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Cable a la Carte, After All

FCC's About-Face Reignites "Bundling" Debate

By Martin H. Bosworth
ConsumerAffairs.com

November 29, 2005

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If you're sick of sifting through dozens of cable channels you don't watch just for the sake of subscribing to the ones you do, you have a new and unexpected ally in Federal Communications Commission (FCC) chairman Kevin L. Martin.

In an appearance before the Senate's Open Forum on Decency on Nov.29, Martin stated that offering consumers the ability to select which cable channels they pay for would help parents filter out "indecent" programming for their children, and save cable watchers money in the long run.

This was the exact opposite of the conclusion the FCC reached in Nov. 2004, when it cited a report saying that consumers would pay more money for individual channels, as opposed to the current model of "bundling" groups of channels together.

Martin said the 2004 report, prepared by the Government Accountability Office (GAO), was "flawed."

Consumers' Union blasted the report as well, saying it was based on a model of "involuntary" model of forcing customers to pick channels, rather than a voluntary model of adding preferred channels to a mandatory "basic" lineup of public and local programming.

"FCC Chairman Kevin Martin should be strongly commended for striking at the heart of the cable industry's flawed pricing model which forces people to buy packages of television channels they don't want and shouldn't have to pay for," said Consumers' Union's Gene Kimmelman after Martin's conversion.

Major cable companies are naturally opposed to the "a la carte" model, as they receive "bulk discounts" from ordering groups of channels from a network, such as ESPN or CNN. Corporations that own network and cable channels alike, such as Viacom and NewsCorp, cross-promote their offerings among their differing channels, often to the detriment of smaller local and independent cable providers.

The odd alliance between conservative Republican Martin and consumers' rights groups isn't the only one to be found in the a la carte battle.

Even as anti-indecency lobby groups support the right of parents to order only the channels they want their kids to watch, they find themselves opposed by televangelists. Religious broadcasters oppose "unbundling" of cable channels for fear of losing the ability to reach large audiences, and the market share that comes with them.

Many free-speech activists also oppose unbundling as a way to combat what they see as censorship and limiting choice from the anti-indecency forces. Cable companies are exempt from FCC regulations on speech and content, because their programs aren't broadcast via public airwaves.

A more cynical opinion is that the FCC's reversal came as a result of the increasing popularity of downloading video content, both legally and illegally.

As more consumers use their TiVo's to record shows for watching at their convenience -- minus advertising -- broadcasters are now offering popular programs for low-cost downloads, or to watch at any time via "on demand" services.

As one observer put it, "[I]f downloadable shows become even 25 percent of the TV watching public's normal habit, business models like Comcast's will start down the road to becoming obsolete…The only way the cable TV industry could fight this would be to allow the a la carte service that their technology infrastructure has allowed for almost a decade."

Whatever their reasons, cable companies, broadcasters, and regulators have to reckon with consumers' growing demand for choice in their content, and opposition to forced regulation of their viewing habits.

A research study of TV watchers' habits, published just in time for the Open Forum on Decency, found that respondents overwhelmingly preferred parental control of childrens' television viewing over government legislation.

The message seems to be, in another viewer's words, "Give us the shows we want, when we want them, and then butt out."

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