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By DAVID HO Palm Beach Post-Cox News Service
Cable and satellite TV customers could save money and reap "substantial benefits" if they could subscribe only to the channels they want, the Federal Communications Commission said Thursday.
As the FCC released a long-awaited report that challenges the way millions of people pay for television, Sen. John McCain, R-Ariz., said in Washington he would introduce legislation to "entice" pay- TV providers with regulatory relief to offer their customers this option.
"The report confirms what I have believed for years - if consumers are allowed to choose the channels their families view, then their monthly cable bill will be less," McCain said. "Choice is far preferable to being forced to buy a host of channels they don't even watch."
Sen. Ted Stevens, R-Alaska, the powerful chairman of the Senate Commerce Committee, said that if such an "a la carte" system is not more expensive, he would "support an effort to take such an approach, subject to discussions with providers on the downside of such a process."
That downside is substantial, according to most of the cable industry. It argues that requiring a la carte would violate free speech protections and disrupt their complex business model, hurting consumers by raising prices and wiping out niche channels that survive only when packaged.
"The notion that the government knows better how to improve on a competitive marketplace is not supported by the evidence," said Kyle McSlarrow, president of the National Cable and Telecommunications Association. He said the new FCC report relies on "assumptions that are not in line with the reality of the marketplace."
The report also provides ammunition for consumer groups, regulators and TV watchdogs who say a la carte is another tool to help parents block violent or sexually explicit programming.
However, the odds of enacting legislation that forces an a la carte system are "very slim," said Blair Levin, an analyst with Stifel Nicolaus. "Even if you think consumers will pay less, the notion of government intervention into the marketplace is just not likely in the current political environment," he said.
Pay-TV providers now offer basic packages that include broadcast networks and expanded bundles with an array of channels. Premium networks such as HBO and Showtime cost extra.
The FCC report found that certain a la carte systems could reduce cable or satellite TV bills by up to 13 percent. Subscribers could receive up to 20 channels, including six broadcast signals, without their bills increasing - and the average cable household watches 17 channels.
Rebuffing industry concerns, the report said some kinds of a la carte could do a better job promoting diverse programming than standard packages.
The findings are a reversal for the FCC, which submitted a report to Congress in 2004 that found consumers would pay up to 30 percent more under an a la carte system.
The previous report relied on a flawed study by the Booz Allen Hamilton consulting firm that was funded by the cable industry, the FCC said, adding that the firm has since admitted its errors.
"The earlier report contained mistaken calculations, relied on unsupported and problematic assumptions, and presented an incomplete analysis," said Kevin Martin, who became FCC chairman less than a year ago.
Martin first revealed the new report's core findings in November at a Senate Commerce Committee forum on television and radio decency.
TV options
The FCC report proposes three options for digital subscribers:
- Purchasing all channels a la carte or in programming packages.
- Customizing channel bundles from a menu of networks.
- Buying themed packages such as sports- or family-oriented programming.
