Phone Companies May Be Able to Own Systems : FCC Considers Loosening Cable Rules

WASHINGTON — The Federal Communications Commission, saying that more competition was needed in the cable television industry, announced Wednesday that it would consider allowing local telephone companies to own cable systems.

An 18-year-old FCC rule and a 4-year-old law bar telephone companies from running cable systems in their own service areas, but the FCC indicated by a series of actions Wednesday that it favors lifting those prohibitions.

Use Waivers

The commission voted 3-0 to seek public comment before making a final decision on a recommendation to Congress, which will have the final word.

It also asked the staff to formally define what would be “good cause” for waivers of the prohibition as allowed by the law and the rule. By that action, the commission indicated that it could use waivers to allow telephone companies into the cable television business even if the 1984 law is not rescinded.

The commission called the prohibitions a draconian form of regulation that no longer is needed because the cable industry has become large and strong enough to compete with the telephone companies.

If telephone companies are allowed to operate cable systems, the consumer will benefit from increased video services, including home shopping and video phones, as well as having an additional source of pay television programming, the commission said.

“I would like to see the public benefit from competition in the delivery of video products by wire,” FCC Chairman Dennis Patrick said at the FCC meeting.

But Commissioner Patricia Diaz Dennis said she was not yet convinced that phone companies should be allowed to control the content of programs.

The cable industry has fought hard to keep the phone companies out of their business, arguing that the huge firms would stamp out industry competition.

James P. Mooney, president of the National Cable Television Assn., suggested that consumers’ basic phone bills would increase if the telephone companies delve into cable television.

Out of Date

“Consumers . . . would find themselves forced to subsidize high-risk investments in pay TV. The only certain results would be to push telephone rates even higher than they are now,” he said in a statement.

Although it will be up to Congress to lift its prohibition, and although the FCC is not expected to develop a final recommendation to Capitol Hill until later this year, the commission made clear it believes that the existing prohibitions are out of date.

Cable companies can serve about 80% of the homes in the nation, the commission said.