Copyright 2005 Gannett Company, Inc.
November 30, 2005, Wednesday, FINAL EDITION
By Paul Davidson
In a sharp reversal, the chairman of the Federal Communications Commission said Tuesday that the agency now thinks cable companies should stop forcing people to subscribe to bundles of channels and give them the option of choosing individual channels.
Kevin Martin, FCC chairman since March 16, asserted that a la carte pricing could both allow parents to block offensive programming and lower their surging cable bills. His stance might push Congress to require cable and satellite companies to offer the option.
Martin said that a 2004 FCC report -- which concluded most consumers would face higher cable and satellite bills under a mandatory a la carte system -- "presented incorrect and incomplete analysis."
A new FCC report near completion "concludes that purchasing cable programming in a more a la carte manner in fact could be economically feasible and in consumers' best interest," Martin said at a Senate forum on indecency.
The news comes as Congress debates tough new indecency legislation that would drastically boost fines. The cable industry calls legislation unnecessary because set-top boxes let parents filter out channels with offensive content. Consumer advocates call that technology ineffective because subscribers must still pay for unwanted channels.
Under a la carte, consumers would have to subscribe to a basic tier that includes broadcast stations and channels such as CNN. Beyond that, they'd pay only for channels they want. Thus, parents could reject racy channels such as MTV or Comedy Central.
The 2004 FCC report found that the average cable household, which watches 17 channels out of 88 available, would see its bill rise 14% to 30%, assuming it ordered 17 channels. Only subscribers who pay for fewer than nine channels beyond the basic tier would save under a la carte, the study said.
Martin said the report mistakenly included the cost of the broadcast channels in the basic tier to arrive at the average price for additional channels. Omitting that cost would increase the number of channels consumers could order without a price hike, he said.
Kyle McSlarrow, head of the National Cable & Telecommunications Association, called the a la carte mandate a "very dangerous idea." He said it would violate cable companies' free-speech rights. And research firm Legg Mason says it's unlikely Congress would pass an a la carte mandate because it would imperil cable channels that depend on widespread carriage by cable systems for advertising revenue.
"I would prefer to try and work out a voluntary ratings system and blocking and try and find some way to meet the demands of the family community without getting to mandates," said Sen. Ted Stevens, R-Alaska, head of the Commerce Committee.