CATV Hearings Special (Reel 1)

The problems and problems of cable television. A special report on four days of hearings by the Federal Communications Commission on the problems technology and the future of cable television in America. Here is Macon Ferber WEAA public affairs cable television came into existence some 20 years ago when it was used to bring TV programs to rural areas which couldn't pick up the local stations signals very well. Now however it is much more with an estimated twenty five hundred cable station systems serving 14 million people across the nation and even beyond that it's a potential a capability a futuristic idea of what's called a wired nation with dozens of TV channels coming into our homes carrying a myriad of things cultural programs constant news reports stock market reports local high school ball games. It's the possibility of two way communication between the viewer and sources of information. It's the concept of a housewife dialing her shopping list to the supermarket and it's other things

that haven't yet been thought of. But as we shall see tonight it will probably be some time before this potential is realized. During the past few days at the new auditorium of the National Academy of Sciences here in Washington the Federal Communications Commission held eight hearings on the subject of cable television and it was clear from these hearings that the complexities of the whole field of cable TV are vast. Tonight we'll touch on just a few of the many aspects that make up cable television as they were brought out during the twenty five hours of testimony at the FCC hearings. There was no intention or possibility of presenting a thorough and complete look at this complicated topic but perhaps we can highlight some of the problems and interests that exist at this early stage of development of cable TV. At least we will try. With me is Philip Hochberg an attorney experienced in communications law to help delineate and we hope translate what we will see and hear. The first of these hearings dealt generally with

cable TV and a variety of issues were raised. Still what can you give us a brief rundown on some of the points made. Well link the first panel dealt with what we might call the blue sky potential of cable. The commission was seeking discussion of what directions it should try to steer the existing and future cable systems several themes were repeated during that first session. In an industry where there has always been an economy of scarcity limited broadcast channels suddenly the commission is faced with an abundance an economy of abundance greatly expanded numbers of channels on the cable system. How are they to be best used for the public good. Another recurring theme was the question of access. Who can say what to whom. Who has the right to go on the cable. What can he say. Can there be censorship by the operators who should shoulder the liability if defamatory statements are made. And how do we guarantee that the people on the receiving

end also have their access not to go on the air but to hear what has been said on the air. And of course the omnipresent question how should the FCC act toward CATV future. Let's go now to that first panel discussion to hear Irving Kahn president of teleprompter a major cable television company. Paul Comstock representing commercial broadcasters McGeorge Bundy whose Ford Foundation has been preeminent in supporting public broadcasting and Ted led better representing minority interests and done a good job in presenting different points of view. I'd like to make a fundamental point which seems to have been missed. Cable nobody really liked cable but the people they surely didn't have any great love by the broadcasters and the Commission ignored them for such a long time that they really got the feeling they weren't wanted.

But as the people subscribed and wanted it they grew and they grew because they felt the need. I think that the enlightened point of view of this commission should be extended to this point. You can't make rules now that are going to specifically legislate protection in the dynamics of an industry like cable. You cannot try to say you can't you can do it and if you do it you'll end up like with another freeze which didn't exactly do so many great things for broadcasting as my recollection goes. And we've been listening to the tremendous damage over the years that cable might do to the broadcasters and let's protect them so we end up by protecting the top hundred markets who really need it badly and we ignore the rest of the United States who I don't think need it at all but if anyone does they might. Now interestingly enough.

There is a great opportunity here and it's very hard to make this point almost every speaker has touched on and I don't know if the commission has considered it. U.S. regulators. Those of you who have been on the commission a long time and those who have learned a lot in a short time have been raised in an environment where you have a limited number of channels available and therefore a great argument. How do we get the optimum use. The exact opposite is inherently true in cable technologically. The way it isn't the problem of having a piece of wire that if you change an amplifier will make available 40 60 80 or 200 channels that's not the problem and I don't think there's a speaker here. If he's informed even a little bit that could argue that point. The problem is how do you program what are going to do in all these channels. We have them available right now and you don't have to worry one

doggone bit about our adding in sufficient time to take advantage of all of the man that the public access is going to need to these channels. The problem is what are you going to do with them. How are you going to program them. We've got a hard job in this country regardless of the monopolistic characteristics of getting three networks spread across the country and programming them properly. The fact is that Cable offers great opportunities to do new things. Don't stifle it with synthetic regulation that's really the basic theme or has to be of our hope let us grow. Let the marketplace make a decision. The public will benefit. Tell you what they want I'll tell you what they don't want. Access Absolutely. You should do everything possible to make access a factor but you can't legislate a technically sconce time.

Well I I have a couple of points I'd like to make and I think they too go to the gentleman on my right and the speaker on the extreme left namely Mr. Khan and Mr. Valenti. Let me take them in reverse order. First I have to agree with with Mr. Valenti that copyrighted program should be copyrighted that is the owners of the copier that WRITE IT programs that people who develop them should have the right to ensure that they are compensated for those programs. That's the trouble today and the whole use of broadcast programs broadcasters pay the fair market value of the programs and the cable operators who pick up these programs from wherever sometimes very distant places and sometimes the same program that's played in the market that pay nothing at all. This is the unfair competition aspect I don't want to dwell on that because I know that later on there will be copyright experts here talking further about it.

But Mr. ability makes the point that CATV system should not be limited in any way with regard to entertainment. What he's really talking about is the point that I made pay cable television what he wants to do and I don't blame him for it is to sell the performance rights to motion pictures on pay cable. And he wants to get away from any of the rules that would prevent the siphoning of the programs now on free television over the pay cable. This I think is the whole problem here. I know that certain moving pictures have never even been sold on broadcasting. Now if they are if they are withheld and sold only on pay cable it appears to me that a large number of the population will not be able to see the programs or at least for a long long time as was the case in the recent fight. I think we have to remember here that we are talking about the entire public when we talk about broadcasting when we talk about programming.

And at least 20 million people in the United States live in homes that have a a gross income of less than $3000 per year. In no case has anyone of the people here said how these low income people are going to be able to have the cable much less how they're going to be able to obtain these very popular programs that will be sold on the paid cable. I think in the long run certainly and maybe it's a very long long run we will have all of the promise of cable technology but in the short run we're talking about mass entertainment programming. That the program suppliers and the cable companies will sell for what the traffic will bear. The poor will really be effectively denied these programs that can now be obtained unless there's some kind of subsidy. No one's mentioned what that should be and I certainly I certainly have no idea in today's difficult economy.

The final point I would make that Mr. Kahn made here he said that the new services on cable would come in the almost immediate future. He must surely be alone or have very few people with him because all of the technicians all of the cable experts that I have talked to tell me that this is a long way down the road and indeed in the in the comments filed before the commission and this docket there is no one that says these services are going to come in the very short run. Mr. Khan will be the first time I need them alone but I'd like to point out that we have an actual working test now and at least one of our system's hardware to do the two way precisely that has the enhanced terminal that has the the ground work in it that technologically is available now. It's our program and it's our design and certainly I'm speaking now from my company

that some time before the middle of 72 to have a substantial several thousand homes I mean thousands and possibly in excess of a hundred thousand working. If that happens if Mr. Comstock will just read a little bit about the history of radio and television when he got into it the geometric growth that took place after the basic hardware is established is really dynamic and I'm talking within a five year frame. There is absolutely I consider virtual certainty that a good percentage of the homes in the United States could do or could have available in-house terminals that they have in-house terminals they can do a variety of the things we're talking about simultaneously while this is being developed There's other technology satellites are going to be up there. The commission just ends up by letting out. Some licenses I think in two or three years you'll have the interconnect. And I'd like to point out half jokingly It took

one year for our company to develop jointly with Hughes Aircraft short haul microwave. It took us three years and four months to get a license for commercial use at the FCC. Now. This is not necessarily always the case but this in fact happened and I'm not saying that's wrong maybe they had to take a good look because we were going into areas where no one had been before. But there ought to be a better process to get something going and maybe I don't know how to make that call. I think the alternate that Mr. Comstock offers is well you haven't got it and all people say it isn't going to be so let's assume it isn't going to be we're saying just the opposite. If we haven't got it my country's going to be awful broke and I'm going to have stockholders that are going to be very unhappy with the investments we're making to make it happen and make it happen and make them happy. I don't believe that you should add to our burden the

restrictions if it isn't going to happen it's got nothing to worry about and if you're going to restrict us to guarantee it won't happen so give us a chance to be wrong and prove it. Mr. Gandhi I don't have much to add as chairman to what I've said already I do think that the dialogue on my right indicates the importance of getting a staunch and the equal importance of maintaining flexibility to regulate this system as it develops I have a good deal of sympathy for the view that we need to get this technology into business. I think it is also clear that if you give franchises Now that last for 20 years to commercial operators with a particular concern for stockholders you delimit most unwisely the prospects for variety and quality over time. Mr. Chairman I'd like to ask Mr. Bundy as a practical man saying if he objects to a 20 year franchise How does he suggest that we go to the marketplace to secure funds to build these systems and present these

hundreds of millions of dollars if we cannot offer our investor a substantial period of franchise so they can at least see the opportunity. Remember these franchises are not exclusive. Ninety nine percent of the cases. How are we going to finance the growth. I don't think the foundations can do what I wish they could but where are we going to get this money if he will accept Ford money to program any of our channels and give you full access and full control. Any time you want to make it available that's on the record. But candidly how are you going to get the necessary funds to build and operate on short term available franchises. We had this very problem in New York. We were on internet radio part of your question just to kind. Yes yes yes. Part of my question this time is let me turn the question around as chairman I think Mr. Khan in your testimony you have said that it's important for all

these things to happen and it's important for you not to be regulated. I do not think you ought to ask for a 20 year unregulated access to anything as important as this do you. May I ask another question. Short of seeing as what we are asking for is exclusive. Is it that limiting and how. What I'm trying to say if you stop us in one sense getting necessary funds to develop. Are you accomplishing anything where you I believe you can accomplish what you want by having a non-explosive capability committed to second third and fourth franchise Don't you believe that. I think that is one way but by no means the only way and I also think that it's just terribly important to have variety in the way this thing is tested out during the formative years and that we should not commence in 1070 franchise controls for 1990.

We're back to our calendar milk which we're worried about the shepherd. It cannot hurt. Excuse me. Has these highways exist so long as the system is viable and the commission sees that channels are available and are made freely available to anybody who has something to say. Haven't you accomplished your objective. I'm concerned and I think the Commission should be concerned about the vesting of interest. And if you listen closely to the argument of neighbor on your lap how many billions of dollars was at stake. You'll see something to what I mean. I heard a fish like dinner. And I'm very concerned about what I'm hearing here because I hear a lot of people talking about again access it's a word I've use. I basically agree that people who have created something should be paid for creating that product. But I can support Mr. Valenti's proposal much stronger

if it were not true that the motion picture industry is bad and its hiring and employment practices as a broadcast industry. Secondly we're talking about how to set up. Ways for people to program on cable channels we're talking about ownership. We're talking about a whole lot of things but what it boils down to is how can we make sure that the programming is provided to serve the needs and interests of people. I'm very familiar with Mr. Khan's situation in New York. He says Come on provide programming we'll put it on. But the problem with minority people in this country is that Mr. Khan has to exercise some decision as to what programming he will accept on a cable channel. This is true on the part of broadcasters also.

And when minority people have to go through majority people to have a selection made as to whether that programming will be put on them that is not true communications. The Corporation for Public Broadcasting and educational television are basically good concepts but they don't always work either. There is a case right now before the commission where the Alabama Educational Television Commission actually misled I show ID just as well we not discuss the case it's pending divorce in this case form you don't mine. OK May I just say that individual stations and the way it's going right now individual cable systems will have the opportunity to select and to block out programming even on local access channels. The only way I can see to

eliminate that barrier to programming is to apply common carrier principles taught us thank you. Several other issues were raised in that session but it was the second session that really got down to a specific. The panel was supposed to talk about another subject but instead it seemed to dwell on the topic of distant signals. Phil what are distant signals. Link some of the cable interests would reply to that question by simply answering distance signals are the name of the game. Of course that that really just begs the question for the home viewer so let's see if we can't define it a little better. Every television station is operated on a specific channel with certain power from a transmitter located at specific location and specific height. Now all of these factors go into making up a station's signal strength. The Commission's definition of distance signal depends on the signal strength in your community. So for instance the signal of a New York station WABE see

TV for instance is distant to New Haven Connecticut but not distant to Bridgeport Connecticut just a few miles down the coast from New Haven. The importance of these distance signals is that they form an economic base for a CATV system. So say the cable operators. It will provide programming not otherwise available in the community. Nevertheless for the past five years the commission has resisted the attempts of systems to carry these distant signals in the largest population centers in the country. At this second session Alfred stern of television Communications Corp. revealed a cable industry compromise proposal in return for the right to for distant signals and all nearby signals. The cable industry would be willing to pay a reasonable copyright fee. They would continue to block out sports which would be required of local stations. They would provide unreserved cable channels for the public. They'd protect syndicated shows by not carrying them on the distant stations until the local stations that carry those shows

once and they would abide by a special failing station plan to protect certain television stations. The panel was supposed to discuss the Commission's public dividend plan which would have required substitution of commercials on the programs of those distant stations along with a payment to public broadcasting and the copyright payment. But as Commissioner Thomas Hauser said late in the day. I'm not defending the plan. I'm trying to determine how dead it is. It's probably accurate to say that the commission will look to some other formula. Here now is a discussion on distant signals with FCC Chairman Dean Birch Alfred Stern a cable system operator Bruce Merrill a cable manufacturer and operator David Baltimore a commercial station manager from Wilkes-Barre Pennsylvania. John McCoy who is involved with both commercial and cable broadcasting and Leonard Ross a Harvard law professor. Would you agree that the real not the real God issue is as Mr.

McCoy says the importation of some or many or a few distant signals to make cable short term an attractive proposition. And I would agree that for the implication particularly into the larger markets which are now i'm not allowed to get into. We need importation of the distance it was to form a base of acceptance on the part of this it's about average for this service. It may be less important as time goes on but it certainly is one entry into the market and essential in my opinion. You agree that mosquito. There are only two places Mr. Chairman I know of in the United States where a successful. Apparently successful CATV operations are are going on where they where they do not bring in signals from outside the coverage area of the of the stations they're carrying. That's in Manhattan. And in the Hollywood Hills area north of Los Angeles and both areas there are significant and unique reception problems

which the system is overcome. And in my opinion create the necessary ingredient to the apparent success they're enjoying. I know of no place else in the United States where the IC with the exception of small areas in San Francisco and even there they bring in stations from San Jose and Sacramento to supplement the stations that are available and Sam's Siskel. Basically it's my opinion that in order for a CATV system to be successful initially at least without the importation of some other distant commercial. Signal has to offer the public and increase viewing capability. You've got to have all 15 to 20 off the air signals in the area with a large sprinkling of UHF signals in with that so that the combination of reception problems color reception improvement and relieving some of the pop problems people have of receiving UHF are

necessary. Otherwise I don't. I think if if this weren't the case you would see some. Some systems being built in some of the other large metropolitan areas of the of the country and I don't know I don't know any of this going on here. Yes EARNEST Well I'm sure I believe that in this particular item that the FCC and the broadcasters are looking through the various things from opposite sides. I don't feel that a New York City striving for Tasia would mean a darn thing. The reason that CATV can exist there is because of the reception problems. Likewise in a Philadelphia Los Angeles I don't think that the need for outside signal is of importance because those are the production centers in the largest cities in the country. It is obvious that small segments of anything can exist profitably and know it because as was said was so large you can find an economic base for itself. The real impact is not in the top 10 or 15 markets but everything beyond that were eventually the rest of us will be clobbered not only as we have with others. When I was in Wilkes-Barre Scranton market it's 58 now.

Prior to the the definition of a DIY market it was 44 directive which may I just ask one thing it's often been observed by critics of the FCC Kamal policy that it's always been backward to the very people who can stand it least are the ones who are required to complete the CATV namely those on the bottom and those out of the top hundred market who do tend to agree with that of the top 30 or 40 markets I'd say that I'd like to have if they were all talking to 7. No no never. If we could win all of the cases that we have bending before you we could and could bring them to a combination of real they begin developing a real part of our market. We might conceivably go as high in the standings as 46 they're 40 50 so I'd be a top 50 market with other new problems that you create for us but if you if you study the other statistics the top 30 or 40 markets provide a gigantic percentage of the total listening in the United States the rest of us contribute half

percent and three tenths of percents and things like that and so that we don't have the kind of a base that those large markets have going I was very interested in the replies to your question that's a good question. Well first of stern and Mr. Merrill said PV needs importation of distance so you know and actually to succeed I would like to have one or both of them. What happens after initially. What happens after initially I'll answer first and then through school if that's alright. Sure what happens after that is that other services I think will be supplied Mr. Rush's indicated and I think rightly so earlier on that a cable system like any other business needs an economic base in order to be able to offer additional services. I won't go into that you heard a panel this morning talk about those additional services. They exist they don't exist will exist shortly and we will be able to supply the public with the advantages

of those additional services. But we cannot get started in these markets. It is my opinion unless we have an opportunity to build that base of 5 percent we need distance enough to do it. How long would you need the right would depend to find the expertise in all kinds of ways. How fast you build it how fast the public accepted it what kind of a good selling force you have hey it would be very hard to determine.