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February 9, 2006
I'll Order My TV Programming from the A La Carte Menu, Thank You Very Much
We're fast approaching the 10th anniversary of the Telecommunications Act of 1996, an omnibus overhaul of US telecommunications law. Many politicians and industry reps argued at the time that the act would be consumer-friendly, increasing competition and choice of services, which in turn would help lower prices.
According to my latest cable bill, that ain't the case.
While the cost of Internet and mobile phone services have generally come down, we've seen a steady hike in monthly cable charges. According to the research firm TNS Telecoms, cable costs have risen 35.7% for the average American consumer since the year 2000. Much of this increase can be associated with the sheer number of new channels added to cable subscription packages. It's now not uncommon for subscribers to receive 200-300 channels, despite the fact that the average consumer watches only 17 channels on a regular basis.
The logical conclusion one would draw from this would be to demand the option to purchase your favorite channels a la carte - in other words, if you only watch ESPN, the Weather Channel and Spike TV, you should only have to pay for ESPN, the Weather Channel and Spike TV. In 2004, the FCC put out a report on the a la carte option, which concluded that it wasn't economically feasible nor in consumers' interests. FCC Chairman Kevin Martin was skeptical of the conclusions, though, so he asked for a re-examination of the data, which had been supplied by - cough - the cable industry. The follow-up report is now out, and Chairman Martin's hunch was correct: the conclusions weren't supported by the data.
According to the new report, consumers could cut as much as 13% from their cable bills through a la carte pricing.
"Today, the [Federal Communications] Commission issued a further report, which concludes the earlier report contained mistaken calculations, relied on unsupported and problematic assumptions, and presented an incomplete analysis," Martin said in a statement. "According to today's report, a careful analysis reveals that a la carte and increased tiering could offer consumers greater choice and the opportunity to lower their bills. Indeed, in recent months more consumer choice has proven to be technically possible and many companies have begun offering the kinds of tiers the previous report found to be infeasible."
"Increasingly, consumers are saying they don't want to pay $10 more for 10 more channels," Chairman Martin added in an interview with the New York Times.
Not surprisingly, cable programmers warn that a la carte pricing could hurt the diversity of programming currently available. "Implementing pay-per-channel rules will mean the end of smaller networks that currently provide consumers with such a wealth of diversity in programming," said Rod Tapp, an executive veep for Inspiration Networks, as quoted by the Times.
The FCC apparently disagrees. "Some type of a la carte option could prove better than today's bundling practices in fostering diverse programming responsive to consumer demand," they write. "A la carte could make it easier for programming networks valued by a minority of viewers to enter the marketplace." Senator John McCain has also come out in support of a la carte; he's just announced he'll introduce legislation to make it possible.
The Consumers Union, which publishes Consumer Reports, wasted no time in applauding the FCC and Senator McCain.
"Consumers should praise FCC Chairman Kevin Martin and Senator John McCain for striking at the heart of the cable industry's flawed pricing scheme which forces consumers to buy packages of television channels they don't want and shouldn't have to pay for," said Jeannine Kenney, Senior Policy Analyst for Consumers Union. "Today's action kick starts the national effort to give consumers' wallets a break and allow them more control over their television programming choices and cable bills."
Personally, I can't wait to cut my digital cable bill down to size; I probably watch only 20 channels of the 200+ I'm currently paying for. Consumers Union has a lot more to say on the subject and other important media policy issues: visit HearUsNow.org to get the facts.
Posted by acarvin at February 9, 2006 4:32 PM
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