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The Sacramento Bee

By Deb Kollars, The Sacramento Bee, Calif.

Jun. 19--In most homes with cable television, the number of channels that people pay for can run as high as 60, 100, even double or triple that count.

Typically, most watch only about 17 or so.

If those same consumers went to a restaurant, they wouldn't have to order the entire menu to get a burger and fries. If they wanted to subscribe to Time magazine, they wouldn't also have to order GQ and Bon Appetit.

According to a growing collection of consumer advocates and politicians, including a prominent U.S. senator, cable television should be the same.

Earlier this month, Sen. John McCain, the Republican senator from Arizona with presidential aspirations, introduced a bill in Washington aimed at making cable channels available on an "a la carte" basis to subscribers.

The nation's cable industry says no way, channel-by-channel ordering would not pencil out financially.

But mention the idea to cable watchers, and they're likely to pop up in their recliners with delight.

"Most of the channels I get, I don't even watch," said Linda Bentley, an insurance agent from Carmichael who spends about $54 a month for cable television service from Comcast. "I'd love to be able to pick my channels."

On her list of favorites: The Discovery Channel. The History Channel. Sci-Fi. The Food Network. The major networks. And the Home Shopping Network.

"Pretty much that's it," Bentley said of her dozen or so channel preferences, adding she also watches E! and Fox News at times.

Consumers Union, the nonprofit publisher of Consumer Reports, believes people like Bentley should to be able to pick and choose their cable stations.

"Being able to buy channels a la carte is so intuitive for consumers," said Jeannine Kenney, a senior policy analyst with Consumers Union. "By and large, most people do not watch the big bundles."

McCain made the same point when he introduced his bill, the Consumers Having Options in Cable Entertainment Act, or CHOICE, on June 7.

His proposed legislation would not force companies to go a la carte but rather would offer reduced franchise fees and other incentives to encourage them to give consumers the ability to choose before buying.

The bill comes amid an intense legislative battle at the state and federal levels between telephone and cable companies over franchise fees.

In most places, cable firms have negotiated exclusive franchise fees with local governments to offer cable service. (Sacramento is one of the few places with competition among companies serving television customers.)

Now, two big phone companies -- AT&T and Verizon -- are leading an aggressive campaign to allow them to acquire state or even national franchises that would override the authorizing process at the local level.

The telephone companies want to compete directly with established cable and satellite companies by running television programming over phone lines. Cable companies believe the nonlocal franchising process will create an unfair market and are fighting to assure a "level playing field."

Against this competitive backdrop, McCain hopes to insert another layer of consumer options and competition through his a la carte legislation. In a news release, he said the a la carte approach could bring savings to consumers, noting that cable rates have risen at double the rate of inflation or more in recent years.

The senator's bill would not apply directly to satellite companies because they do not have to acquire franchises to use public rights of way. But certain provisions could encourage satellite firms to also engage in a la carte pricing, Kenney said.

The average consumer watches just 17 channels on a regular basis, according to the federal General Accountability Office.

A Federal Communications Commission study released in February found that under an a la carte scenario, consumers could receive up to 20 channels, including six broadcast stations, without their monthly bills going up. Consumers who purchased fewer stations could see their cable bills go down, the study said.

"Many consumers could be better off under an a la carte model," the FCC report noted.

The cable industry disagrees.

If a la carte pricing took effect, subscriber bills would likely go up in many cases, said Marc Burgat, director of governmental affairs for the California Cable and Telecommunications Association, a Sacramento trade group.

"Some channels cost us $2 to $2.25 per subscriber per month," Burgat said. "Plus, there are all the taxes and fees we must pay."

Burgat and others explained that networks and companies selling programming to cable and satellite firms use a bundling system with financial incentives. For a cable firm to get the best rate on a popular channel such as Disney, for example, it must agree to sell to consumers a package of several other channels as well.

A big force behind the system is advertising. The more households that receive a channel, even if it doesn't get watched, the more the networks and channel providers can charge advertisers. For this reason, consumers are offered bundles rather than individual channels, said Rob Stoddard, senior vice president for the National Cable and Telecommunications Association in Washington, D.C.

"If you didn't have this, you'd pay more for the individual pieces," said Jimmy Schaeffler, senior analyst with the Carmel Group, a Carmel-by-the-Sea telecommunications consulting firm.

Such a scenario came quickly to mind for Mary Ann Overton, a retired education consultant from the Pocket area who subscribes to Comcast for cable service.

"Like a cafeteria? Sounds good to me. But wait a minute," she said after hearing about McCain's bill. "What would the prices be? If it's $5 a channel, that would add up fast. I might be better off with a package deal."

In an a la carte market, there would be another price to pay, according to cable officials: Many of the smaller niche channels would not draw enough individual subscribers to survive.

"Food TV. Outdoor Life. MSNBC. The Cartoon Network. None of those would make it in an a la carte world," said Burgat, who likened cable to the insurance industry, where everyone pays to help keep prices down and services available for all.

The closest thing consumers may see to the McCain ideal is some sort of "quasi a la carte," Schaeffler said. For example, viewers might be offered a basic package in the $35 range that must include ESPN and a number of other channels but also lets people select a handful of their channels from a prescribed list of choices.

Roseville-based SureWest Communications, which has been competing in the Sacramento area for cable subscribers, has looked into a la carte pricing and found it to be unworkable financially, said Haavard Sterri, director of marketing and product management.

However, he said, SureWest is considering creating new packages of similarly themed channels that subscribers could add for several extra dollars a month.

High on the list of possibilities: A new package anchored by SoapNet, which SureWest customers have been asking for in their lineups.

"People want to be able to watch what they want," Sterri said.

It wasn't that long ago, said Robert Thompson, a professor of media and pop culture at Syracuse University in New York, when such an array of choices would have been unheard of.

"Cable has given us this delicious banquet of choices," he said.

But it also has taken away a cultural gift from the days when television was free and channels were few: The collective kinship that was shared across the country when millions of viewers would gather round their sets, all watching the very same thing, be it the State of the Union Address or the latest "All in the Family" episode.

There is no such thing any more, Thompson said.

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Copyright (c) 2006, The Sacramento Bee, Calif.

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