November 29, 2005 1:14 PM PST

New FCC report advocates a la carte TV pricing

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Viewers of cable and satellite TV may soon have the option of subscribing to only the channels they want to watch, if the Federal Communications Commission gets its way.

On Tuesday FCC chairman Kevin Martin spoke to a forum, sponsored by the U.S. Senate Commerce Committee in Washington, which has been examining indecency on radio and television. Martin told the forum that the FCC will soon release a report that concludes that offering TV programming a la carte is economically feasible and in the best interest of consumers.

Today, instead of subscribing to the channels they want to watch, cable and satellite TV consumers must buy packages that include a standard set of channels.

The new report, not yet released, contradicts an FCC report published in November 2004, under then Chairman Michael Powell. The earlier report concluded that a la carte and tiered pricing models, such as a family tier, would result in higher cable prices.

"I had many concerns with this (earlier) report, including the logic and some of the assumptions used," Martin said during his testimony to the Senate forum. "I asked the media bureau, as well as our chief economist, to take a more thorough look at the issue. The staff is now finalizing a report that concludes that the earlier report relied on problematic assumptions and presented incorrect and incomplete analysis."

Several parent and consumer advocacy groups, including the Parents Television Council and the Consumers Union, have urged Congress to consider legislation that would require a la carte options for television. These groups believe that allowing consumers to subscribe to individual channels instead of purchasing entire packages would lower costs and provide parents with more control over what programs their children watch.

But cable TV companies have argued that pricing individual channels would result in fewer choices for all consumers. They believe that a la carte pricing would make it too expensive to offer less-popular channels that presently are bundled with popular channels.

Martin said he doesn't plan to push the industry to adopt a new business model, but he suggested that more restrictions on basic cable programming be added if the industry doesn't offer consumers more choice.

"I share your concern about the increase in coarse programming on television and radio today," he told the forum. "I also share your belief that the best solution would be for the industry to voluntarily take action to address the issue. But I do believe that something needs to be done."

16 comments

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A La Carte
I believe that the only way this pricing model would increase costs for consumers is if the cable/satellite companies were allowed to get away with it.

Right now we pay a high package fee because we're told that ESPN and other networks are expensive.

I want the ability to select the 30 to 35 channels I typically watch throughout the week. And I want my TV bill to go down. The technology is there today - just look at the receivers DirecTV uses - the ID card on your box identifies you to the bird and decodes the channels you've paid for. Substitute the company defined package with my custom package and they MIGHT have to add a hard drive to their servers to handle the increased database table.
Posted by Stan_Timek (5 comments )
Reply Link Flag
Give me the choice
of which channels I want to pay for. Right now, there are so many
channels that I do not watch, but have to pay for. I am sure that my
cable bill will be far less than it is now, if I were given the choice. I
hope the FCC gets involved and allows for the ala carte method of
channel choosing to become a reality.
Posted by (22 comments )
Reply Link Flag
HALLELUJAH!
I have been waiting ages for this, I can only hope it's true.
Posted by tengu925 (2 comments )
Reply Link Flag
economics
Cable companies claim that they are concerned that some channels might be dropped because they are not popular enough - that to me just seems like simple supply and demand. I can't wait for a la carte! Plus, the specialty channels that get dropped can always opt to broadcast over the internet anyhow as boradband speeds improve and some quality of service becomes possible.
Posted by (8 comments )
Reply Link Flag
Backfire
I don't care either way really. I grew up when there was about 30 or 40 cable channels, and nothing to watch. I currently have 300 channels and watch maybe six or seven shows a week. But I do wonder if this is going to just blow-back in the face of the Deceny people.

People want to watch 'Nip/Tuck' and 'The Sopranos'. I already pay extra to get HBO. What will happen is that small channels like The Christian CHannel with the GOlden Throwns will be run out of business; not to mention all the ethnic and educational channels that don't have that much of an audience.

So the chances are the Channels and the programs that survive will be the very ones that the Deceny Defenders are trying to get off the air.

Not to mention the fact that the Cable Choice thing ignores the economic reality. I think people asking for CableChoice are under this delusional that you'll still get a package and at anytime you can call up XYZ Cable COmpany and say, 'I don't want that, this, or That', and they magically disappear without any extra cost.

We all have haggled with our cable companies and you know that's not going to happen. You'll probably be given the option of buying a package, or going line by line and picking your channels for like $5 or ten bucks each. So most people will by the $35 package for the same reason they by twenty pairs of soxs for two dollars at Walmart.

This whole thing is like the V-Chip and TV Ratings. Out of date, twenty years behind the time, and useless.
Posted by larrymadill (36 comments )
Reply Link Flag
Good point...
I think you make a good point Larry. Also, I like getting a lot of channels, more verity of programming. For example, I don't watch the Food network but when my friends come over they often do.

I don't agree with you that the v-chip or TV Ratings are out of date. The FCC said they were considering a la carte because it would offer parents more choices in controlling what their kids watch. I think the v-chip and TV ratings accomplish this already.

Personally, I feel it is better to talk to your kids about what is appropriate and not appropriate and trust them to use their judgment and only resort to parental controls as a last resort. A la carte or v-chips can never replace good parenting.
Posted by hybris06 (66 comments )
Link Flag
Cable Pricing
To be quite honest the entire cable sales model is defective and the FCC has been remiss is it's responsibility to serve "the public interest".

We shouldn't have to subsidize the propaganda, shopping, and offensive channels. However, you will see the channel pricing increased to make it just as expensive, if not more so, to have just one's choices available as to purchase the packaged lineup (which is 90% most of the time).

Me? I'd prefer to just pay a FAIR price for FOX News/CNN News/HBO/TLC/FX/Discovery/PBS/and one each of the available local channels. It's legalized robbery the way it is structured now.
Posted by clayndwoods (1 comment )
Reply Link Flag
ala-cart
I hope that the cable companies be forced to offer their services "ala-cart". The days of them blaming the lack of that choice on cost is over, one would hope, because we know better, and always have. They just want to cram other not so good channels down our throats, AND make us pay for them to boot!
Posted by rodneybramlett (1 comment )
Reply Link Flag
And the Next Step for Cable TV Is . . .
many folks are asking for a la carte cable choice because they don't like paying for channels that offer content in which they're not interested, or of which they disapprove. i know that of the 300 or so channels to which i'm subscribed, i could boil that down to about a dozen or so that i watch even on an occasional basis--really about five i watch regularly, mostly news shows.

my tv watching has dramatically reduced in recent years primarily because tv's gotten so full of advertising that i don't watch many shows until they come out on dvd. sure, i'm a season behind on battlestar galactica, but i don't have to suffer one more minute of my precious time wasted watching the umpteenth rerun of a commercial for a product that holds no interest for me.

anyway, those channels are spread out so much in various packages that i pay $90/month to get that handful of stations that interest me. meanwhile, i pay for shopping, golf, court, etc channels that hold zero interest for me. so i'd be delighted to see cable tv offer an a la carte option.

as for cable's arguments about cost and technology: what's the next step beyond channel selection by the consumer? well, it's show selection by the consumer. and cable and other companies are already pushing hard the tv on-demand line-ups. so i don't buy that technology is a real issue--we're already past a la carte channel selection, with the cable companies fully behind it.

as for cost for a la carte: the channels that can't provide product at a price that consumers will pay will die off. that's called the free market. either they'll adapt (improve content, reduce cost to make/price to sell, etc), or we'll free bandwidth for someone else to try.

mark d.
Posted by markdoiron (1138 comments )
Reply Link Flag
Embracing A La Carte Cable TV
The cable companies would be wise to embrase A La Carte simply as a new business model.

Say that someone who dosen't have cable could get it for $24.99 by selecting A La Carte channels compared to a package for $59.99

You would automatically have more subscribers. There will always be people who will want a "package" and more than willing/able to pay for it.

Then you have the lower income bracket user who
has chosen not to subscribe because they don't want to pay the say $49.00 fee. They could instead buy their "select" channels at a lower price thus giving cable/satellite companies a flow of income that they otherwise would not have.

That lower income/bracket subscriber could eventually upgrade to a "full package".
Posted by cfsnco (4 comments )
Reply Link Flag
faulty logic
This is a flawed argument as it assumes all existing customers will continue to be willing to pay their current fees. This is most likely not going to be the case.

A La Carte programming will likely result in most subscribers tailoring their packages to their specific wants and the probable result of this will be fewer channels that they subscribe to which (if the channels are reasonably priced) will result in lower total cost. I know that there are a number of channels I would drop because I never watch them and would be willing to bet that most other households will do the same.

You're right that total subscriptions will probably go up but it's my guess that the value of those subscriptions will go down and the net result will be the cable companies making less money.

That said I am definately in favor of congress forcing an a la carte model on the cable companies as I believe it is economically feasable for them and greatly benefits the consumer. It may also result in better programming as it will make the channels compete even more for consumer loyalty if they wish to maintain their current subscriber base.
Posted by jdfergason (1 comment )
Link Flag
Technology for the companies
O.K. now i understand wanting to be able to control your cable or dish to the channels you watch and not the ones you never watch. However if you look at our technology right now although we are pretty advanced youd be looking at a multi billion dollar computer systems nation wide that would have to regulate, moniter and control that content in each home. Now where do you think that cost is gonna go? To us of course. Me personally i dont feel like paying more for my services i already have. Just think about it folks how is that really gonna help if your bill is going to increase and your channels are going to decrease. how can anyone feel thats is worth getting what you want? some people say " thank God for stupid people." I say " Please God Make people smarter so they dont make such stupid mistakes in the name of greed."
Posted by docmluna (1 comment )
Reply Link Flag
A La Carte Channel Choice
I'll believe it when I see it. The monopolies that do now want that are very powerful. If such a law pass's, most likely it will be so perverted by lobbyists, that 1 channel will cost the same as the whole garbage mess.

You see, they will fight for the status quo with every lawyer and bribe they can muster. As an example, you now pay money, to assist in funding CNN. CNN is a powerful news organization whose motives are totally contrary to the average TV channel buyer.

Don?t expect a real status quo change, and you won?t be disappointed.

Senator Mccain talks of it. But you sure wont hear about it in the media.

I got an offer in the mail from my DSL provider to upgrade me to light fiber. A jump in price from $30 per/month to $70/month, and a 10 fold increase in speed with free TV over that fiber.

But here is the kicker? With internet speeds in the 4M bit/sec range, and 5 times that right around the corner?. now going to average consumers, anyone can start an internet TV station, or internet TV network. Now that, would be a change.
Posted by Scooter McGooter (1 comment )
Reply Link Flag
I agree with the many others who would prefer ala carte selection and pricing for TV. Most watch up to 35 channels and as low as 20 regularly. I don't need or want many sports, shopping, other language, religious, music and news stations. I'm writing my reps and senator with my opinion very soon.

Debundle
Posted by Debundle (1 comment )
Reply Link Flag
I forsee Ala Carte TV Programming becomming available on the internet thus forcing TV Programming to become available to Cable and Satellite services. I'm one that will jump over to the "modernizating" of TV Programming.
Posted by FOURBITS (1 comment )
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