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Kerry Surge A Plus For Cable

What could be better for cable operators than a battle for the White House between President Bush and Sen. John Kerry, the Massachusetts Democrat?

Bush and Kerry are two politicians who — while poles apart, ideologically, on national security and fiscal policy — don't appear to harbor animosity toward the giants of pay TV.

During his time in office, Bush has left cable alone. As a senator for nearly two decades, Kerry has supported a deregulatory environment for cable to the extent possible, even when such a stance was widely unpopular.

With triumphs in Iowa and New Hampshire, Kerry has overtaken former Vermont Gov. Howard Dean as the frontrunner in the race for the Democratic presidential nomination. The results from the seven-state primary on Feb. 3 could generate all the momentum Kerry needs to earn his shot at toppling the Bush administration.

Kerry's surge is good news for cable because the lanky, 60-year-old lawmaker has closely observed the industry from his seat on the Senate Commerce Committee. By and large, he has resisted joining the chorus of congressional cable bashers who tend to view the industry through the narrow prism of consumer rates.

For cable, Kerry might even be considered family. His brother, Cameron, who crowded the stage with other campaign officials to celebrate the senator's primary wins, is a cable and telecommunications lawyer in the Boston office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C., a firm that has represented Cablevision Systems Corp. for many years.

People who know Kerry indicated that he would not abandon his moderate stance toward cable in the White House, that he would attempt to sand the edges of cable-hostile legislation and that he would not appoint people to the Federal Communications Commission who would support Draconian measures.

"He is very clear that he is a capitalist. He would not, I presume, be in favor of regulation that doesn't accomplish something," said one Kerry supporter, who asked not to be named.

According to another Kerry source who also asked for anonymity, many years ago Kerry viewed his role as a referee between cable operators and consumers at a time when complaints poured in about shoddy service and rising rates.

But that was when cable was the only pay TV player in town.

Today, the source added, Kerry believes his role has changed because cable faces competition from direct-broadcast satellite carriers in video and from large phone companies in high-speed data and voice communications markets.

The source added that Kerry's current focus is less on intervening on behalf of consumers than on ensuring that cable and its competitors face a level playing field so that the benefits of competition flow to consumers.

"I think [President Kerry] would enjoy watching that play out," the source said.

Kerry was elected to the Senate in 1984, just after Congress passed sweeping legislation deregulating cable rates. In 1992, Congress reversed gears, deciding to restore price controls on cable rates and provide handouts to broadcasters.

During debate on the Senate floor, Kerry sponsored a bipartisan amendment designed to take some sting out of the pending legislation. The amendment would have prohibited rate regulation above the basic tier and would have removed program access provisions requiring cable companies to sell their programming to rivals.

"[Sen. Joe] Lieberman (D-Conn.) and [Sen. Al] Gore (D-Tenn.) were pushing very aggressively for re-regulation of cable, preventing discrimination in the distribution of cable programming. Sen. Kerry was not helpful to consumers in that battle," said Gene Kimmelman, senior director of public policy at Consumers Union.

A Kerry ally said the amendment was designed to impose "regulation, not strangulation" on cable companies.

Kerry's amendment was defeated, 54 to 35.

After the loss, he voted to pass the cable bill in January and to override President George H.W. Bush's veto of the bill that October.

In June 1995, the Senate began work on telecommunications-reform legislation, which included provisions that would lift price controls on expanded basic cable effective March 31, 1999.

Lieberman offered an amendment that would have allowed the FCC to continue to regulate the upper-tier rates of large cable companies that were not charging reasonable prices. The amendment said rates would be deemed unreasonable if they substantially exceed the national average rate charged by cable systems subject to effective competition.

Aided by Kerry, the cable industry fought the Lieberman amendment and defeated it, 67-31.

Before the vote, Kerry rose from his seat on the Senate floor to urge the amendment's demise.

"I think all of us have learned that when you have regulation, you inevitably have a skewing of the market which impacts the capacity of people to take risks, people to raise capital, people to invest and diversify," Kerry declared.

Kerry has also kept an eye on cable mergers, including America Online Inc.'s takeover of Time Warner Inc. In the fall of 2000, he co-wrote the FCC and the Federal Trade Commission raising concern about AOL's grip on the instant messaging market.

More recently, Kerry raised concerns last June in response to the FCC's decision to rewrite media-ownership rules, which allowed large companies to accumulate more TV stations and permitted the common ownership of TV stations and newspapers in the vast majority of local markets for the first time since 1975.

Kerry co-sponsored a resolution of disapproval that would have voided the FCC's new policies. The resolution passed 55-40. But Kerry missed the Sept. 16 vote.

He was on the campaign trail.