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January 2006

Do You Support “A La Carte” Television Pricing?

Are you a WECN reader who subscribes to satellite TV or cable? If so, you might be interested to know that an issue is brewing before the Federal Communications Commission (FCC) to require pay-television services to be priced on an “a la carte” basis, or in other words, you would pay for each channel you wanted to watch, rather than for a “bundled” package of channels that you may or may not watch.

FCC Chair Kevin Martin took many by surprise on November 29, 2005, when he announced his support for “a la carte” pricing and indicated that the FCC will be reporting on this issue to Congress.

Some parent advocates believe consumers should have the ability to only purchase the channels they want because they could then block their children from being exposed to racy or violent content. I understand their viewpoint because I have not always found it easy to keep my children from watching some less than tasteful programming—on MTV for example.

While the FCC plan could affect both satellite and cable industries, the news media to date have mostly reported on the cable companies’ strong opposition to this proposed pricing change. Cable spokespersons argue that the bundling of channels actually reduces consumer cost. They also argue the price for some consumers would increase if channels were separately priced. Looking behind these arguments, the Wall Street Journal reports that industry analysts are concerned individual pricing would dramatically shrink cable’s audiences and hurt cable revenue. This would happen because advertising rates are based on viewers. If viewership falls for certain channels under “a la carte” pricing, advertising revenues would fall as well. Finally, the National Cable and Telecommunications Association states: “We don’t support un-necessary government intrusion into private marketplace negotiations.”

A recent study indicates that the average American household watches 16 channels. The same study estimated that consumers would probably subscribe to nine individual channels on an “a la carte” basis. Pricing varies greatly between channels. For example, the Wall Street Journal reports that ESPN costs cable operators about $2.50 per subscriber per month, while MTV costs less than $.70 per subscriber per month.

Consumers Union, the Consumer Federation of America, cable operator Cablevision Systems, and AT&T join FCC Chairman Martin in his call for “a la carte” pricing. However, current federal law does not allow for individual channel pricing. Therefore, Congress would need to approve FCC Chair Martin’s proposed change.

What do you think? You might want to give your opinion to the FCC by providing your thoughts directly to Chairman Martin at his e-mail address: KJMWEB@fcc.gov.

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