Phone Companies’ Cable Plans Put on Hold

WASHINGTON —  A Senate committee Tuesday effectively dashed any hopes that telephone companies had of gaining entry into the cable television business this year.

The Commerce, Science and Transportation Committee sent a compromise bill to the Senate floor that allows phone companies to build cable systems and run them as common carriers but bars them from owning any of the programming. The compromise, which largely maintains the status quo, replaced a more expansive phone company entry provision.

Removal of the controversial provision is expected to all but guarantee that the Senate will pass legislation to reregulate cable TV this year. Similar legislation is pending in the House.

The compromise, engineered by Sen. Daniel K. Inouye (D-Hawaii), did not completely dismiss the argument that phone companies need to have some involvement in television to help them build modern fiber-optic networks that can carry voice, data and video over one wire. Many believe that the technology will be crucial in the next century.

The bill grants phone companies the right to build plants capable of handling both voice and video communications without obtaining a local government cable franchise. Yet it leaves intact the current restrictions forbidding phone companies from owning the content that runs over their lines.

Critics, including cable operators, broadcasters and newspaper publishers, argue that if the phone companies were allowed to own the programs as well as the cable lines, they would have an unfair competitive advantage.

The bill also asks the Federal Communications Commission to conduct a one-year study of expanding the phone companies’ role in television.

“We would rather that phone companies, like anyone else, have to obtain franchises in order to build video transmission, but overall this (bill) would leave the phone companies in no better position as video providers than they are today,” said James P. Mooney, president of the Cable Television Assn.

The National Assn. of Broadcasters also hailed the bill as a victory. The phone companies have vowed that they will press the issue of entry into cable next year.