Regulation with regard to the NII can be thought of in two ways: the regulation of the content and traffic on the networks and the regulation of the industries that will be creating and maintaining these networks. From the cable television operator point of view regulation of the content of these new media will be largely the same as it now is for television. Although it is an important concern, there is not a major controversy regarding how the FCC regulates current television cablecasts. Those in the cable industry expect this situation to extend to interactive television. There are however major issues regarding the regulation of the cable television, telephone and wireless communications industries and the types of activities they may engage in. This is a major concern for cable operators.
In a well publicized quote from an interview in Wired Magazine - registration required for this site - John Malone remarked,
Yeah, well if it helps, I'll make a commitment to [the vice president], OK? Listen Al, I know you haven't asked for it, but we'll make a commitment to complete the job by the end of '96. All we need is a little help . . . you know, shoot Hundt! Don't let him do any more damage, know what I'm saying?referring to Reed Hundt, Federal Communications Commissioner and in Chicago Tribune, Gerald Levin, the chairman of the board of Time-Warner Inc., is quoted as describing the 7 percent cut in cable rates as Soviet-style regulation.
The damage these gentlemen are primarily referring to is the Cable Television Act of 1992 in which congress, on the recommendation of the FCC enacted legislation to, in effect, mandate price caps for cable television service.
Moreover, the rate reregulation mandated by the Cable Act of 1992 has amounted to a loss of $2 billion in cable industry revenue through 1994, delaying deployment of new technological services to many homes.--CableLabs whitepaper
These caps are considered to be one of the factors causing the downfall of the proposed mega-merger between cable giant TCI and Bell Atlantic. The cable television industry fears similar future legislation which might prevent them from adequately recouping their investment in new infrastructure.
Deregulation of these industries on the other hand is creating an environment where companies are now facing competition in ways that they have not before. Legislation before the current congress (Telecommunications Competition and Deregulation Act of 1995) and promised to passed by the end of this year by both Speaker of the House Gingrich and the President) will allow telephone companies to provide television services and cable companies to provide voice and data communication services. It is hoped that this deregulation will allow free market competition to drive innovation and lower the consumer costs of future services. This will obviously have great impact on the profitability of all of the affected industries. Many consider the cable television industry to have the most to gain whereas the telephone industry with by far the largest profits (each Regional Bell Operating Company has revenues in excess of the entire cable industry) may have the most to lose.
