PHILIPPINE CABLE SEEKS NEW LAW;PROPOSAL WOULD ALLOW FOREIGN INVESTMENT FOR THE FIRST TIME

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Cable operators in the Philippines are pressing for regulations that will keep telecommunications giants at bay while the cable industry finds its footing.

The industry has drafted the Cable Television Policy Act of the Philippines and has submitted it to the Senate and Congress. Three hearings, including one open to the public, will be held in each house. The final draft is expected to be submitted to the combined legislative body by July 29.

The draft legislation is a significant milestone on the path to a comprehensively regulated industry. Highlights include provisions for up to 40% of foreign investment and various tax incentives and import privileges. Foreign investment is prohibited for cable, because it is currently classified as a broadcast medium.

The powerful Philippines Cable TV Association has long resisted efforts to define cable as telecommunications because of cumbersome and expensive franchise conditions and the need to protect cable operators from competition.

PCTA General Manager Victor Agu said defining cable as telecommunications would "kill the industry. Small companies with less than 5 million pesos [$191,000] cannot compete with the [national telephone company] PLDT's 8 billion [$3 million] ... We don't want them to deliver cable until the industry grows sufficiently."

The draft document defines cable TV as a distinct technology separate from telecommunications and broadcasting.

"It's media, but it's not mass media," Mr. Agu said.

The industry may face a fight on cable classification when the bill comes up for public hearings. Senate recommendations are that cable TV be reclassified as a public utility. Even though this opens up the industry to foreign investment, it also gives the government power to set subscription fees.

Mr. Agu said this move will be resisted. "We want to be considered as a public service and not a utility," he said. The PCTA has significant support in Congress for its stance.

The proposal would lift ad restrictions to allow cable operators an added revenue stream.

The draft legislation also addresses advertising and overbuilding. The PCTA said the number of operators in one area should be restricted to protect the viability of the investment in the system.

PCTA figures say the Philippines has 312 cable TV operators and about 350,000 subscribers. The average system has between 1,000 and 3,000 subscribers, but many have no more than 300 to 500. The largest is Manila-based Sky Cable, with about 60,000.

Details of a new advertising environment are still being discussed. Limits per hour are most likely to be well below the 18 minutes allowed on broadcast TV. Cable stations are not supposed to carry advertising, although in reality some carry up to 4 minutes per hour.

The PCTA has also called for a dual system of central and local government regulation. A centralized government agency would issue licenses and a local government would deal with issues such as program content and com-munity concerns.

The draft legislation has to be passed by the Senate and the Congress before President Fidel V. Ramos may approve it. Proponents hope the measure will become law by December.

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