″

The cable industry also opposes the compromise package, saying it scales back the price freedom it would have had under an earlier version of the Pressler bill.

Provisions to deregulate the broadcast industry also were substantially tempered.

The plan does away with a provision that would have allowed one company to own as many radio stations as it wanted nationally. The current limit is 40.

Instead, TV and radio companies would be permitted to own stations reaching up to 35 percent of all U.S. homes. The current limit is 25 percent.

The Federal Communications Commission would decide whether other ownership limits should be retained, but the plan would change existing law so that a company could own a cable system and a TV station in the same market.

In addition, the new plan retains a law that restricts a foreign company from owning more than 25 percent of a U.S. broadcaster unless the FCC finds it in the public interest.

``They agreed to deregulate every segment of the telecommunications industry, except for broadcasting,″ said Jim May, chief lobbyist for the National Association of Broadcasters.

Two Republican committee members, Sens. Bob Packwood of Oregon and John McCain of Arizona, voted against the package, saying it is too regulatory.

Pressler’s proposal also would:

_ Allow telephone and cable companies to enter each other’s business.

_ Give TV broadcasters the right to provide and charge for all kinds of services carried on one of two channels they may eventually control.

_ Permit Bell companies to manufacture telecommunications equipment.

_ Remove foreign ownership restrictions on U.S. telephone companies on a reciprocal basis.

_ Ban indecent and obscene messages over the Internet, computer services and future telecommunications networks.

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