FCC puts 'a la carte' cable on the menu

Sick of paying for dozens of channels you don't watch? Relief may be on the way.

ByLeslie Cauley, USA TODAY
January 8, 2009, 1:06 AM

— -- If you're tired of paying for dozens of cable TV channels that you don't want and don't watch, relief may be on the way.

The Federal Communications Commission on Tuesday plans to begin considering banning programmers from "tying" — making cable systems take less-popular or new channels to get must-haves, such as ESPN DIS or CBS CBS.

Programmers have used the practice to launch scores of channels. That's why you see all those spinoffs of Walt Disney's ESPN on basic and digital cable. Operators didn't necessarily want them — they just couldn't see a cheaper way to get the flagship channel.

Each extra channel adds a fee to customers' bills. "The problem for consumers is that they have to pay higher rates for a bunch of channels they may not want or watch," says FCC chief Kevin Martin.

Cable operators routinely cite programming costs as a big reason they've more than doubled rates over the past decade.

Martin thinks curbs on tying could ease those costs. "Cable TV rates have continued to rise above the rate of inflation. I'm hopeful that this would help control the rate of increase of cable rates."

Cable operators have tried to get around tying for years, says Matt Polka, president of the American Cable Association, which represents hundreds of small cable TV operators. "At a time when (cable consumers) are screaming for choice, there is none, largely because of consolidation and control of content."

Polka says programmers also use ownership of broadcast networks and stations to force "carriage" of channels. ABC is owned by Disney, NBC by General Electric GE, CBS by CBS Corp. and Fox by News Corp NWS. All have cable arms that create new channels regularly.

Cable operators are required to carry all local TV stations, but federal rules let broadcasters pick how they want to be paid: Cash or carriage of their company's cable channels.

Polka says programmers typically set the cash price so high that operators have little choice but to agree to take their channels. Recently, they've even started to demand support for their websites, he says.

Martin says that under the bar on bundling that the FCC plans to examine, programmers would have to sell channels individually. "You can't tie the channel in any way. … If you only want one channel, you shouldn't have to take 10 or 20."

Tying also has a less-obvious downside for consumers: It allows big programmers to pack cable TV with their channels, leaving less room for channels from other providers.

Martin says the problem is most acute for small cable operators with limited network capacity and is getting worse as channels proliferate, he says.

Polka says the crowding can even hamper non-TV innovations, such as broadband options. With only so much capacity in the cable wire, "The more space that gets taken away for mandated video carriage, the less room there is for other services."

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