Capital Watch

Cable operators keep searching for new ways to cut fees. Not subscriber fees, of course, but the fees the industry pays to federal and local governments. Cable's latest gambit would cut $45 million from the $2 billion in franchise fees operators hand over to municipal governments.

Two Time Warner operators have told their city governments that local fees must be cut in order to stay within the federal government's 5% cap on franchise fees. Cities and counties usually charge the maximum, but some operators counter they should not have to pay the full 5% because cable systems also pay regulatory fees to the federal government.

In 2003, the industry's bill for federal fees came to $45 million. Combined, the federal and local fees put most MSOs' fee burden slightly over the cap. Local governments, fearing that more systems will make that argument, have asked the Federal Communications Commision to declare that federal regulatory fees don't count toward the 5% cap.

This is the second cable-fee issue pending at the FCC. The commission is already reviewing an industry request to decrease a proposed hike in the federal regulatory fee that would raise it from 66¢ per subscriber to 70¢.

Antitrust lawyer Deborah Majoras, President Bush's pick to replace Timothy Muris as head of the Federal Trade Commission, shares Muris's philosophy. She was a key supporter of his ill-fated attempt to stop the commission from reviewing media mergers and leave the task solely to the Department of Justice.

Historically, Justice and the FTC decide which agency will review a media merger on a case-by-case basis. The Justice maneuver was defeated after Democrats and activists argued that the FTC does a more thorough job.

At the time, Majoras was second in command of the Justice Department's antitrust division. In that capacity, she negotiated the government's settlement of antitrust charges against Microsoft.

She left Justice recently for private practice. Majoras's merger position and her lack of a track record on consumer advocacy won't sit well with Democrats when Congress takes up her nomination. If confirmed, she will serve the rest of Muris's term, which expires in 2008.

Muris, best known for leading the FTC's creation of a do-not-call list for telemarketers, announced last week that he is rejoining the George Mason Law School faculty.

Congress wants to keep new cable businesses largely unregulated. But Comcast CEO Brian Roberts (above) is pleading with lawmakers not to lump deregulation of cable telephone and Internet businesses into a rewrite of telecommunications laws, which could take two years. To guarantee cable's $13.4 billion a year investment in new services, "we need this sooner rather than later," Roberts told the Senate Commerce Committee.

He says operators' investments will dry up unless they are assured their companies won't be forced to lease access to phone and Internet-network competitors. The best route, he advises, is to pass separate legislation sponsored by Sen. John Sununu (R-N.H.) and Rep. Chip Pickering (R-Miss.) that would keep Internet telephone providers regulation-free.