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11.29.2004
Originally featured on BroadcastEngineering.com
FCC rejects a la carte cable idea

The FCC has rejected the idea that allowing cable TV subscribers to pay only for channels they want would lower high cable bills. Consumer groups, denouncing the FCC’s stand, said their analysis is flawed.

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

The analysis by FCC staff, the Associated Press reported, found the average cable household watches 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 at least 14 percent and as much as 30 percent, the analysis said.

According to the report, an a la carte pricing system would drive up cable companies’ costs for equipment and customer service and marketing, with the charges being passed to subscribers.

Smaller niche channels, such as those with religious programming or channels aimed at minorities, could disappear with the loss of advertising revenue and extra costs that cable operators would have to pay, the report said.

The Consumers Union said the FCC failed to consider other options to rein in skyrocketing cable bills, such as a voluntary choice system that would still let customers buy bundled packages.

Consumer groups point to government statistics that show cable prices have increased by 56 percent since 1996, when Congress deregulated price controls for cable programming services. The most recent FCC figures, released in July 2003, showed the average monthly cable bill increased by more than eight percent in the previous 12-month period, up from $37.06 to $40.11.

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

The House Committee on Energy and Commerce requested the report. Republican Sen. John McCain of Arizona, who chairs the Senate Commerce, Science and Transportation Committee, also asked regulators to study the issue.

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