By Brooks Boliek
WASHINGTON -- Reversing course from a study it made four years ago, the
FCC determined that forcing cable operators to offer programming on a
per-channel basis would benefit consumers.
The report released Thursday found that the commission, in its original
report made by government consulting firm Booz Allen Hamilton for the
commission's Media Bureau, underestimated the number of cable channels a
so-called "a la carte" programming system would bring to consumers with
more channels at a lower cost. Booz, Allen found that a la carte
programming could cause cable rates to rise by as much as 30%.
"The Booz Allen study significantly underestimated the number of
programming channels that a subscriber could enjoy under a la carte
while still achieving savings compared to the subscriber's current
multichannel video programming distributor fees," the Media Bureau said
in its release accompanying the new report. "Indeed, correcting for this
mathematical error, consumers' bills decreased by anywhere from 3%-13%
in three out of the four scenarios considered in the Booz Allen study."
In November, FCC chairman Kevin Martin criticized the commission's
previous report before the Senate Commerce Committee forum on indecency.
Martin has been pushing for a la carte programming as a way to lower
costs and allow people to more easily screen out programming they might
find offensive.
"According to today's report, a careful analysis reveals that a la carte
and increased tiering could offer consumers greater choice and the
opportunity to lower their bills," Martin said Thursday.
According to the FCC, "Booz Allen itself acknowledges the errors, which
other economists also have confirmed."
In particular, the commission contends that the company "failed to net
out the cost of broadcast stations when calculating the average cost per
cable channel under a la carte. As a result, the Booz Allen study
overstated the average price per cable channel by more than 50%."
But Booz Allen said the commission mischaracterized the company's position.
"In November 2004, the FCC independently corroborated the methodology
and conclusions of a report prepared for the FCC's a la carte inquiry,"
the company said. "At that time, other independent economists also
corroborated our conclusions. In December 2005, in a letter to the FCC's
chief economist, we acknowledged -- and corrected -- a mistake in one of
our calculations. We shared with the FCC our findings that, after making
the appropriate adjustments, our conclusions remain unchanged."
The company said it still stands by its conclusion that a la carte
pricing would result in higher prices, fewer choices and lower-quality
programming.
Cable industry executives dismissed the new report, saying it -- not the
Booz Allen study -- was flawed.
"Most studies conclude that a mandated a la carte regime would be more
expensive for consumers and result in less diversity in programming,"
National Cable and Telecommunications Assn. president and CEO Kyle
McSlarrow said. "It is disappointing that the updated Media Bureau
report relies on assumptions that are not in line with the reality of
the marketplace. Over the last 25 years, the American free-enterprise
system created the most diverse video programming on Earth with the best
value for the customer."
Washington is not the place to make programming decisions, McSlarrow said.
"The marketplace in which cable, satellite, broadcasters and others
vigorously compete for customers should decide video offerings, not
mandates and price controls imposed by Washington, D.C.," he said. "The
notion that the government knows better how to improve on a competitive
marketplace is not supported by the evidence."
Much of the debate over a la carte programming is being driven by
policymakers' wishes to rein in indecent programming -- an issue that
many conservatives have embraced. Campaigns by such groups as the
Parents Television Council and the American Family Assn., run by Rev.
Donald Wildmon, have been responsible for generating most of the
indecency complaints at the FCC.
"We applaud the FCC and Chairman Martin for bringing the truth to an
issue where only lies and deceit had gone before: Cable choice will
help, not hurt, consumers," PTC president L. Brent Bozell said.
"Consumers -- and especially families -- must be afforded the ability to
pick and choose and pay for only those networks they want in their homes."
While conservative groups have been responsible for much of the
indecency agitation, many religious networks fear that a la carte
pricing will force them off the cable systems.
"A pay-per-channel system would not accomplish the removal of obscenity
from television," said Rod Tapp, executive vp at the Inspiration
Networks. "It won't even help sift out unsuitable programming for our
families. On the contrary, it could represent the death knell for much
of the wholesome programming available today from smaller independent
channels."
Oxygen Media chairman and CEO Geraldine Laybourne echoed that view.
"TV viewers often don't know what they want to watch until it's there
for them as an option," she said. "Who would have known to subscribe to
Bravo to watch 'Queer Eye for the Straight Guy' prior to it airing?" she
asked. "The a la carte model would make it extremely difficult for any
new network to launch successful new shows and therefore extremely
difficult for any new network -- especially those appealing to
underserved audiences -- to make it."
The report received a mixed reaction on Capitol Hill.
"I am pleased that the commission has concluded that an a la carte
offering could reduce consumers' cable bills by as much as 13%," said
Sen. John McCain, R-Ariz. "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."
McCain said he planned to introduce legislation that will "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."
It was unclear how far any legislation will get. While Sen. Ted Stevens,
R-Alaska, has been an early proponent of a la carte programming, his
ardor has cooled. During a third hearing on indecent broadcasts, he told
the industry that he would like to give it time to see whether the
"family-friendly" tiers many of the major players have rolled out work.
Stevens' plans are particularly important because he chairs the Senate
Commerce Committee, the panel that oversees the telecommunications
industries. He was noncommittal Thursday.
"If a 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.
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THR: Top Stories
Feb. 10, 2006
FCC wants new cable TV menu
By Brooks Boliek WASHINGTON -- Reversing course from a study it made four years ago, the FCC determined that forcing cable operators to offer programming on a per-channel basis would benefit consumers.
The report released Thursday found that the commission, in its original report made by government consulting firm Booz Allen Hamilton for the commission's Media Bureau, underestimated the number of cable channels a so-called "a la carte" programming system would bring to consumers with more channels at a lower cost. Booz, Allen found that a la carte programming could cause cable rates to rise by as much as 30%.
"The Booz Allen study significantly underestimated the number of programming channels that a subscriber could enjoy under a la carte while still achieving savings compared to the subscriber's current multichannel video programming distributor fees," the Media Bureau said in its release accompanying the new report. "Indeed, correcting for this mathematical error, consumers' bills decreased by anywhere from 3%-13% in three out of the four scenarios considered in the Booz Allen study."
In November, FCC chairman Kevin Martin criticized the commission's previous report before the Senate Commerce Committee forum on indecency. Martin has been pushing for a la carte programming as a way to lower costs and allow people to more easily screen out programming they might find offensive.
"According to today's report, a careful analysis reveals that a la carte and increased tiering could offer consumers greater choice and the opportunity to lower their bills," Martin said Thursday.
According to the FCC, "Booz Allen itself acknowledges the errors, which other economists also have confirmed."
In particular, the commission contends that the company "failed to net out the cost of broadcast stations when calculating the average cost per cable channel under a la carte. As a result, the Booz Allen study overstated the average price per cable channel by more than 50%."
But Booz Allen said the commission mischaracterized the company's position.
"In November 2004, the FCC independently corroborated the methodology and conclusions of a report prepared for the FCC's a la carte inquiry," the company said. "At that time, other independent economists also corroborated our conclusions. In December 2005, in a letter to the FCC's chief economist, we acknowledged -- and corrected -- a mistake in one of our calculations. We shared with the FCC our findings that, after making the appropriate adjustments, our conclusions remain unchanged."
The company said it still stands by its conclusion that a la carte pricing would result in higher prices, fewer choices and lower-quality programming.
Cable industry executives dismissed the new report, saying it -- not the Booz Allen study -- was flawed.
"Most studies conclude that a mandated a la carte regime would be more expensive for consumers and result in less diversity in programming," National Cable and Telecommunications Assn. president and CEO Kyle McSlarrow said. "It is disappointing that the updated Media Bureau report relies on assumptions that are not in line with the reality of the marketplace. Over the last 25 years, the American free-enterprise system created the most diverse video programming on Earth with the best value for the customer."
Washington is not the place to make programming decisions, McSlarrow said.
"The marketplace in which cable, satellite, broadcasters and others vigorously compete for customers should decide video offerings, not mandates and price controls imposed by Washington, D.C.," he said. "The notion that the government knows better how to improve on a competitive marketplace is not supported by the evidence."
Much of the debate over a la carte programming is being driven by policymakers' wishes to rein in indecent programming -- an issue that many conservatives have embraced. Campaigns by such groups as the Parents Television Council and the American Family Assn., run by Rev. Donald Wildmon, have been responsible for generating most of the indecency complaints at the FCC.
"We applaud the FCC and Chairman Martin for bringing the truth to an issue where only lies and deceit had gone before: Cable choice will help, not hurt, consumers," PTC president L. Brent Bozell said. "Consumers -- and especially families -- must be afforded the ability to pick and choose and pay for only those networks they want in their homes."
While conservative groups have been responsible for much of the indecency agitation, many religious networks fear that a la carte pricing will force them off the cable systems.
"A pay-per-channel system would not accomplish the removal of obscenity from television," said Rod Tapp, executive vp at the Inspiration Networks. "It won't even help sift out unsuitable programming for our families. On the contrary, it could represent the death knell for much of the wholesome programming available today from smaller independent channels."
Oxygen Media chairman and CEO Geraldine Laybourne echoed that view.
"TV viewers often don't know what they want to watch until it's there for them as an option," she said. "Who would have known to subscribe to Bravo to watch 'Queer Eye for the Straight Guy' prior to it airing?" she asked. "The a la carte model would make it extremely difficult for any new network to launch successful new shows and therefore extremely difficult for any new network -- especially those appealing to underserved audiences -- to make it."
The report received a mixed reaction on Capitol Hill.
"I am pleased that the commission has concluded that an a la carte offering could reduce consumers' cable bills by as much as 13%," said Sen. John McCain, R-Ariz. "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."
McCain said he planned to introduce legislation that will "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."
It was unclear how far any legislation will get. While Sen. Ted Stevens, R-Alaska, has been an early proponent of a la carte programming, his ardor has cooled. During a third hearing on indecent broadcasts, he told the industry that he would like to give it time to see whether the "family-friendly" tiers many of the major players have rolled out work. Stevens' plans are particularly important because he chairs the Senate Commerce Committee, the panel that oversees the telecommunications industries. He was noncommittal Thursday.
"If a 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.
By Brooks Boliek
WASHINGTON -- Reversing course from a study it made four years ago, the
FCC determined that forcing cable operators to offer programming on a
per-channel basis would benefit consumers.
The report released Thursday found that the commission, in its original
report made by government consulting firm Booz Allen Hamilton for the
commission's Media Bureau, underestimated the number of cable channels a
so-called "a la carte" programming system would bring to consumers with
more channels at a lower cost. Booz, Allen found that a la carte
programming could cause cable rates to rise by as much as 30%.
"The Booz Allen study significantly underestimated the number of
programming channels that a subscriber could enjoy under a la carte
while still achieving savings compared to the subscriber's current
multichannel video programming distributor fees," the Media Bureau said
in its release accompanying the new report. "Indeed, correcting for this
mathematical error, consumers' bills decreased by anywhere from 3%-13%
in three out of the four scenarios considered in the Booz Allen study."
In November, FCC chairman Kevin Martin criticized the commission's
previous report before the Senate Commerce Committee forum on indecency.
Martin has been pushing for a la carte programming as a way to lower
costs and allow people to more easily screen out programming they might
find offensive.
"According to today's report, a careful analysis reveals that a la carte
and increased tiering could offer consumers greater choice and the
opportunity to lower their bills," Martin said Thursday.
According to the FCC, "Booz Allen itself acknowledges the errors, which
other economists also have confirmed."
In particular, the commission contends that the company "failed to net
out the cost of broadcast stations when calculating the average cost per
cable channel under a la carte. As a result, the Booz Allen study
overstated the average price per cable channel by more than 50%."
But Booz Allen said the commission mischaracterized the company's position.
"In November 2004, the FCC independently corroborated the methodology
and conclusions of a report prepared for the FCC's a la carte inquiry,"
the company said. "At that time, other independent economists also
corroborated our conclusions. In December 2005, in a letter to the FCC's
chief economist, we acknowledged -- and corrected -- a mistake in one of
our calculations. We shared with the FCC our findings that, after making
the appropriate adjustments, our conclusions remain unchanged."
The company said it still stands by its conclusion that a la carte
pricing would result in higher prices, fewer choices and lower-quality
programming.
Cable industry executives dismissed the new report, saying it -- not the
Booz Allen study -- was flawed.
"Most studies conclude that a mandated a la carte regime would be more
expensive for consumers and result in less diversity in programming,"
National Cable and Telecommunications Assn. president and CEO Kyle
McSlarrow said. "It is disappointing that the updated Media Bureau
report relies on assumptions that are not in line with the reality of
the marketplace. Over the last 25 years, the American free-enterprise
system created the most diverse video programming on Earth with the best
value for the customer."
Washington is not the place to make programming decisions, McSlarrow said.
"The marketplace in which cable, satellite, broadcasters and others
vigorously compete for customers should decide video offerings, not
mandates and price controls imposed by Washington, D.C.," he said. "The
notion that the government knows better how to improve on a competitive
marketplace is not supported by the evidence."
Much of the debate over a la carte programming is being driven by
policymakers' wishes to rein in indecent programming -- an issue that
many conservatives have embraced. Campaigns by such groups as the
Parents Television Council and the American Family Assn., run by Rev.
Donald Wildmon, have been responsible for generating most of the
indecency complaints at the FCC.
"We applaud the FCC and Chairman Martin for bringing the truth to an
issue where only lies and deceit had gone before: Cable choice will
help, not hurt, consumers," PTC president L. Brent Bozell said.
"Consumers -- and especially families -- must be afforded the ability to
pick and choose and pay for only those networks they want in their homes."
While conservative groups have been responsible for much of the
indecency agitation, many religious networks fear that a la carte
pricing will force them off the cable systems.
"A pay-per-channel system would not accomplish the removal of obscenity
from television," said Rod Tapp, executive vp at the Inspiration
Networks. "It won't even help sift out unsuitable programming for our
families. On the contrary, it could represent the death knell for much
of the wholesome programming available today from smaller independent
channels."
Oxygen Media chairman and CEO Geraldine Laybourne echoed that view.
"TV viewers often don't know what they want to watch until it's there
for them as an option," she said. "Who would have known to subscribe to
Bravo to watch 'Queer Eye for the Straight Guy' prior to it airing?" she
asked. "The a la carte model would make it extremely difficult for any
new network to launch successful new shows and therefore extremely
difficult for any new network -- especially those appealing to
underserved audiences -- to make it."
The report received a mixed reaction on Capitol Hill.
"I am pleased that the commission has concluded that an a la carte
offering could reduce consumers' cable bills by as much as 13%," said
Sen. John McCain, R-Ariz. "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."
McCain said he planned to introduce legislation that will "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."
It was unclear how far any legislation will get. While Sen. Ted Stevens,
R-Alaska, has been an early proponent of a la carte programming, his
ardor has cooled. During a third hearing on indecent broadcasts, he told
the industry that he would like to give it time to see whether the
"family-friendly" tiers many of the major players have rolled out work.
Stevens' plans are particularly important because he chairs the Senate
Commerce Committee, the panel that oversees the telecommunications
industries. He was noncommittal Thursday.
"If a 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.
By Brooks Boliek WASHINGTON -- Reversing course from a study it made four years ago, the FCC determined that forcing cable operators to offer programming on a per-channel basis would benefit consumers.
The report released Thursday found that the commission, in its original report made by government consulting firm Booz Allen Hamilton for the commission's Media Bureau, underestimated the number of cable channels a so-called "a la carte" programming system would bring to consumers with more channels at a lower cost. Booz, Allen found that a la carte programming could cause cable rates to rise by as much as 30%.
"The Booz Allen study significantly underestimated the number of programming channels that a subscriber could enjoy under a la carte while still achieving savings compared to the subscriber's current multichannel video programming distributor fees," the Media Bureau said in its release accompanying the new report. "Indeed, correcting for this mathematical error, consumers' bills decreased by anywhere from 3%-13% in three out of the four scenarios considered in the Booz Allen study."
In November, FCC chairman Kevin Martin criticized the commission's previous report before the Senate Commerce Committee forum on indecency. Martin has been pushing for a la carte programming as a way to lower costs and allow people to more easily screen out programming they might find offensive.
"According to today's report, a careful analysis reveals that a la carte and increased tiering could offer consumers greater choice and the opportunity to lower their bills," Martin said Thursday.
According to the FCC, "Booz Allen itself acknowledges the errors, which other economists also have confirmed."
In particular, the commission contends that the company "failed to net out the cost of broadcast stations when calculating the average cost per cable channel under a la carte. As a result, the Booz Allen study overstated the average price per cable channel by more than 50%."
But Booz Allen said the commission mischaracterized the company's position.
"In November 2004, the FCC independently corroborated the methodology and conclusions of a report prepared for the FCC's a la carte inquiry," the company said. "At that time, other independent economists also corroborated our conclusions. In December 2005, in a letter to the FCC's chief economist, we acknowledged -- and corrected -- a mistake in one of our calculations. We shared with the FCC our findings that, after making the appropriate adjustments, our conclusions remain unchanged."
The company said it still stands by its conclusion that a la carte pricing would result in higher prices, fewer choices and lower-quality programming.
Cable industry executives dismissed the new report, saying it -- not the Booz Allen study -- was flawed.
"Most studies conclude that a mandated a la carte regime would be more expensive for consumers and result in less diversity in programming," National Cable and Telecommunications Assn. president and CEO Kyle McSlarrow said. "It is disappointing that the updated Media Bureau report relies on assumptions that are not in line with the reality of the marketplace. Over the last 25 years, the American free-enterprise system created the most diverse video programming on Earth with the best value for the customer."
Washington is not the place to make programming decisions, McSlarrow said.
"The marketplace in which cable, satellite, broadcasters and others vigorously compete for customers should decide video offerings, not mandates and price controls imposed by Washington, D.C.," he said. "The notion that the government knows better how to improve on a competitive marketplace is not supported by the evidence."
Much of the debate over a la carte programming is being driven by policymakers' wishes to rein in indecent programming -- an issue that many conservatives have embraced. Campaigns by such groups as the Parents Television Council and the American Family Assn., run by Rev. Donald Wildmon, have been responsible for generating most of the indecency complaints at the FCC.
"We applaud the FCC and Chairman Martin for bringing the truth to an issue where only lies and deceit had gone before: Cable choice will help, not hurt, consumers," PTC president L. Brent Bozell said. "Consumers -- and especially families -- must be afforded the ability to pick and choose and pay for only those networks they want in their homes."
While conservative groups have been responsible for much of the indecency agitation, many religious networks fear that a la carte pricing will force them off the cable systems.
"A pay-per-channel system would not accomplish the removal of obscenity from television," said Rod Tapp, executive vp at the Inspiration Networks. "It won't even help sift out unsuitable programming for our families. On the contrary, it could represent the death knell for much of the wholesome programming available today from smaller independent channels."
Oxygen Media chairman and CEO Geraldine Laybourne echoed that view.
"TV viewers often don't know what they want to watch until it's there for them as an option," she said. "Who would have known to subscribe to Bravo to watch 'Queer Eye for the Straight Guy' prior to it airing?" she asked. "The a la carte model would make it extremely difficult for any new network to launch successful new shows and therefore extremely difficult for any new network -- especially those appealing to underserved audiences -- to make it."
The report received a mixed reaction on Capitol Hill.
"I am pleased that the commission has concluded that an a la carte offering could reduce consumers' cable bills by as much as 13%," said Sen. John McCain, R-Ariz. "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."
McCain said he planned to introduce legislation that will "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."
It was unclear how far any legislation will get. While Sen. Ted Stevens, R-Alaska, has been an early proponent of a la carte programming, his ardor has cooled. During a third hearing on indecent broadcasts, he told the industry that he would like to give it time to see whether the "family-friendly" tiers many of the major players have rolled out work. Stevens' plans are particularly important because he chairs the Senate Commerce Committee, the panel that oversees the telecommunications industries. He was noncommittal Thursday.
"If a 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.
