nomic point of view, it would not appear to be advantageous for these programmers to restrict access to their programs and in the end competition, not regulation, benefits consumers.

As a result of this and as a member of this subcommittee who has played an important role in crafting the Telecommunications Act of 1996 I fully support the goal of deregulation to provide consumers with more choices, lower prices, and certainly better quality service.

No amount of Government regulation and bureaucratic red tape can give consumers the wide variety of innovative products and services that come about as a result of competition in the free market, and I thank you very much again, Mr. Chairman, for holding this hearing and I look forward to the testimony of the witnesses. I yield back my time.

Mr. TAUZIN. I thank the gentleman from Colorado and the Chair now recognizes the gentlelady from California, Ms. Eshoo, for an opening statement.

Ms. ESHOO. Thank you, Mr. Chairman. And thank you for holding this hearing this morning. Increased competition was the foundation of the Telecomm Act. We spent an awful lot of time in this hearing room stating that and building that into each line that we not only drafted but then passed finally in the Congress. Today, we have the opportunity to learn whether this foundation is holding up under the strain of real world pressures and marketplace forces.

Competition in the cable industry or multichannel video programming is I think a good place to start to examine all of this. Much was promised during the debate on the Telecomm Act from phone companies and others with regard to cable. Companies were ready to compete from day one if Congress would just free them from the regulatory framework of restrictions that existed. So where are we today?

We should remember that any assessment of video competition at this point in time, at least in my view, is nothing more than a snap shot of the process. Nonetheless, as of today, in my view, again, it is a blurry picture but it is early in the process.

Cable rates have risen in some areas and companies that were claiming readiness to compete 2 years ago are not even thinking of competing today. And yet there are some signs of hope.

Direct broadcast satellite services are growing tremendously as are other alternative delivery systems. Some companies, including some that are here today and testifying before us, have lived up to the promises that were made.

So, in closing, Mr. Chairman, I do look forward to hearing from the witnesses, particularly those that would create calls for new legislation in the area of access of programming. I am hesitant to believe that the snap shot of the competitive process that we are looking at today contains all the information that we need and that we should think about tinkering with a work in progress.

Nonetheless, I do look forward to hearing from everyone today as to why they would make any case or how they would design their case to call for new legislation. It took us a long time to create the Telecomm Act and I think that we need to proceed with caution but also examine what people have to say and what is creating the forces that they present to us.

So I yield back the balance of my time, again with thanks to you for calling this hearing. Thank you.

Mr. TAUZIN. I thank the gentlelady and the Chair now recognizes the gentleman from Illinois, Mr. Shimkus, for an opening state

ment.

Mr. SHIMKUS. Thank you, Mr. Chairman.

I would like to thank you for calling this hearing today to learn more about competition in video delivery systems. This issue is important to me since, like all Members of Congress, my constituents contact me on a regular basis about their cable rates. Just recently, Baur's Restaurant in Springfield, Illinois, contacted my district office about a large increase in their cable bill. Since there is only one cable provider in the area, they felt that there was no choice but to discontinue their services.

They wanted to know how Congress could allow such a monopoly to exist. While, as members we can try to convince our constituents that changes are coming, most people want to see changes now.

As a result of the Telecommunications Act of 1996, we will be seeing many changes not only in telephone services but in multichannel video programming distribution. It is very exciting to see technology advancing and competition flourishing in this area of telecommunications. I also had a chance 6 weeks ago to visit Charter Communications, which is my incumbent provider. The technological advances that they are planning for the future are very exciting and this is because of competition coming in the future.

This competition will not only keep prices in check, it will improve services and, most importantly to me, create jobs. As the new media services evolve, more workers will be needed to build the infrastructure and maintain the systems.

Many people feel that competition has not come quick enough to video delivery systems. Many still find that in their area, there is only one cable provider. However, we need to remember that the Telecommunications Act is less than 2 years old. It takes time and resources to promote competition in an industry which used to have just a few players. For example, we are now seeing tremendous growth in direct broadcast satellite systems due to advancing technology which has made dishes smaller and rates more affordable.

Additionally, Mr. Chairman, I would like to welcome Ms. Lenart from my home State. While Ameritech is not based in my district, it does provide telephone service to a large part of the district.

Again, Mr. Chairman, I thank you for calling this hearing today and I look forward to today's testimony and I yield back the balance of my time.

Mr. TAUZIN. I thank the gentleman. The Chair is now pleased to recognize the ranking minority member of the full committee, former Chairman John Dingell, for an opening statement.

Mr. DINGELL. Mr. Chairman, thank you. And I thank you for holding this hearing today.

Since the passage of the Telecommunications Act last year, a great deal of attention has been focused on the impact of the new law on competition in the local and long-distance telephone markets. But the Act was designed to do much more, to open all telecommunications markets to increased competition including cable

television and other methods of video distribution. And the issues before us today clearly affect the lives, the pocketbooks and the checkbooks of millions of American families.

I think it is important that we recall to the benefit of all that this committee worked very hard in drafting the Telecommunications Act to make sure that robust video competition amongst other kinds of competition would become a reality. Prior to the passage of the Act, single cable television franchises held a virtual monopoly on video delivery in most of the communities throughout the Nation. The law was specifically designed to provide a key to new entrants who wished to enter these lines of business and to substitute competition, a desirable form of business activity, for regulation, something which the country is coming to realize is a less desirable form of business management.

I appreciate the chairman holding this hearing today and I do thank you, Mr. Chairman, for the purpose of finding the key to unlocking the competition problems that are contained in the new law and to see to it that the new law is working as well as we had hoped. Are we seeing widespread competition drive down prices and improve service for consumers? It certainly is no secret to any Member of Congress with access to a telephone or a fax machine that cable rates have increased over the past year and our constituents want us to find out why this situation obtains.

However, I can say from direct knowledge that video competition is becoming a reality in many communities, a number of which are located in my home State of Michigan. And I am very pleased to note that Ameritech, amongst others, is providing that kind of competition which is important and will enable us to eliminate controls and regulation. It will allow the marketplace to decide who will make how much and how the people will be served, and will allow consumers to make rational choices with regards to the handling of telecommunications matters.

And I want to point out that cable franchises are expanding to include two or more in more than 47 communities serving 2 million people in the Detroit metropolitan area. The Detroit News recently noted that in virtually every area where Ameritech was competing, the incumbent cable operator was holding down the line on prices while at the same time increasing the number of program channels available to consumers.

Unfortunately, as one would expect, in those areas which are surrounding Detroit where consumers still have no choice of providers, prices continue to climb. It is clear that rates do fall and services do improve when markets are open and when competition appears.

Although many of my constituents are beginning to see the benefits of video competition, construction of new cable systems is time consuming and it is a capital-intensive undertaking. Those who are building cable facilities from scratch are offering service completely independent of telephone services, which is an option newly available to companies since the passage of the Telecommunications Act. But competition simply cannot happen over night with the stroke of a pen. It requires widespread support for the processes that will make it possible.

So, while the lack of widespread video competition nationwide is a matter of legitimate concern, I would like to caution my colleagues about rash judgments and warn them that they are not in our interest at this time. We ought not rush either to rash judgments about the cause or solutions to the problem. We certainly should allow the legislation to meet the test of working, monitor the current state of competition in the cable television market, and we should then consider appropriate ways to improve it. But, for now, I think the matter is one which should be addressed by the marketplace and by the regulators implementing the wishes of the Congress as set forth in the statute.

We have to be vigilant in avoiding the temptation to lay the heavy hand of government on one side of the competitive scale or the other with the purpose being really to achieve by that mechanism a quick fix to a problem that will probably be self-correcting over time through natural market processes.

I look forward with great interest to hearing from all of our distinguished witnesses today. I thank them all for agreeing to testify on an important subject. I would like to welcome my constituent, Ms. Lenart, from Ameritech and I thank you, Mr. Chairman, for holding this hearing which I believe is very important.

I yield back the balance of my time.

Mr. TAUZIN. I thank the gentleman from Michigan and the Chair now recognizes the gentleman from Oklahoma, Mr. Largent, for an opening statement.

Mr. LARGENT. Thank you, Mr. Chairman, I will be real brief. My opening statement is simply three questions that I hope to have answered in this morning's hearing.

The first is why cable prices have increased 8.1 percent in the last year. Why, in the age of competition, that access to programming among all cable providers, multichannel video providers, is decreasing, the access is decreasing, and why and should we be concerned by the continuing consolidation of the major providers of programming? These are areas of concern that I have in this age of deregulation of the telecommunications industry and I hope that we will get answers to those questions in today's hearing.

I thank the chairman.

Mr. TAUZIN. I thank the gentleman. He has stated some very good questions I think we will be exploring.

The Chair now recognizes the gentleman from Illinois, Mr. Rush, for an opening statement.

Mr. RUSH. Thank you, Mr. Chairman, for this opportunity and also for this hearing.

As you and my other colleagues on the committee know, the Telecommunications Act of 1996, crafted by this committee and passed by the Congress last year, creates new opportunities for businesses, especially minority-owned and women-owned small businesses, to enter into the telecommunications field.

Our hearing today begins to look at the extent of competition among providers of multichannel video programming. This, in turn, was supposed to create more choices for video customers.

I look forward today to hearing from our distinguished panel which represent diverse sectors of the telecommunications industry. I will, and we all should listen, carefully; but there is no ques

tion that we want to encourage competition in the delivery of video systems.

Video technology offers new possibilities, not only for home entertainment, but also in the field of education such as distance learning. Video is another tool to connect our schools and our communities to the information superhighway.

Increased competition currently characterizes the video marketplace. By the end of this year, it is estimated that 10 million subscribers will obtain multichannel video service from one of cable's competitors if present trends continue. There even appears to be evidence that in the last year there has been a slight decline in cable's share of multichannel video homes from 89 percent to 87 percent. Competition may not be happening as fast as some may like. But I urge my colleagues not to rush into premature decisions about calling for changes in the current regulations or new legislation on this issue.

The Telecommunications Act of 1996 is just over a year old. We need to give the Act a full chance to open up these new markets. I will caution my colleagues not to use the "Mike Tyson" approach to this particular problem.

Today's hearing is a first step, but it should not be conclusive. We want to encourage competition, but we also want to let the marketplace and the new legislation work.

I hope that today's hearing will highlight those areas where the Federal Government's competition policies are working and where the Federal Communications Commission needs to be enforcing them more vigilantly.

Thank you very much. I yield back the balance of my time.

Mr. TAUZIN. I thank the gentleman. We have heard your Mike Tyson admonition and we all "ear" you.

The gentleman from Florida, Mr. Stearns, is recognized for an opening statement.

Mr. STEARNS. Thank you, Mr. Chairman. I just want to congratulate you for having this hearing.

I think the area that I have some interest in is the, as a result of the Telecommunications Act of 1966 and the Section 302(b)(1) of the 1996 Act that repeals a cable-telephone cross-ownership ban, you know, I would just like to gain an understanding how this is working and what sense there is, is there more competition in this area? Are viewers also able to have a better choice in choosing their own cable programs.

I know some cable companies can go about and offer different basic rates, then a premium rate, and it includes different channels, but could a customer in fact say I want to have this channel, this channel, this channel, and see the cable company provide that flexibility.

Those are two of the areas that I would be interested in and again, Mr. Chairman, I think this is very appropriate an time, considering a lot of our constituents are concerned about the impact of the Telecommunications Act and when are we going to see the rates come down. I yield back.

[The prepared statement of Hon. J. Dennis Hastert follows:]