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Cablevision Backs Unbundling Programming Packages

Facing Telecom Competitiors, Cable Systems Get Religion

By James R. Hood
ConsumerAffairs.com

December 1, 2005

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Critics of "bundled" cable television services may soon be reminded of the old saying that one should be careful what one wishes for. Cablevision, the sixth-largest cable operator in the U.S., has thrown its support behind the notion of letting consumers purchase cable channels individually.

Comcast, never known for its flawless timing, took the opportunity to announce a 6 percent rate increase for next year.

Cable systems have fought the a la carte concept for years, forcing customers who want only CNN to buy channels featuring wall-to-wall cooking shows, stock car races and old movies. But earlier this week, Federal Communications Commission Chairman Kevin Martin surprised friend and foe alike by announcing his support for unbundled programming.

What's driving this rush to unbundle is not a sudden case of consumeritis among the ideologically rigid commissioners, it's the revelation that consumers aren't easily able to opt out of channels that may feature what some regard as sexually explicit programming.

AT&T, nee SBC, which plans to start selling video services early next year, was quick to pounce on the issue, saying it plans to let consumers choose individual cable channels rather than bundled packages.

In the past, cable companies have argued that a la carte pricing would undercut the economics of their business and hurt the survival chances of smaller channels. Of course many of those weaker channels the cable systems are so worried about are owned by none other than the cable companies.

Putting aside their concern with smaller channels for a moment, cable operators are quite aware that customers who want a lot of channels might very well end up paying more if service packages were unbundled.

The issue may be beyond anyone's control. With telephone companies beating at the video gates, cable systems are beginning to realize that they may actually face real, live competition one of these days.

This is leading the cable systems to demand that telephone companies go through the same franchise process as cable systems. It's basically a replay of the days when telephone companies tried to keep cable companies out of their territory by denying them access to utility poles and rights of way. What goes around comes around.

Smiling his cheshire cat grin, Cablevision Chairman Charles Dolan opined that the "opportunity to purchase programming on an a la carte basis would be in the best interests of consumers."

"We do not believe in the long term that selling programming a la carte will be detrimental to either programmers or cable operators," Dolan purred.

On the pricing front, Dolan's Cablevision said it would raise the price of its standard package, which includes channels like CNN, MTV and ESPN, an average of 1.3 percent to $46.73 a month. Cablevision faces imminent competition from telecom giant Verizon in its lucrative New York regional markets. It is fighting a town-by-town battle to throw up regulatory barricades on Long Island but Verizon appears to be getting the upper hand.

Also anticipating serious competition is Cox Communications, which said it did not plan to raise rates in its Northern Virginia duchy, where Verizon is trying to organize an assault.

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