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Cynthetiq · 07-14-2004, 01:19 PM

Cable a la Carte Still Half-Baked By Michael Grebb
Story location: http://www.wired.com/news/politics/0,1283,64203,00.html

02:00 AM Jul. 14, 2004 PT

It's one of the most perplexing questions ever to face humankind: Why can't you buy just the cable channels you actually watch?

At a hearing of the House Subcommittee on Telecommunications and the Internet on Wednesday, a diverse panel of witnesses representing cable operators, cable channels, consumer advocates and religious broadcasters will jockey for position in the debate.

Several lawmakers, including Sen. John McCain (R-Arizona), already support mandated "a la carte" carriage. Under such a system, people could pick only the few channels they want rather than have to buy large "tiers" of cable programming that include 70 or 80 channels.

The cable industry argues that an a la carte system would destroy the economics of the business. The argument goes like this:

Without carriage on broad tiers, startup and niche programming wouldn't be able to attract advertising and would quickly wither away, leaving consumers with fewer choices. In addition, as audiences fragment among all the channels, plummeting advertising rates would force surviving networks to raise the license fees they charge cable companies. Those higher fees would in turn get passed right along to customers, increasing the price of each individual channel.

"Even if consumers were to choose just 17 channels, their bills would go up considerably," said Brian Dietz, spokesman for the National Cable & Telecommunications Association. "Bundles of programming provide the best value for consumers."

Consumer advocates, however, charge that the cable industry just wants to preserve its power to squash any independent networks in which it doesn't have an ownership stake.

"I think that's a lot of it," said Kenneth DeGraff, a policy analyst at the Consumers Union. "If you ask the smaller cable guys, they're in favor of (a la carte). It's the big media companies that are opposing it."

Indeed, the American Cable Association, which represents small rural cable operators, said it would voluntarily offer a la carte programming if the big program networks would let it.

In legal comments (PDF) to the FCC last year, the group wrote that "the sole reason" it doesn't offer a la carte to its customers "is because media conglomerates, including Disney, Fox and others, flatly deny this option to smaller cable operators."

DeGraff pointed out that the gay-themed channel PrideVision TV has seen much success on Canadian cable systems since the channel's launch in 2000, but it has "had no success getting on here (in the United States)" largely because it is independent. "They can't be offered because they have no leverage," he said.

DeGraff said such niche channels would find it easier to gain carriage in an a la carte world because they wouldn't take up any space on a bundled tier.

Of course, it's unclear how much power the big cable companies actually wield.

According to the FCC's 2004 report on video competition, none of the top six cable system conglomerates holds an ownership interest in more than 18 percent of all national programming networks.

"The a la carte bundling helps the most totally independent, non-vertically integrated networks," said Frank Lloyd, a cable industry attorney at the Washington law firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo. "Otherwise, these networks could never survive."

Lloyd represents GoodLife TV Network, an independent programmer that opposes a la carte mandates.

In May, the House Commerce Committee requested that the FCC study the a la carte issue. Legal comments in that proceeding are due on Thursday, and the final report is expected out later this fall.

A report (PDF) last year by the Government Accountability Office (formerly the General Accounting Office), however, concluded that cable a la carte wasn't worth the trouble and would actually increase rates for some consumers.

But the GAO report has never impressed a la carte advocates, who charge that the agency assumed a world in which a la carte replaced rather than simply augmented the current tiered system.

"That doesn't apply to the model we're talking about," said DeGraff.

Caught in all of this confusion are TV viewers everywhere, some of whom still wonder why buying access to A&E and Court TV requires that they also support Comedy Central and those raunchy kids on South Park.

Considering the complex nature of this debate, they may still be wondering long after Wednesday's hearing.
---------------

I understand what they are saying but I don't readily or easily agree with the fact that the costs will skyrocket. I think that like all things there should be an ala carte offering and if I chose to get a better "value" by bundling then I do that....

07-14-2004, 01:19 PM	#334 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	Cable a la Carte Still Half-Baked By Michael Grebb Story location: http://www.wired.com/news/politics/0,1283,64203,00.html 02:00 AM Jul. 14, 2004 PT It's one of the most perplexing questions ever to face humankind: Why can't you buy just the cable channels you actually watch? At a hearing of the House Subcommittee on Telecommunications and the Internet on Wednesday, a diverse panel of witnesses representing cable operators, cable channels, consumer advocates and religious broadcasters will jockey for position in the debate. Several lawmakers, including Sen. John McCain (R-Arizona), already support mandated "a la carte" carriage. Under such a system, people could pick only the few channels they want rather than have to buy large "tiers" of cable programming that include 70 or 80 channels. The cable industry argues that an a la carte system would destroy the economics of the business. The argument goes like this: Without carriage on broad tiers, startup and niche programming wouldn't be able to attract advertising and would quickly wither away, leaving consumers with fewer choices. In addition, as audiences fragment among all the channels, plummeting advertising rates would force surviving networks to raise the license fees they charge cable companies. Those higher fees would in turn get passed right along to customers, increasing the price of each individual channel. "Even if consumers were to choose just 17 channels, their bills would go up considerably," said Brian Dietz, spokesman for the National Cable & Telecommunications Association. "Bundles of programming provide the best value for consumers." Consumer advocates, however, charge that the cable industry just wants to preserve its power to squash any independent networks in which it doesn't have an ownership stake. "I think that's a lot of it," said Kenneth DeGraff, a policy analyst at the Consumers Union. "If you ask the smaller cable guys, they're in favor of (a la carte). It's the big media companies that are opposing it." Indeed, the American Cable Association, which represents small rural cable operators, said it would voluntarily offer a la carte programming if the big program networks would let it. In legal comments (PDF) to the FCC last year, the group wrote that "the sole reason" it doesn't offer a la carte to its customers "is because media conglomerates, including Disney, Fox and others, flatly deny this option to smaller cable operators." DeGraff pointed out that the gay-themed channel PrideVision TV has seen much success on Canadian cable systems since the channel's launch in 2000, but it has "had no success getting on here (in the United States)" largely because it is independent. "They can't be offered because they have no leverage," he said. DeGraff said such niche channels would find it easier to gain carriage in an a la carte world because they wouldn't take up any space on a bundled tier. Of course, it's unclear how much power the big cable companies actually wield. According to the FCC's 2004 report on video competition, none of the top six cable system conglomerates holds an ownership interest in more than 18 percent of all national programming networks. "The a la carte bundling helps the most totally independent, non-vertically integrated networks," said Frank Lloyd, a cable industry attorney at the Washington law firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo. "Otherwise, these networks could never survive." Lloyd represents GoodLife TV Network, an independent programmer that opposes a la carte mandates. In May, the House Commerce Committee requested that the FCC study the a la carte issue. Legal comments in that proceeding are due on Thursday, and the final report is expected out later this fall. A report (PDF) last year by the Government Accountability Office (formerly the General Accounting Office), however, concluded that cable a la carte wasn't worth the trouble and would actually increase rates for some consumers. But the GAO report has never impressed a la carte advocates, who charge that the agency assumed a world in which a la carte replaced rather than simply augmented the current tiered system. "That doesn't apply to the model we're talking about," said DeGraff. Caught in all of this confusion are TV viewers everywhere, some of whom still wonder why buying access to A&E and Court TV requires that they also support Comedy Central and those raunchy kids on South Park. Considering the complex nature of this debate, they may still be wondering long after Wednesday's hearing. --------------- I understand what they are saying but I don't readily or easily agree with the fact that the costs will skyrocket. I think that like all things there should be an ala carte offering and if I chose to get a better "value" by bundling then I do that....