Last week, in the bureaucratese equivalent of “either you’re stupid, lying, or both,” FCC Chairman Kevin Martin presented a report which starkly contradicted “the conclusions and underlying assumptions” of an earlier, industry-supported, FCC report on the economics of cable TV channel pricing.
In a statement, Martin said the new report “concludes the earlier report contained mistaken calculations, relied on unsupported and problematic assumptions, and presented an incomplete analysis … a careful analysis reveals that a la carte and increased tiering could offer consumers greater choice and the opportunity to lower their bills.”
This is a “yo mama” to the industry and former FCC chair Michael Powell, who accepted the earlier report at face value.
The earlier study, released in November of ’04, concluded that à la carte channel offerings — as opposed to the bundled channels offered by cable and satellite operators today — were likely to reduce monthly bills only for consumers who bought nine or fewer channels; while the new report concludes that households could buy as many as 20 channels without seeing cable bills rise – above the magic threshhold of 17 channels that the average American home is believed to watch.
Martin also sees a la carte and/or family-friendly channel tiers as a method of avoiding explicit programming, as he stated at a November Senate Commerce Commttee hearing on indecency; and in fact many operators, feeling the heat, have since committed to creating those very same family-oriented tiers in the hope of avoiding legislation.
Industry critic Sen. John McCain (R-Ariz.) responded strongly, saying, “The report confirms what I have believed for years – if consumers are allowed to choose the channels their families view then their monthly cable bill will be less. Choice is far preferable to being forced to buy a host of channels they don’t even watch.”
“It is regrettable that the cable companies continue to balk at offering channels on an ‘a la carte’ basis,” he continued, “and instead continue to raise the price of their bundled offering. The Wall Street Journal recently reported that consumers can expect to rate increases of as much as six percent during 2006. Therefore, I will soon be introducing legislation that would entice all providers of television services to offer an ‘a la carte’ option in addition to a package of channels in return for regulatory relief. I hope that the cable industry will appreciate the ability to choose despite their failure to provide meaningful choices to their customers.”
Commerce Committe Chairman Sen. Ted Stevens (R-Alaska) was a bit more diplomatic. “If à la carte is not more expensive for consumers, I will support an effort to take such an approach, subject to discussions with providers on the downside of such a process,” he said.