Few Push A La Carte, Though Aspects Surface in Comcast-NBCU Review
Few companies or groups are pushing the government to mandate a la carte for cable, although some of the conditions proposed for Comcast’s planned purchase of control of NBC Universal echo elements of dormant channel-unbundling proposals. The American Cable Association asked the FCC Thursday to require Comcast to negotiate separately from deals for other programming distribution agreements for its regional sports networks (RSNs) and for the NBC TV stations it will control after the deal closes. Talks on RSNs and stations should also be separate, ACA said.
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The group stopped short of seeking full wholesale unbundling rules for all programming. Few others seem ready to take up the cause now. The ability for pay-TV subscribers to pick and choose individual channels of their choice likely is being raised in the course of commission review of Comcast-NBC Universal and a separate rulemaking request on retransmission consent deals, agency and industry officials said. They said it’s hard to say if it will soon be a regulatory priority.
“We had a run at it,” said Mark Cooper, Consumer Federation of America director of research. “If anybody is working on it, it would be us, and we're not making a push right now.” The group’s focus has shifted from seeking a la carte rules to creating an environment in which consumers would get more video programming choice by other means, he said. “One of our primary endeavors is to break the bundle between Internet and video,” Cooper said. “We want people to be a able to buy a broadband connection and then buy Internet TV on a standalone basis. That’s a form of a la carte. At a minimum, we want to establish the ability and preserve the ability to buy video separate from cable. That would create certain pressures that would change the marketing model."
For ACA, a proposed requirement that Comcast-NBC Universal to enter distribution talks for TV stations and RSNs separately from other programming would lower the cost of arbitration for small cable operators seeking to carry the stations and sports networks, said William Rogerson, an economist at Northwestern University. The transparency of the contracts would make it simple for an arbitrator to come up with a fair value for carriage, said Rogerson, who’s working for ACA. “When they bundle them together, an arbitrator can’t tell what any particular item costs.” That has made arbitration an expensive remedy for small cable operators seeking access to some vertically integrated programming networks, he said.
Though a la carte rules had support from Kevin Martin when he was the FCC chairman, it’s not clear where the current commission would come down on them, said Public Policy Director Dan Isett of the Parents Television Council. How the agency decides a petition for rulemaking on retransmission consent rules could indicate the way it approaches broader a la carte questions, said Isett. “Those two things are intrinsically related,” he said. “The real point of inflection here is going to be on retransmission consent reform."
There’s a case to be made that Comcast-NBCU bears on a la carte because the cable operator extensively bundles channels together and in turn sells broadband, phone and video service in a package, as do other pay-TV providers, said a commission official. It’s unclear if the FCC team reviewing the deal has homed in on unbundling and also whether Chairman Julius Genachowski plans to make it an issue outside the deal, said agency and industry officials. “Obviously, the commission has not made this a very high-profile matter,” said a lawyer with telecom clients. “But that doesn’t mean that it can’t bubble up at some point."
ACA also proposed that small cable operators be entitled to a new style of arbitration for TV stations and RSNs owned by Comcast-NBC Universal. Instead of baseball-style arbitration, in which each side submits an offer and an arbitrator picks one, smaller operators would be entitled to pay a 5 percent premium over the lowest price any other distributor pays for an RSN or NBC-owned TV station under ACA’s proposal. The association also sought rules to force Comcast to deal with the National Cable Television Cooperative, which buys programming on behalf of many small cable operators, as if it were one large distributor.
Meanwhile, a Free State Foundation scholar cautioned the FCC not to adopt unnecessary conditions. “It is critical for the FCC to exercise a strong measure of institutional self-restraint so that these collateral initiatives do not end up siphoning off all the gains that this merger might produce if allowed to go forward,” Richard Epstein said Thursday. Replies in the merger docket were due at the end of the day.