[opendtv] F.C.C. Sees Cable Savings in à la Carte
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Fri, 10 Feb 2006 08:48:21 -0500
It would be nice to think that some of the discussions here, on this
subject, have been a factor in the FCC decision to reverse field and
push for ala carte cable pricing...
The FCC Report can be downloaded here:
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-263740A1.pdf
Craig
http://www.nytimes.com/2006/02/10/business/media/10cable.html?_r=1&th&emc=th&oref=slogin
F.C.C. Sees Cable Savings in à la Carte
By KEN BELSON
Published: February 10, 2006
It has been a trend in American living rooms for decades: every year,
the cable television bill goes up as consumers receive ever more
channels they do not want or cannot find the time to watch.
But in a frontal assault on business as usual, the Federal
Communications Commission, in a report issued yesterday, said
consumers would save as much as 13 percent on their cable bills if
they could buy only the channels they wanted instead of being forced
to pay for hundreds of them. The average household, the F.C.C. said,
watches only 17 channels.
For years, consumer groups who want lower prices and greater control
over what networks come into homes have been calling for so-called à
la carte programming. Lawmakers like Senator John McCain of Arizona
have championed the cause from time to time.
With the new report, the F.C.C. chairman, Kevin J. Martin, has
amplified those concerns and issued the strongest public statement
yet by the commission on the issue. Though the commission cannot
force cable providers to offer channels piecemeal, it can try to
persuade companies to meet consumer demands.
"Increasingly, consumers are saying that they don't want to pay $10
more for 10 more channels," Mr. Martin said in an interview before
the report was released.
He has taken issue with the cable companies because they have
consistently raised their rates as costs for phone and Internet
services have steadily declined. In the first quarter of 2005,
American households spent an average of $57.12 a month for pay
television, an increase of 35.7 percent from 2000, according to TNS
Telecoms, a research firm.
The price of long distance and cellphone calls figured per minute
plummeted during the same period.
Cable and satellite television providers blame programmers for the
rate increases. They say that Disney, Viacom and others are charging
more for their programs and forcing them to carry dozens of less
popular channels like Sleuth TV, Nick 2 and Discovery Home. As a
result, consumers would spend about the same if they bought a few
channels or packages with hundreds of channels, the cable companies
say.
The networks say that selling bundles of channels allows them to
produce a greater variety of programming. If consumers were allowed
to pick only the channels they wanted, many programs that have small
but devoted followings would have to be shut down, the networks
contend.
"Implementing pay-per-channel rules will mean the end of smaller
networks that currently provide consumers with such a wealth of
diversity in programming," Rod Tapp, the executive vice president for
sales and marketing at Inspiration Networks, a producer of religious
programming, said in a statement. À la carte plans could be "the
death knell" for small independent channels, he added.
Several industry analysts said that among the larger media groups,
Viacom, which owns MTV, Nickelodeon, the Comedy Channel and a host of
other programming would most likely be hurt by à la carte plans
because it generates about two-thirds of its revenues from its
networks.
The Walt Disney Company, which owns ESPN as well as the less-watched
Family Channel and SoapNet, could also be hurt.
The debate over à la carte programming stretches back years, but in
recent months it has gathered momentum, thanks to Mr. Martin's
outspokenness.
Last year, his support for à la carte programming pushed Comcast,
Time Warner Cable and Echostar into selling "family tiers" of
programs, which typically include 35 to 40 channels and cost about
$30 a month, or roughly 40 percent less than a digital cable
programming package.
Despite Mr. Martin's use of his bully pulpit, industry analysts say
that Congress is unlikely to pass any laws to force cable companies
to sell channels piecemeal.
The F.C.C. report focused only on customers with digital cable
services, or about 40 percent of the nearly 70 million cable
subscribers nationwide, because à la carte sales are more difficult
to put in place with analog cable services.
Mr. Martin's comments last November, and the report yesterday,
represent an about-face for the F.C.C., which in 2004, under Mr.
Martin's predecessor, Michael Powell, issued a report saying that à
la carte programming would lead to higher costs for consumers.
That report relied heavily on a study paid for by the cable companies
and written by Booz Allen Hamilton, an industry consultant. The study
was roundly criticized in yesterday's findings.
The F.C.C., Booz Allen said, "overstated the average price per cable
channel by more than 50 percent" and it incorrectly said consumers
would see their rates rise if they chose nine cable channels à la
carte.
In a statement, Booz Allen said it had corrected mistakes in its
report and stood by its conclusion that "à la carte pricing would
result in higher costs to consumers for comparable access to cable
programming."
The dispute, though, has produced strange bedfellows among the
industry rivals. For instance, the Bell phone companies have aligned
themselves with consumer groups in criticizing the cable providers
and programmers.
That is because Verizon, AT& T and other phone companies are
introducing their own television services, which use technology that
gives consumers more freedom to choose programming. Still, the Bells
say they will be able to do this only with the networks' consent.
"We will be happy to offer à la carte programming, as long as we are
able to obtain access to the programming in that manner," said Robert
Quinn, senior vice president for regulatory issues at AT& T, which
sells TV services in Texas over phone lines.
Charles Dolan, the founder and chairman of Cablevision, and Charles
Ergen, the chairman of Echostar, which runs the Dish Network, have
also come out in favor of à la carte programming. Unlike their
rivals, Comcast and DirecTV, they own few or no networks.
Some industry analysts say that regardless of how this battle ends,
consumers are starting to find more ways to get video, a shift that
may force cable operators to alter their packages anyway.
"This is not the only television programming that people have," said
James McQuivey, a professor at the College of Communications at
Boston University. "They have the Internet. There is almost nothing
on television to which people don't have an alternative."
Geraldine Fabrikant contributed reporting for this article.
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