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FCC Report Recommends More Cable Choices

April 30, 2007

Channel choice gives consumers greater choice over the channels they buy, preventing them from subsidizing channels they object to, provides them with more control over the cost of their cable bills, and promotes enhanced diversity in cable programming, the groups said.

"Letting consumers, not Congress, the FCC or cable companies, decide which programming is right for their families is an appropriate, market-based response to growing concerns about violence and other objectionable programming on cable television," said Gene Kimmelman, vice president for federal and international affairs at Consumers Union.

"Consumers should neither have to take extraordinary steps to block programming they don't watch and don't want to receive, nor pay for channels they find offensive or otherwise inappropriate."

The cable television industry, not surprisingly, says that eliminating bundling would be a blow to diversity.

"Cable's method of delivering programming packages, with channels bundled into basic and digital tiers, has proven to provide both choice and quality to consumers," said the National Cable Television Association. "This model has enabled all programming networks, including niche networks that serve underserved audiences, to find and build an audience."

"Several independent and industry studies have concluded that a la carte would offer no benefit to the vast majority of consumers and would, in fact, result in higher prices, less choice and less programming diversity," NCTA said.

The Government Accountability Office (GAO) issued a report in 2003 suggesting much the same. It found that:

• Fewer networks would be available to consumers because “any movement of networks from the most widely distributed tiers to an a la carte format could result in a reduced amount that advertisers are willing to pay for advertising time.”

• “[S]ome cable networks, especially small and independent networks, would not be able to gain enough subscribers to support the network.”

A 2004 study by Booz Allen Hamtilton came to similar conclusions. It found that:

• “As many as half to three-quarters of emerging networks could fail under each of the scenarios [both a la carte and themed tiers], including a growing number of targeted niche and ethnic program networks, and new network launches would become extremely unlikely.”

• “[E]ven the most established networks would likely have to reduce expenditures on programming, leading to lower viewing and lost advertising. This would likely lead to further industry consolidation into fewer network groups.”

FCC Findings

The FCC report found that research indicates exposure to violence in the media can increase aggressive behavior in children and that current parental control tools offered by cable companies are ineffective in protecting children from violence.

The report suggested that the cable industry adopt voluntary standards to reduce violent programming, and that Congress could adopt restrictions limiting the times violent programming could air on cable, or requirements that cable companies give consumers the ability to opt in or out of the channels offered.

Consumers Union, Consumer Federation of America, Communications Workers of America, and Free Press urged Congress, in a letter, to take steps to give consumers the ability to pick and pay for only the channels they actually want to purchase.

Cable companies currently offer channels in only large, costly bundles, known as the extended basic package.

Consumers are not allowed to select programming on a channel by channel basis despite 2006 AP survey findings that more than three-quarters of consumers want the ability to tailor their own packages and recent Nielsen Media Research findings that consumers watch, on average, fewer than 16 channels of the more than 100 offered.

The groups said the size of the bundle has contributed to skyrocketing cable prices, which have increased by 70 percent, nearly two and half times the rate of inflation, since Congress deregulated cable prices in 1996.

"Giving consumers the ability to pick and pay for only those channels they actually want to watch provides them with greater control, not just over content, but also over the cost of their cable service," Larry Cohen, president of the Communications Workers of America.

Channel choice is preferable to other regulatory approaches suggested by the Commission, such as time-channeling, which face greater constitutional hurdles, require more government intervention and do less to empower consumers, the groups told Congress.

"Consumers should be able to choose what content is most appropriate for their families, and be offered more diverse channels than today's cable systems offer," said Ben Scott, policy director for Free Press.

"Consumer choice in cable TV opens a path to break the gatekeeping power of the cable companies over content and brings new opportunities for a mediascape that speaks to all parts of our diverse society."

The letter said that by allowing consumers to vote with their wallets rather than forcing them to buy channels they never watch, the marketplace will respond by providing programming that is more diverse and of greater quality than the homogenized and repackaged programming forced on consumers today.

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