Legal channels and cable's future - impact of Cable Television Consumer Protection Act of 1992 on the already over-regulated cable television industry

Insight on the News, March 22, 1993 by Richard Miniter

The future of cable television, one piece of it anyway, is already on display in Carlsbad, Calif. In the small coastal community under an hour's drive north of San Diego, some 50,000 cable subscribers are playing with a new interactive video system called Main Street. The system is being offered as a test jointly sponsored by Daniels CableVision.

While the Main Street service comes into Carlsbad homes via cable and shows up on television screens as Channel 57, calling it cable is something of a misnomer.

Users of personal computers will quickly recognize Main Street as similar to services they can subscribe to by hooking up their computers via modem to electronic data bases, on-line information systems, games and shopping services. What the phone company and the cable company are offering for $9.95 a month is all that -- without the need to buy the computer and the modem. Subscribers navigate their way through the services on their screens with a small keyboard that looks like a remote control unit on steroids.

Main Street is the kind of innovation that technicians find exciting. Though it's unclear how many consumers will ultimately want to subscribe, Main Street has great potential to expand the horizon from a La-Z-Boy. Subscribers purchase airline tickets (even select window or aisle seating) or reserve rental cars. The couch-bound college-bound can bone up for their SATs by scrolling through Barron's Study Guide (which in its Main Street version even totals up one's scores on the sample tests).

There's an interactive questionnaire that offers advice on choosing a college or a new career, based on one's answers to a series of queries. Investors can get real-time stock quotes. Another feature allows users to pay regular bills -- mortgage payments, utilities -- electronically And one can buy everything from gourmet food to flowers to books from the array of home shopping services.

Main Street is far from the only cable novelty Daniels is offering its Carlsbad subscribers. Besides the usual programming, there are 30 channels of digital, compact disc-quality music -- available around the clock without commercials or disc jockeys. The slogan: "Someday all music will sound this good." It certainly sounds good if you have a decent stereo to pipe it through, but there are still some programming glitches. Blues may turn up on the classic jazz channel, for example.

The ideal customer for all these services might be Bill Daniels, the owner of Daniels CableVision and a man widely hailed as the father of cable television.

In his multimillion-dollar home outside Denver, dubbed "Cableland," Daniels has a wall of 64 television monitors. "I push two buttons," he says. "The first button, you see five Denver television stations -- the three networks, a PBS station, and an independent station. I push another and all 64 [channels] light up with different programming."

It's a graphic example of what cable has added to television, a subject much on Daniels's mind at the moment. Speaking about projects such as that in Carlsbad, he says: "There's just no limit to what we can do -- if you get the goddamn government off our back."

To say that government is a sore point with Daniels these days is an understatement. Like all the captains of the cable industry, he was upset when Congress passed a cable bill over President Bush's veto in October. He and Ted Turner each filed suit in federal court to overturn the Cable Television Consumer Protection and Competition Act -- which expands federal regulation of the $42 billion-a-year industry -- before the legislative ink had time to dry.

The legal efforts of Daniels and Turner were shortly joined by virtually every major player in the industry: Time Warner (owner of Time Warner Cable and Home Box Office), C-SPAN, Discovery Communications (the Discovery Channel and the Learning Channel), Hearst/ABC-Viacom Entertainment Services, E! Entertainment Television, USA Network, Arts & Entertainment Network and the National Cable Television Association, among others.

In December, all the suits were bundled together into one massive complaint -- the legal equivalent of a howl of protest -- now lodged with the U.S. District Court for the District of Columbia.

In essence, Congress passed a law in October saying, "We can tell you how to run your business," and the cable operators are now asking the federal judiciary to say, "No, you can't."

If the cable operators win in court, expect a technopolitical earthquake. Much of the federal apparatus governing the industry would wither away Cable would enjoy the same constitutional protections from government control -- and freedom from regulation -- as the print media.

As things now stand, First Amendment protections for cable are so weak that Congress didn't hesitate to issue to cable operators detailed programming instructions -- known as "must-carry" provisions in the industry lingo -- in its new law.

Must-carry rules are at the heart of one of the longest-running battles in television history, pitting broadcasters against cablecasters. When the Federal Communications Commission began regulating cable in 1966, it required the fledgling operators to carry the signals of local broadcast stations and to refrain from carrying stations from outside the region that broadcast the same programs.