COMMERCE COMMITTEE LEADERS REQUEST A LA CARTE FEASIBILITY STUDY
House Commerce Committee leaders asked the FCC for an in-depth feasibility study of a la carte programming and what’s holding cable and satellite operators back from offering more choices to consumers. In a letter to FCC Chmn. Powell, Committee Chmn. Barton (R-Tex.), ranking member Rep. Dingell (D-Mich.), Telecom Subcommittee Chmn. Upton (R- Mich.), ranking subcommittee member Rep. Markey (D-Mass.), and Rep. Deal (R-Ga.) asked a series of questions and asked the FCC to submit a report to Commerce by Nov. 18. Barton said earlier in the week that they would be submitting the letter (CD May 19 p8).
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The 4-page letter asked, among other things, whether multichannel video program distributors (MVPDs) have any historical impediments to buying a la carte programming and offering it to their customers as such. “What statutory or regulation action would be needed to remove any such limitations?” the lawmakers asked. They wanted to know the impact on rates to consumers if programmers were required to offer programming on an a la carte or themed-tier basis. They also wanted to know what effect such actions would have ad revenue and rates.
The lawmakers showed particular concern for rural and smaller markets in their questions. They asked the FCC how broadcast networks and affiliate groups have used the retransmission consent process to expand carriage of affiliated programming and how that has affected rates for consumers. Small and rural cable operators have complained about being forced to carry affiliate channels they don’t want in order to avoid demands for cash from broadcasters. The American Cable Assn., which represents small and rural operators, has pushed for the ability to buy programming a la carte. Large cable operators, represented by NCTA, have said a la carte programming would ruin their business model, consumers would end up paying more for fewer channels, and some channels would die or never get off the ground in an a la carte world.
The lawmakers asked the FCC to study any effect a voluntary offering of a la carte or themed-tier service would have on the ability of independent, niche, religious and ethnic programming to gain carriage or launch. And the lawmakers asked the agency to explore the programming cost differential between large cable and satellite companies and small, independent MVPDs. They wanted to know about volume discounts that large players may have and whether smaller operators pay more for programming as a percentage of expenses.
On technology, the lawmakers asked if addressable converter boxes would be required for every TV on which a consumer might want programming on an a la carte or themed- tier basis. They want to know if a la carte and tiers could be offered only in digital and what impact such services would have on plug-&-play regulations.
They asked the FCC whether there was any reason to treat cable and satellite differently on a la carte and tiering. They asked if must-carry rules would prohibit MVPDs from offering local broadcast stations on an a la carte basis and what constitutional or legal questions would be raised by programmers’ ability to bundle services through retransmission consent, regional sports contracts and national programming contracts. “What, if any, Constitutional or other legal questions would be raised if Congress required programmers to offer their channels to MVPDs on a stand-alone basis and prohibited them from requiring carriage of their programming on particular tiers?” the lawmakers asked.
The lawmakers’ inquiry came as a result of an amendment offered by Rep. Deal that would have required programmers to offer services to MVPDs on an a la carte basis, as opposed to any tying or bundling arrangements that are currently the norm for larger programmers. Deal agreed to withdraw his amendment to the Satellite Home Improvement Viewer Act (SHVIA) after some House members said they didn’t have enough information to make a decision. This inquiry was meant to address that. Small and rural cable operators have hailed Deal’s efforts, while large cable operators have called a la carte a disaster.
Consumers Union praised the effort by the lawmakers, saying it was confident that consumers would reap tremendous benefits from picking and choosing channels. Gene Kimmelman, senior dir.-advocacy and public policy, said: “We are pleased that Congress has listened to the overwhelming public outcry against cable rate increases and requirements that consumers purchase channels they do not want or that they find objectionable.” He also expressed hope that the FCC report would frame the discussion for revisions of the Telecom Act, expected to occur next Congress.
NCTA said in a statement that it was confident that the FCC study would confirm earlier findings by the General Accounting Office. The GAO report indicated that a la carte could hurt ad-supported cable networks and consumers by reducing programming diversity and driving up prices.
Meanwhile, members of the Congressional Black Caucus wrote a letter to Barton and Dingell saying Deal’s proposal would reduce diversity of programming. The letter, signed by more than 30 lawmakers, including Reps. Watson (D-Cal.) and Watt (D-N.C.) cited a new cable network for African- Americans, TV One and ESPN Deportes, a Spanish language sports network, launched this year. “We believe in an ‘a la carte’ world it would have been extremely difficult if not impossible for these channels to have developed,” they wrote.