In a significant change of policy, FCC chairman Kevin Martin, heir to the Grand Throne of Powell, today reversed the Commission’s position on cable-channel bundling in a statement before a Senate Committee on Commerce, Science and Transportation hearing on media decency.
Under previous chairman Michael Powell, last year the FCC issued a report that found consumers could save money on a cable-channel “à la carte plan” only if they subscribed to fewer than nine channels, but since the average cable subscriber watches 17 channels, the report found à la carte pricing could cause a rate increase of between 14 and 30 percent.
In addressing the issues of indecency on cable, which the FCC does not currently regulate for content, Martin said, “Cable and satellite operators could offer an exclusively family-friendly programming package as an alternative to the ‘expanded basic’ tier on cable or the initial tier on DBS [Direct Broadcast Satellite] … Parents could get Nickelodeon and Discovery without having to buy other adult-oriented fare.”
Martin went on to say, “Another alternative is for cable and DBS operators to offer programming in a more à la carte manner … This option could be implemented in a variety of ways … For example, it could be limited to digital-cable customers and customers could still be required to purchase the broadcast basic package of must carry stations. Parents could then be permitted to ‘opt out’ of cable programming, requesting not to receive certain cable channels and having their package price reduced accordingly. Alternatively, parents could be allowed to ‘opt in’ to particular cable programs beyond the basic package, which still would include broadcast must carry stations.”
He continued, “Another option would be to allow consumers to choose a specific number of channels from a menu of available programming for a fixed price – e.g., 10 channels for $20, 20 channels for $30 etc. Parents then would be able to receive – and pay for – only that programming that they are comfortable bringing into their homes.”
Martin then slammed the Powell report and touted his own forthcoming report, concluding, “Based on a more complete analysis of the costs and benefits of bundling and the potential costs and benefits of à la carte pricing, this further report determines that the [Powell] Report incorrectly found that offering of cable programming in a more à la carte manner would be economically infeasible. It also concludes that doing so in fact could be in consumers’ best interests. Finally, it explores several alternatives for increasing consumer choice that could provide substantial consumer benefits if their provision were mandated.”
Of course, the cable and satellite operators prefer bundling to à la carte because it’s much easier for them from a techincal and accounting standpoint, and helps justify an ever-growing cable bill. But Martin’s clever use of the decency/family-friendly angle may help pry open this formerly sacrosanct “bundle.”