In response to a Congressional mandate, the FCC recently inquired whether satellite and cable TV operators should be required to offer their programming on an à la carte basis instead of in bundled form. The inquiry is not limited merely to cable-originated programming services; it also includes broadcast channels carried pursuant to retransmission consent and must-carry.
Cable TV operators offer most of their programming in bundled packages, such as basic and enhanced-basic tiers. These packages contain anywhere from 30 to 120 channels. Of course, most subscribers do not regularly watch programming on the vast majority of these channels, a fact that they are keenly aware of when contemplating rising cable TV rates.
Members of Congress state that issues involving television programming typically generate a large percentage of their constituent mail. Thus, it is not surprising that, with cable rates increased by an average of five percent in the last year, Congress would hold hearings looking into the causes. In May, a bipartisan group of the House Commerce committee asked the FCC to review the feasibility of à la carte cable program pricing. Senator John McCain, a longtime critic of the cable TV industry, made a similar request. À la carte in this context would mean providing cable subscribers the opportunity to pick and choose each individual channel of the programming they receive, irrespective of any bundling the cable provider might have offered before.
In addition to concerns over service costs to consumers, another issue driving this inquiry is viewer resentment over the levels of sex and violence on TV. Some consumers apparently believe that one solution would be to give viewers the ability to choose the individual cable channels to which they subscribe.
The FCC is seeking comments on a number of issues, including (1) contractual limitations on the ability of cable and satellite operators to offer programming on an à la carte basis, (2) the potential impact on rates for individual channels and on diversity of programming, and (3) what set-top box and system equipment is necessary to move the industry to an à la carte model. The commission also wants to know whether the must-carry rules would allow cable operators to offer must-carry broadcast stations on an à la carte basis, and the impact of networks and affiliate groups using the retransmission consent process to leverage carriage of affiliated cable programming networks. While not the initial focus of the à la carte option, the interplay of that opinion with the must-carry could raise important issues that might impact TV broadcasters who may view the à la carte debate as a limited skirmish between consumers and cable operators.
The cable programmers oppose à la carte out of fear that viewers will not choose to subscribe to their channels. Large cable operators also oppose à la carte pricing, stating that limited subscription to most individual channels will require increased per-channel charges, resulting in consumers getting fewer channels at a higher overall cost. It should be noted that the major cable operators are also the owners of many major cable channels. Interestingly, some associations of small cable operators support providing subscribers the option to purchase programming on an à la carte basis, along with the option of purchasing the current packages. The Consumers Union has supported this approach. Television broadcasters do not appear to have made major statements on the issue. The FCC's report to Congress is due in mid-November.
Harry C. Martin is president of the Federal Communications Bar Association and a member of Fletcher, Heald & Hildreth, PLC, Arlington, VA.
Dateline
Oct. 1 is the deadline for TV stations in Florida, Puerto Rico and the Virgin Islands to file their license renewal applications, ownership reports and EEO program reports. Oct. 1 is also the date TV stations in Alabama and Georgia must begin broadcasting their pre-filing renewal announcements. Oct. 10 is the date TV stations should place their third-quarter issues/programs lists and children's program reports (FCC Form 398) in their public files.
Send questions and comments to:harry_martin@primediabusiness.com
