| OnyxCougar |
03-30-2004 02:38 PM |
From WaPo:
Quote:
Channel Packaging Is So Much Cheaper, Incredulous Senators Are Told
by Frank Ahrens
Washington Post
March 26, 2004
In the dream world of some television viewers, they would pay their cable or satellite companies only for the channels they want. Some might not pay for MTV, because they don’t want their 8-year-olds watching it. Others would turn down ESPN Classic, because they’ve already seen the 1975 World Series. Others would eschew TeleFutura, because they don’t speak Spanish.
Reality is far different.
No U.S. cable or satellite company offers what are called "a la carte" plans. In order to get the Discovery Channel from Comcast Corp. cable company, for instance, Washington viewers have to pay for an "expanded basic" package that includes MTV, FX, MSNBC and 33 other channels.
That may change, if some lawmakers and consumer groups get their way, as the cable industry finds itself under increasing scrutiny. Lawmakers report that their constituents are angry about cable bills that have risen at three times the rate of inflation since the industry was largely deregulated in 1996. Others want government to do something about the rising incidence of profanity and nudity found on pay-television systems.
One possible solution being proposed is a la carte cable, a way to give consumers more choice over what they watch and how much they pay for it. But it’s not an answer the cable industry will swallow easily, if a Senate Commerce Committee hearing yesterday on cable rates is any indication.
Committee Chairman John McCain (R-Ariz.) peppered Cox Communications Inc. President James O. Robbins, asking the head of the nation’s fourth-largest cable company why consumers have to pay for channels they don’t want. Robbins’s answer: Giving consumers that degree of choice would cost too much.
Expensive set-top boxes would be needed to give consumers the pick-and-choose capability, and the upgrade could cost the industry billions of dollars. Companies would inevitably be forced to pass on some or all of the expense to subscribers.
"Frankly, that is where long-term the industry is going to go -- to video-on-demand," said Robbins, whose system has 6.3 million subscribers. "But there’s a $30 [billion] to $40 billion bridge to get there."
Besides adding to the cost, cable companies say, selling channels individually might make it difficult for lesser-watched, niche channels to survive.
Under an a la carte system, top-rated cable channels such as USA Network would likely thrive because ratings suggest enough people would choose to buy it individually to make it worth a programmer’s while. However, less-watched channels that serve distinct but smaller audiences, such as TechTV and BET, may not survive, because not enough viewers would pay for them. Under the current system, consumers effectively subsidize less-popular channels, which cable companies say provides diversity in the cable and satellite universe.
However, some consumer advocates and members of Congress don’t buy that logic.
"When I go to the grocery store to buy a quart of milk, I don’t have to buy a package of celery and a bunch of broccoli," McCain said in an interview on Wednesday. "I don’t like broccoli." He argues that it’s not an either-or situation for cable companies: They could continue to offer packages for consumers who wanted them and a la carte for other viewers.
In the interview, McCain said he probably would propose an amendment this year -- it could be attached to an authorization or spending bill, he said -- requiring cable companies to offer a la carte programming.
McCain is working with Consumers Union, the nonprofit organization that publishes Consumer Reports, to draft an amendment designed to make a la carte available. Gene Kimmelman, director of public policy for Consumers Union, presented senators with summaries of Canadian digital cable plans that allow customers to buy channels a la carte.
"U.S. subscribers don’t have that ability," McCain said.
The cable industry is urging the government not to return to the days when it regulated rates and demanded public access channels and other programming, arguing such mandates stifle innovation. But recent events have brought the industry unwanted congressional attention. Contract quarrels between cable networks such as ESPN and cable providers such as Cox have gone public, with each side blaming the other for higher cable bills for consumers. As a result, some members of Congress recently mulled setting limits on how much cable channels could charge distributors for each channel.
The industry is also under attack from people upset about content they consider indecent. Government decency rules and fines apply only to channels broadcast over the public airwaves, not to cable and satellite television, because courts have reasoned that subscribers elected to receive them. But McCain, FCC Commissioner Michael J. Copps and others have proposed extending the FCC’s enforcement powers to cable channels because the industry does not give consumers enough options to drop individual channels they find objectionable.
The cable industry opposes the move. As an alternative, the cable industry’s major trade group, the National Cable and Telecommunications Association, said earlier this week that the nation’s cable companies would give consumers -- at no cost -- the equipment needed to block unwanted cable channels in their homes.
But that’s not enough for some groups.
The Parents Television Council, whose more than 75,000 members flooded the FCC with 240,000 indecency complaints in 2003, wrote to McCain earlier this month, saying "there is something terribly and fundamentally wrong with requiring consumers to pay for a product they don’t want, and may even find offensive, in order to get something they do want."
For some lawmakers, a la carte programming is a no-brainer.
"Letters have been streaming into my office," said Sen. Frank Lautenberg (D-N.J.), a member of the committee. "I don’t hear as much about highlighted issues, like gay marriage . . . as I do about rising cable rates."
Lautenberg applauded the cable industry’s decision to pass out free channel-blocking hardware, but said that’s not enough.
"The logical next step," Lautenberg said, "is to relieve consumers of the burden of paying for channels they don’t watch."
George W. Bodenheimer, president of ESPN and ABC Sports, owned by Walt Disney Co., told the senators that forcing cable companies to remove ESPN channels from packages and offer them a la carte would be a "consumer disaster."
"We need competition," Bodenheimer said, "not regulation."
Some committee members said they were hesitant to impose conditions on the cable industry.
"It’s far too presumptuous to tell an industry how to market its product," said Sen. John Breaux (D-La.), another committee member.
When talk turned briefly to matters of indecency and government policing of cable channels, Robbins shot back: "We need to fix our own problems. We don’t need your help to do so."
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Just a reminder: When Cox and ESPN had their dispute, Cox offered to put ESPN and sports programming on a seperate tier, so that those who wanted to pay for sports could do so, and those that don't watch sports (like myself) don't have to pay the higher price for other cable channels.
ESPN said unequivably, not just no, but hell no. Why? Because they know that only about 12% of the Cox subscribers actually watch sports. So if we tiered ESPN, they would lose 88% of their per subscriber rate. And if that happened, to keep their same rate of profit, they would have to charge ludicrous rates to the people that DO want sports programming. So it WOULD be a "consumer disaster", for those consumers. For the rest of us, it would be a good thing.
As far as ala carte pricing, I think it's a good idea on one hand but a bad idea on the other. Channel Surfing would go away, since you'd only get the channels you preselected, and your viewing blinders would be on. But for parents, I do think its a good thing. Then again, that's what blocking and ratings are for.
I don't like the idea of the gubmint imposing their standards on my TV. It's enough they have ratings for guidance, but forcing the cable industry to have alacarte .... I don't know. |
