Telephone Companies & the Cable Industry

Television as a medium and as a business has changed greatly with the advent of cable delivery of television programs, and cablecasting (as it is called) has developed with new suppliers and new distributors in addition to the major studios and syndicators that have always supplied programs in some fashion. The development of cable television occurred at the same time as the federal government, through legal action, dismantled the telephone monopoly of the Bell Telephone system in the United States, and though the wiring of homes for cable followed the same path as telephone lines in most cases, the telephone companies have been precluded from entering this business by law. The reason for such law was to assure that there would be competition in the cable industry and that the new cable delivery systems would have a chance to grow and develop. What has happened in recent years, however, is that the technology has developed and changed to the point where cable companies are able to deliver telephone-type services, and telephone companies want to enter the video business to make full use of their technical capabilities. This has engendered a major debate over whether or not telephone companies should be allowed entry to the video field.

In the past, telephone and cable companies have been treated as completely different entities using different kinds of lines from the company to the home. Their markets have also been separated by a wall of government restrictions, preve

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g Office reported in July 1991 that cable rates have increased 61 percent since cable deregulation in 1986, a report that has not helped solve the controversy. The reason why the cable industry is so worried about the entry of the telephone companies into their business area is that the pervasive network of phone lines gives the phone companies access to virtually every home in America. This is a clear advantage over cable outlets which have to wire homes on request, at great expense. Cable companies are already gearing to offer the same sorts of advanced services that the telephone companies want to offer. Some claim that the cable operators are trying to quash certain new technologies by co-opting them. An example is the attempt by Tele-Communications Inc. to start its own Direct Broadcast Service (DBS). Critics say that this effort could swamp competing systems, and also that the company is marketing its service only as a supplement to its basic cable service rather than as a rival technology. Nine states and the Justice Department have been examining this effort to see if it violates antitrust laws. The legislation that has been proposed to allow telephone companies entry into the video business is Senate Bill 2800, t

Category: Government - T