FCC Pans Idea of ‘a la Carte’ Cable TV

Federal regulators Friday rejected the idea that allowing cable TV subscribers to pay only for channels they want would lower cable bills. Consumer groups said the analysis was flawed.

In a report to Congress, the Federal Communications Commission said cable bills would increase under a system that would let people pay for individual channels instead of the bundled packages currently offered.

The analysis by the FCC’s staff found the average cable household watched about 17 channels, including over-the-air broadcast stations. If a subscriber purchased that many channels under a pick-and-choose system, he probably would face a rate increase of 14% to 30%, the analysis said.

According to the report, an “a la carte” pricing system would drive up cable companies’ costs for equipment, customer service and marketing, and the charges almost certainly would be passed along to subscribers.

Smaller niche channels could disappear with the loss of advertising revenue and extra costs that cable operators would have to pay, the report said.

Consumer groups denounced the findings.

“The study was rigged against consumers in favor of large cable companies, giant broadcasters and other media behemoths,” said Gene Kimmelman, senior director for public policy and advocacy at Consumers Union, which publishes Consumer Reports.

Consumers Union said the FCC failed to consider other options to rein in cable bills.

Consumer groups point to government statistics that show cable prices have increased 56% since 1996, when Congress deregulated prices for cable programming services. The most recent FCC figures, released in July 2003, showed the average monthly cable bill increased by more than 8% in the previous 12-month period to $40.11.

The cable industry maintained their customers would end up the losers in an “a la carte” system.

“The FCC report to Congress makes clear that government-mandated per-channel pricing would not offer any benefits to the vast majority of consumers and would in fact result in higher prices, fewer choices and less diversity in programming,” said Robert Sachs, president and chief executive of the National Cable and Telecommunications Assn.