Cable regulation bid delayed

The cable TV industry is free from new government regulations -- for now.

An attempt by the head of the Federal Communications Commission to gain new regulatory powers over the industry failed Tuesday in the face of furious lobbying by cable firms, a backlash from Republican commissioners and lawmakers and accusations of underhandedness by one of the agency’s Democrats.

But Time Warner Cable Inc., Comcast Corp. and other cable companies aren’t off the hook yet. FCC Chairman Kevin J. Martin, a Republican, crafted a compromise, approved by the commission, that would require all cable companies to submit subscriber data to the FCC within 60 days that could trigger the new regulatory powers. Currently, cable companies with fewer than 20,000 subscribers do not have to supply the data.

The FCC also passed a plan by Martin to make it less costly for independent programmers to lease space on cable systems.

Martin had pushed the commission to approve a controversial finding that the cable industry had achieved dominance in the pay TV market by turning more than 70% of those people with access to the service into subscribers. That threshold was set by Congress when it deregulated the cable TV market in 1984. Passing 70% gives the FCC new power over the industry.

Public interest groups have pushed for the finding in hopes that new regulation would lead to lower cable prices. Martin has been an outspoken critic of the cable industry, complaining that prices are too high and viewers must buy packages that contain channels they don’t want.

Cable companies fought back hard, fearing that Martin wanted to use the new powers to force them to sell channels separately, or a la carte. They questioned his data and motives, enlisting help from Capitol Hill.

Key congressional Republicans wrote to Martin warning that additional cable regulation would be misguided and harmful. And in an unusual move, both of Martin’s fellow Republicans on the five-member panel, Deborah Taylor Tate and Robert S. McDowell, publicly questioned the 70% finding, citing concerns about the reliability of the data from an outside study.

Commissioner Jonathan S. Adelstein, a Democrat, also questioned the study, and said Tuesday that the FCC’s own data were suppressed. When he finally got to see the FCC’s cable data Monday night, he said it showed cable penetration at only 54%. Those figures and data from two other independent sources were not included in the report on cable penetration that Martin had proposed.

“There was an attempt to cook the books on this report,” Adelstein said.

The opposition forced Martin to scrap his plan to approve the finding Tuesday, delaying a scheduled commission meeting for nearly 12 hours.

The cable industry has cited several independent studies that found that its market penetration had not reached 70%, and was falling in the face of competition from satellite providers.

“Concerns have been raised by several of the commissioners” about the data, Martin told reporters as commissioners wrangled over his compromise. “So one of the approaches I think that would be a reasonable step . . . is just say, ‘OK, let’s have the industry file the data so that we can determine whether we’ve reached it or not.’ ”

Public interest groups said consumers would suffer.

“When the American people see their cable rates rise yet again in January, they at least will recognize that this is not a competitive market,” said Harold Feld, senior vice president of the Media Access Project, a public interest law firm.

At issue is the so-called 70/70 rule. Congress added the provision when it deregulated the cable industry in 1984 to ensure it would not dominate the TV market. The FCC regains some regulatory powers when cable TV service with more than 36 channels is available to 70% of U.S. households and 70% of those households subscribe. There’s no dispute that cable is available to 70% of households. But there is raging debate over whether 70% of those households subscribe. The FCC’s last report on the issue, in March 2006, estimated cable penetration for 2005 at between 54% and 56.3%. The National Cable & Telecommunications Assn., which represents cable companies, submitted estimates at the time from private sources of penetration rates between 63.3% and 68.9%.

Martin hinged his case on a 71.4% penetration rate in the Television and Cable Factbook by Warren Communications News. But Warren officials have since said its data weren’t suitable for determining the 70/70 threshold because not all cable operators were included.

“We applaud the leadership of each commissioner who questioned and withstood the attempt to use incomplete data in order to justify greater regulation that is completely unwarranted by the competitive marketplace,” said Kyle McSlarrow, the cable trade association’s president.

The FCC did not deal with another controversial proposal, pushed strongly by the National Football League, to create an arbitration process when programmers can’t reach agreement with cable operators. The NFL has struggled to get its NFL Network onto big cable systems.

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jim.puzzanghera@latimes.com

Times staff writer Greg Johnson contributed to this report.