Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, May 1, 1994 TAG: 9404290102
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Long
Blame the Federal Communications Commission if he looks confused or distracted.
As Cox Cable's manager of system accounting, Bingham is responsible for deciphering a 500-page report that the FCC sent cable companies less than a month ago.
The report contains detailed - but often complicated - instructions as to how Cox and every other cable system across the nation must cut prices 7 percent by May 15.
The latest federal mandate was ordered in February, just 10 months after the FCC ordered a 10 percent rate reduction that backfired for 30 percent of U.S. cable subscribers, who actually saw their rates go up.
Though the deadline is looming, cable operators around Western Virginia still aren't sure how the new FCC rules will affect cable bills.
A 7 percent decrease on a $25 cable bill will save customers $1.75 a month, but Ervin Stauss, general manager of Simmons Cable in Radford, cautioned consumers not to expect that.
"Realistically, most people may see a decrease, but for everyone to expect a 7 percent decrease; I don't think so." The rules allow cable companies to petition for a 60-day extension, so it probably will be July 15 before any new rates go into effect.
Federal officials predict that the rates will mean a lower bill for most cable customers, because the reduction can affect all channels except pay-per-view and premium services like HBO and Showtime.
Previously, the law regulated only basic cable prices - normally the network and public access stations found on channels 2 through 13. The price increases happened because cable operators were allowed to increase rates for their extended basic service, which usually includes channels like MTV, CNN and USA. Many systems also increased their prices on premium channels and added more pay-per-view services to make up for lost revenue.
Gretchen Shine, general manager of Cox Cable, said while the new rate regulations have the "potential" to affect more channels, that won't necessarily mean across the board price cuts.
The new rates depend on factors including the average income level of local cable subscribers, maintenance and equipment costs of cable systems and the number of people who have changed their local service in the past year.
All of those, and more, are included in the huge blue binder that Bingham has been studying for the last month.
"His tongue is hanging out," Shine said. "We're having a difficult time plowing through these rules."
Jim Corrin, general manager of Blacksburg Cable, said his office is in the same situation.
"We're just crunching numbers," he said.
The FCC has come under increasing attacks since the latest price cut was announced with cable industry officials saying they are being unfairly penalized.
Rich D'Amato, senior director of public affairs for the National Cable Television Association, said the rules contradict the FCC's goal of building an information superhighway.
"I can't think of any other industry that's regulated like this," he said.
The rate cuts are expected to reduce the cash flow in the cable industry about $3 million, he estimated.
Stauss said the federal rate freeze, which has been in effect for a year, has already forced Simmons to cut back on some of its community service programs.
"We've basically had to re-evaluate everything we were involved in," he said.
Stauss said Simmons, in an effort to cut costs, has decided to end an annual $3,000 scholarship program and drop out of the Virginia Cable Television Association.
"The bottom line is that the consumer is the one who ends up with less of a choice," Shine said.
Not a week goes by without Shine getting numerous letters and phone calls asking that new channels be added to Cox's lineup.
Folks want everything from more sports and shopping channels to Court Television she said.
One of the newest to the market is the National Empowerment Television Network. Shine said she's received three requests in the last two weeks for that public affairs channel out of Washington, D.C.
The latest rate cuts, however, will make it more difficult for all cable companies to add new services.
"Our bottom line basically dictates any kind of expansion possibilities," Stauss said. "This is just going to stifle growth so much."
But the new cable regulations are frustrating more than cable operators. Just ask Joe Obenshain, an assistant attorney for Roanoke County and member of a regional task force set up to regulate Cox Cable's operations in the Roanoke Valley.
The 1992 Cable Act, which mandated the first 10 percent rate cut, also gave local governments the right to regulate the basic service of cable companies.
Roanoke County, Roanoke and Vinton received federal certification and then teamed to form a task force to regulate Cox's rates. Last September, after the 10 percent decrease was implemented, the committee hired a Minneapolis attorney to act as its cable television consultant and examine Cox's rates.
The committee's initial report, declaring that Cox's rates are in line with the federal standards, wasn't approved until last week - less than a month before the new rates are scheduled to go into effect.
"There is some irritation on our part," Obenshain said. "We're going to have to go through it all again. ... It's really made it harder for everybody."
The cable consultant's bill, which will be shared by all three localities, is expected to cost $5,000 to $6,000.
Obenshain said he isn't opposed to federal cable regulation, but that he does think the local cable operators should be allowed to make a reasonable profit.
Meanwhile, Bingham keeps busy trying to figure out exactly how much that profit will be after the rate cuts. He estimated that he spends nearly 75 percent of his time at work trying to figure out the FCC instructions that are packed with communications jargon.
"It's sort of boring stuff," he said.
by CNB