1983-07-20 Public Hearings and Regular Meeting

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Summary of S. 66, The Federal "Cable Communications Act of 1983" • A. Background During the past four years, the National League of Cities (NLC) and the National Cable Television Association were involved in a series of intense congressional battles over CATV-related legislation. Claiming that it was being suffocated by municipal overregulation and overtaxation, the cable industry pushed for federal legislation to severely limit the regulatory authority of cities. NLC fought the legislation on the basis that municipal controls were necessary to protect the interests of local cable consumers and the general public. Concerned that the politically -potent CATV industry would eventually prevail in the congressional struggle over this issue, the NLC board of directors met with the cable operators this past March and agreed to a compromise bill--S. 66. In early April, the TML office furnished all member cities with a detailed description of the compromise. With strong support from NLC and the cable industry, S. 66 handily passed the U.S. Senate on June 14. The battleground has now shifted to the U.S. House of Representatives, where opponents of the measure expect to have a better chance of crippling or defeating the bill. As is indicated below, the so-called "compromise" to which NLC agreed is heavily biased in favor of the cable industry. Cities currently exercise vir- tually unlimited CATV regulatory powers; however, if S. 66 becomes law, many of those powers will be abolished and CATV operators will be free to do pretty much as they please at the local level. B. Key Provisions of S. 66 1. Abolishment of City Regulation Over Basic Service Rates For a 5-year period after the effective date of S. 66 (or one-half of the remaining life of the city's franchise, whichever is greater), cities could continue to regulate monthly subscriber rates for basic (Tier One) services. But, during that period, local cable operators would have the unilateral authority --without the city's consent --to make yearly increases in Tier One service rates in an amount equivalent to the increase in the Consumer Price Index. Upon the expiration of 5 years, the regulatory powers of cities over Tier One rates would be totally abolished, and local cable operators would be free to increase basic service charges without limitation. (Note: Two excep- tions from this provision are provided. Upon expiration of the 5-year transi- tion period, municipal ratemaking powers would be continued: (a) in any city where 80% or more of all households subscribe to the basic service offered by the particular franchisee; and (b) in any city served by fewer than four TV broadcasting stations. Even in those cities, however, cable operators would still have the unilateral right to impose annual increases according to the rate of increase in the Consumer Price Index.) 2. Abolishment of City Regulation Over Other Rates • For Tier -Two and Tier -Three services, city rate regulation would totally expire upon the effective date of S. 66.