Overbuilder Pushes A La Carte Idea in Reply Comments
Cable overbuilder RCN, struggling to emerge from bankruptcy, told the FCC that it should implement a la carte pricing for cable networks, on a “voluntary, market-supported basis,” saying doing so would satisfy consumer demand for competition, choice and control. RCN’s comments were among many replies in the FCC’s proceeding on a la carte pricing for cable and satellite. The FCC is examining the issue at the behest of several members of Congress, including Sen. McCain (R-Ariz.)
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RCN said many networks are owned or controlled by the largest cable operators and broadcasters. RCN said they tend to impose tying arrangements and volume-based discounts that discriminate against smaller operators and new entrants or other contractual restrictions, “while leaning on confidentiality and most favored nations clauses in their agreements with larger operators as a means to preclude RCN and other competitive providers from offering innovative consumer-driven programming options.” RCN said a GAO study last year found that in rare places where wireline competition exists, cable pricing for consumers is about 15% lower.
OPASTCO said half of its members operate small cable TV systems in their rural service areas and they should have the flexibility to offer programming choices based on local market conditions. Small carriers are often forced to provide unwanted channels through the retransmission consent process or “through the threat of withholding vital programming,” OPASTCO said.
Allbritton Communications, which owns a 24-hour daily news channel in Washington D.C., said such a service would be “unfeasible” in an a la carte world. “At a time when Congress and the Commission seek to encourage local programming targeted to the specific needs and interests of local communities, niche services like NewsChannel 8 cannot withstand the economic blows that a la carte pricing would engender,” Albritton wrote. Others opposing the a la carte regime included American Women in Radio & TV, which feared the demise of channels targeting women like Oxygen, Lifetime and WE.
Courtroom TV said the FCC shouldn’t be swayed by arguments that a la carte works in Canada. Canada is a poor example, the network said, because it’s a secondary market for U.S. programmers, the Canadian market is much smaller than the U.S. and dividing along language lines between English and French, and Canadian cable operates under a protectionist regulatory regime that favors home-grown programming. Also, very few Canadian subscribers take the a la carte option, the network said.
Religious programming groups were conflicted on the issue. They generally like the idea of parents being able to pick and choose which channels they allow into their home, but fear religious programming networks wouldn’t survive a la carte. The National Religious Bcstrs. (NRB), for example, told the FCC it opposes a la carte because of its “direct threat to must-carry provisions of federal law and the likelihood that it would cause irreparable damage to religious, independent, ethnic and niche program producers.” NRB said a significant portion of its membership, however, supports the concept of a la carte “because of the prevalence of indecent or offensive content” in programming.
NRB said it could support a la carte under certain conditions that would explicitly preserve the must-carry provisions of the law and that would explicitly include all leased-channel arrangements in a mandatory basic tier. Those channels would be required to conform to all federal indecency statutes and regulations under NRB’s proposal.
Consumers Union (CU) and Consumer Federation of America (CFA) said large cable operators and national programmers have “painted a doomsday scenario for a la carte choice that bears no relationship to reality.” They “vastly overstated the costs and completely ignored the benefits,” CU and CFA said, saying the companies didn’t take into account the digital transition. “A policy that requires mixed bundling for digital subscribers would enhance consumer sovereignty and invigorate competition without raising consumer costs,” CU and CFA wrote. In such an atmosphere, independent programmers will find a less hostile environment, the consumer groups said.
NCTA said proponents of a la carte have failed to show that such a system is economically sustainable, that it would reduce monthly bills for most consumers, or increase diversity of programming. NCTA said a la carte would drive up costs for consumers, impose additional equipment and personnel costs on cable operators, take up more bandwidth and reduce program quality and diversity.