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Time - Man of the Year
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Time_Man_of_the_Year_Compact_Publishing_3YX-Disc-1_Compact_Publishing_1993.iso
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moy
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072792
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07279911.000
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1993-04-08
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3KB
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THE WEEK, Page 22BUSINESSNew Competition for Cable Companies
After a long fight, the FCC allows phone companies to carry
TV signals
The cable television industry has long eyed telephone
companies warily, and now the Federal Communications Commission
has given it ample reason for that concern. The FCC has granted
phone companies the right to carry TV programming into millions
of homes. The controversial decision is a major victory for phone
operators, which will now be able to transmit TV shows, movies,
sports and news formerly carried only by cable and broadcast
networks. They will also be allowed to acquire a financial
stake of up to 5% in programmers like cnn, Walt Disney and even
cbs. The ruling is expected to pave the way for new consumer
services, including interactive television and home shopping,
and to lower cable rates by promoting more competition. In
return for the new freedoms, phone carriers must open their
networks to all comers.
The cable industry, which fears being run over by its much
larger rivals, immediately attacked the FCC order. Cable
companies complain that phone carriers can compete unfairly by
drawing on ratepayer funds to subsidize new TV ventures and
using their monopoly over local telephone lines to restrict
access from competitors. Although the FCC vowed to guard against
such practices, skeptics point out that the agency's resources
are too limited for it to do so. Critics also note that any
gains consumers realize from lower cable prices could be more
than offset by the $100 billion to $500 billion they may end up
paying to upgrade the telephone system to transmit high-speed
video information.
While the plan is far-reaching, the FCC hopes to go even
further. Federal law still prohibits phone companies from
producing TV shows. And rules barring phone operators from
owning cable-TV systems also remain intact. But the FCC intends
to lobby Congress to waive both restrictions. The FCC also gave
the cable industry's push into telecommunications a boost by
proposing that local phone companies be prohibited from offering
a new pocket telephone service. Says Kenneth McGee, an analyst
at the Gartner Group: "The FCC wants to redefine the
communications industry in America." The risk is that the FCC
may be unwittingly replacing two separate monopoly franchises
with one supermonopoly.