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By Leslie Cauley, USA TODAY Kevin Martin, chairman of the Federal Communications Commission, isn't shy about offering his prescription for cable TV service: He thinks you should be allowed to buy individual channels. The problem? Big programmers such as Disney and Viacom forbid operators to sell their channels individually. So do cable operators such as Comcast and Time Warner, which also own programming. And other operators have followed their lead. The industry's rejection of an "a la carte" system is the main reason U.S. consumers still have essentially just two options in cable TV packages: Basic, a federally required tier that offers access to local stations, and Expanded Basic, which provides an average of 70 to more than 200 channels. Most people choose Expanded Basic. It's the most widely distributed tier, with more than 70 million subscribers. Last week, Martin ratcheted up the political heat. His office released a report showing that consumers could cut their cable TV bills by up to 13% if they were given the option of a la carte. The FCC's conclusion struck at the heart of the industry's long-standing contention that consumers are better off buying a big bundle of channels. It also refuted a 2004 FCC report that had been prepared at the behest of Martin's predecessor, Michael Powell. Martin, in an interview, says his goal was to correct "several problems" with the Powell report. He contends that the 2004 report relied on miscalculations and on assumptions "that weren't supported" by the facts. Chief among them: the idea that cable customers would watch less TV if they had the option of buying channels a la carte. The 2004 report had claimed that a la carte would lead to higher prices and less choice for consumers. "I was surprised by the results of the (2004) report," says Martin, who was a commissioner at the time. "That's why I wanted to look at (a la carte) further." Martin added: "I think consumers would benefit from additional ability to control the content coming into the home." The FCC can't compel the cable industry to change its policies. But as a practical matter, the report's findings will be hard to ignore, says Paul Gallant, a media analyst for Stanford Washington Research Group in Washington. The new FCC report "puts the a la carte issue back on Congress' radar screen," he says. Gallant notes that support for a la carte cuts across political lines. A la carte "has support from diverse groups within Congress," Gallant says. "The left sees it as a way to lower rates; the right sees it as a vehicle for parents to protect kids. That's a strong combination." Still, Blair Levin, a regulatory analyst for Stifel Nicolaus, a financial services firm, thinks Congress will be loath to meddle with the business model of the U.S. cable industry. The industry worries that a la carte would shrink its revenue from subscriptions and ads. "I don't believe this Congress wants to get into price regulation," Levin says. Such action, Levin points out, would require companies to void long-term contracts and make other business allowances to accommodate a la carte. Market forces might wind up prevailing anyway, says Ford Cavallari of Adventis, a Boston-based media consultancy. In the United Kingdom, Cavallari notes, customers of BSkyB, a satellite TV operator, can choose from among more than 90 packages, some of them with just a few channels. Viewers in Spain, Italy and Hong Kong have similar flexibility, he says. In the USA, meantime, new video entrants such as AT&T and Verizon are expressing interest in a la carte. As they start gaining market share, Cavallari says, Comcast and other cable operators will be pressed to keep up. "Within three years, we'll see a la carte in this country," he predicts. The bottom line for consumers, in Cavallari's view: "They'll get to save money while watching the programs they really like." |