Picking the cable channel you want!

[dkennedy]

Picking the cable channel you want!

Report: FCC is expected to back 'a la carte' pricing in the industry, instead of bundled channels.

November 29, 2005

Reuters News Release

The Federal Communications Commission is expected to suggest that cable companies could best serve their customers by allowing them to subscribe to individual channels instead of packages of several stations, the Wall Street Journal reported Tuesday.

The newspaper said that FCC Chairman Kevin Martin is expected to announce Tuesday that the commission will soon revise the conclusion it reached in the report it issued last year on "a la carte" pricing in the cable industry.

Citing an FCC official familiar with the revised report, the Journal said the report will conclude that buying individual channels could be cheaper for consumers than bundles and that themed tiers of channels could be economically feasible.

Last year's FCC report on the subject found that most U.S. households would face higher television bills if they only paid for the channels they wanted to watch.

The commission said then that increased costs for marketing and equipment would force up monthly bills by 14 percent to 30 percent for most cable or satellite TV customers even if they only paid for a handful of stations.

Customer advocates have said a pay-per-channel approach would keep cost increases in check by making programmers and providers more accountable to viewers

[hurnik]

I wish this were available now. $30/month, there's really only MAYBE 25 channels I watch now.

Of course, if I had Verizon FIOS with more HD channels, that would change.

[dkennedy]

If "a la carte" is ever implemented, I suspect your cost would be about what you pay now. For example, when the utilities were deregulated they added a "delivery fee" to our gas & electric bills that in some cases is higher than the amount we use. I think TWC will add a delivery fee for "a la carte" of about $15 to $20 dollars making that choice costly when you start adding individual channels.

I had Dish Network when they had a fixed price for any 10 channels and I welcome something similar from TWC.

[dkennedy]

Martin: New FCC Study Favors a la Carte

November 29, 2005

By Ted Hearn, Multichannel News

Federal Communications Commission chairman Kevin Martin said Tuesday that a pending agency study concluded that cable "could" sell programming a la carte in an economically feasible manner, reversing key findings in an FCC study for Congress last November.

Appearing before the Senate Commerce Committee, Martin said last year's FCC report relied on "problematic assumptions and presented incorrect and, at times, biased analysis."

Last year's FCC study concluded that a la carte would require cable customers to pay more to maintain the same level of service. But Martin indicated that the new report he commissioned would not embrace that finding.

"Based on a more complete analysis of the costs and benefits of bundling and the potential costs and benefits of a la carte pricing, our new report concludes that purchasing cable programming in a more a la carte manner in fact could be economically feasible and in the consumers' best interests," Martin said.

He noted that the first report was blessed by former FCC chairman Michael Powell and former Media Bureau chief Ken Ferree.

Martin did not comment on the first report after its release. In private, he did complain about it, according to a cable lobbyist.

Cable sells the vast majority of its networks in packages -- a bundling approach considered the most efficient means of program distribution in terms of per-channel costs. But cable critics want to break up tiers so consumers don't have to pay for channels they don't watch.

The FCC's first study concluded that it would be cheaper for consumers to block channels they don't want than to buy just their favorites a la carte.

With his comments, Martin blindsided D.C. cable lobbyists. His decision to renounce a major FCC study -- which tracked findings in an October 2003 study by the U.S. Government Accountability Office -- was the most profound cable-related flip-flop at the FCC since 1993 and 1994, a period when the agency cut cable rates 10%, then by another 7%, and then eased up by allowing rates to rise $1.50 annually if related to channel additions.

After Martin spoke, National Cable & Telecommunications Association president Kyle McSlarrow told the Senate panel that government-forced a la carte was "a very dangerous idea," akin to requiring a newspaper to sell the sports and business sections separately, and constitutionally suspect.

He added that a la carte would certainly damage one of cable's most attractive features -- programming diversity -- because niche channels like TV One, which is aimed at African Americans, need to keep company with ESPN and Discovery Channel on widely distributed tiers in order to have a chance of surviving in the market.

In terms of legislation, Senate Commerce Committee chairman Ted Stevens (R-Alaska) said he wasn't seeing progress. He added that a bill to hike broadcast indecency fines from $32,500 to $500,000 per offense was stalled in the Senate between those who think the $500,000 level is too low and those who think it is too high.

[hurnik]

dkennedy said:

If "a la carte" is ever implemented, I suspect your cost would be about what you pay now. For example, when the utilities were deregulated they added a "delivery fee" to our gas & electric bills that in some cases is higher than the amount we use. I think TWC will add a delivery fee for "a la carte" of about $15 to $20 dollars making that choice costly when you start adding individual channels.

I had Dish Network when they had a fixed price for any 10 channels and I welcome something similar from TWC.

Yeah, I'm sure they'd find a way to jack up the prices somehow. I can't remember the last time that they had a price decrease. Oh wait, probably never (just like NY and taxes).

Although supposedly back when, the C-band (?) big 'ol Satellite dishes had "a-la carte" service.

[dkennedy]

Wall St. Unfazed by a la Carte

November 30, 2005

By Mike Farrell, Multichannel News

The hubbub over the potential threat of a la carte pricing drew a collective yawn from cable investors Wednesday, with most MSO stocks holding their own.

Just three of the six publicly traded MSOs showed declines in their stock prices Wednesday, the biggest being Cablevision Systems Corp., which closed the day at $23.66 per share, down 57 cents.

Other MSOs showed smaller losses -- Comcast Corp. was down 35 cents to $26 per share and Mediacom Communications Corp. was down 2 cents each to $5.21. Charter Communications Inc. and Insight Communications Co. Inc. were unchanged, at $1.19 and $11.64 per share, respectively. Time Warner Inc. was the only cable stock to show an increase -- 11 cents per share to $17.98.

The investor indifference to Federal Communications Commission chairman Kevin Martin’s comments at a Senate hearing Tuesday, where he said a la carte was feasible, mirrored the sentiments of several Wall Street analysts.

In research reports in the past two days, several analysts said the possibility of forced a la carte pricing for cable networks was highly unlikely, with most adding that Martin’s comments could be a political ploy to push through his longtime desire for a family-friendly tier at most MSOs.

“Mandating a la carte would be a tremendously complex, controversial and likely litigious process with unclear consumer benefits and numerous potential unintended consequences,” Banc of America Securities LLC media analyst Doug Shapiro wrote in a research note.

“We think any change in stance by the FCC on a la carte is actually aimed at persuading the pay TV industry to offer a ‘family-friendly’ tier, as chairman Martin has long supported,” he added. “This would have far less potential adverse impact than pure a la carte.”

Merrill Lynch & Co. media analyst Jessica Reif Cohen said the lobbying power of cable operators and content companies also reduces the likelihood of forced a la carte.

“There also remain significant questions regarding whether the courts would uphold any likely legislation, the potential pricing for a la carte, potential renegotiation of affiliate contracts (often five-year to seven-year terms) and how long this would take to implement (probably more than five years),” Reif Cohen wrote.

The Goldman Sachs Group Inc. cable analyst Lale Topcuoglu wrote that a la carte could be beneficial for MSOs if it allows them to use their bandwidth more efficiently. But she added that the disadvantage would be in the increased marketing efforts a la carte would necessitate.

“Cable has recently adopted the premise that ‘simple is better,’ and a la carte programming marketed alongside ‘all-you-can-eat packages’ could create consumer confusion and further complicate marketing of bundles,” Topcuoglu wrote.

[dkennedy]

Cablevision Backs Unbundling Programming Packages

Facing Telecom Competitiors, Cable Systems Get Religion

December 1, 2005

By James R. Hood, ConsumerAffairs.Com

Critics of "bundled" cable television services may soon be reminded of the old saying that one should be careful what one wishes for. Cablevision, the sixth-largest cable operator in the U.S., has thrown its support behind the notion of letting consumers purchase cable channels individually.

Comcast, never known for its flawless timing, took the opportunity to announce a 6 percent rate increase for next year.

Cable systems have fought the a la carte concept for years, forcing customers who want only CNN to buy channels featuring wall-to-wall cooking shows, stock car races and old movies. But earlier this week, Federal Communications Commission Chairman Kevin Martin surprised friend and foe alike by announcing his support for unbundled programming.

What's driving this rush to unbundle is not a sudden case of consumeritis among the ideologically rigid commissioners, it's the revelation that consumers aren't easily able to opt out of channels that may feature what some regard as sexually explicit programming.

AT&T, nee SBC, which plans to start selling video services early next year, was quick to pounce on the issue, saying it plans to let consumers choose individual cable channels rather than bundled packages.

In the past, cable companies have argued that a la carte pricing would undercut the economics of their business and hurt the survival chances of smaller channels. Of course many of those weaker channels the cable systems are so worried about are owned by none other than the cable companies.

Putting aside their concern with smaller channels for a moment, cable operators are quite aware that customers who want a lot of channels might very well end up paying more if service packages were unbundled.

The issue may be beyond anyone's control. With telephone companies beating at the video gates, cable systems are beginning to realize that they may actually face real, live competition one of these days.

This is leading the cable systems to demand that telephone companies go through the same franchise process as cable systems. It's basically a replay of the days when telephone companies tried to keep cable companies out of their territory by denying them access to utility poles and rights of way. What goes around comes around.

Smiling his cheshire cat grin, Cablevision Chairman Charles Dolan opined that the "opportunity to purchase programming on an a la carte basis would be in the best interests of consumers."

"We do not believe in the long term that selling programming a la carte will be detrimental to either programmers or cable operators," Dolan purred.

On the pricing front, Dolan's Cablevision said it would raise the price of its standard package, which includes channels like CNN, MTV and ESPN, an average of 1.3 percent to $46.73 a month. Cablevision faces imminent competition from telecom giant Verizon in its lucrative New York regional markets. It is fighting a town-by-town battle to throw up regulatory barricades on Long Island but Verizon appears to be getting the upper hand.

Also anticipating serious competition is Cox Communications, which said it did not plan to raise rates in its Northern Virginia duchy, where Verizon is trying to organize an assault.

[dkennedy]

FCC's Martin Digging for Legal Leverage

December 5, 2005

By Ted Hearn, Multichannel News

Kevin Martin not only thinks that cable systems should sell programming by the channel in a menu of a la carte choices -- he’s also looking for legal grounds that could force the issue.

Federal Communications Commission staff are now looking into whether existing law provides any opening that could compel cable systems to adopt some form of a la carte pricing, according to an aide to chairman Martin.

Martin's staff -- in a preliminary way, the aide stressed -- is focused on a provision of the 1984 Cable Act that gives the agency discretion to “promulgate any additional rules that may be necessary to promote diversity of information sources.”

The FCC’s authority to adopt rules is tied to the penetration of high-capacity cable systems -- specifically, when operators with 36 or more channels pass 70% of U.S. households, and 70% of households passed by those systems are subscribers. “If you hit 70/70, other options become available,” the Martin aide suggested.

The FCC's look at the 21-year-old provision was an effort partly designed to debunk the widely reported view that the agency has no legal authority to impose a la carte on cable, the Martin aide said.

Before Christmas, the FCC is expected to reveal in its annual video-competition report whether the 70/70 test has been met.

In prior years, the agency has concluded that the first, but not the second, prong of the test had been met. In last year's competition report, the FCC concluded, “Subscribers to systems with 36 or more channels as a percent of the homes passed by such systems is 58.8%.”

In the past, the National Cable & Telecommunications Association has said that when both prongs of the 70% test have been met, FCC authority is restricted to regulating the rights of third parties to rent channels, also called leased access. The agency has not addressed its authority under section 621(g), said a Washington, D.C., cable attorney who asked not to be identified.

A Martin aide cautioned that a review of the 70/70 test was just starting. “Every year, we look at the 70/70 provision, and every year, the conclusion has been that we are not there yet,” the aide said.

[dkennedy]

My TV: Pressure grows for paying only for specific cable channels

December 5, 2005

By David Ranii, RALEIGH NEWS & OBSERVER

There is mounting political pressure to let customers pay for only the cable television channels they watch. But any changes are likely to fall short of enabling consumers to be the masters of their own cable universe.

Instead, look for such companies as Time Warner Cable to offer a wider variety of packages in hopes of appeasing regulators and Congress. The most likely of all: a new package of family-friendly channels.

The issue over what the industry calls a la carte pricing moved to the forefront last week when Kevin J. Martin, the chairman of the Federal Communications Commission, pushed the concept at a Senate hearing.

Lurking in the background is a debate over whether a la carte pricing would actually save people money.

The cable industry, as well as analysts who have looked at the issue, say no.

Bear Stearns, an investment-banking firm, projects that, in an a la carte world, the monthly cost of ESPN could range from $5.12 to $15.82, depending on the number of households that subscribe. For MTV, monthly rates would range from 64 cents to $2.32. The reason: Disney, Comedy Central and the like charge cable companies a fee pegged to the number of subscribers. With fewer subscribers, they would have to charge more per subscriber to cover their costs - and maintain profit margins.

Cable channels now typically insist on contracts that bar cable companies from offering channels a la carte. That gives them access to the widest possible audience - a crucial consideration when setting advertising rates.

But consumer groups dismiss the industry's arguments. The cable companies and the channels are lining their pockets by forcing consumers to accept big bundles of channels, many of which they never watch, said Jeannine Kenney, a senior policy analyst at Consumers Union in Washington. The average person, she said, watches 17 channels.

Last year, an FCC report concluded that a la carte pricing wasn't in the best interests of consumers. But Martin told senators that study was flawed and is being revised. He also said that a la carte pricing could generate a 1.97 percent decrease in consumers' bills.

That's not a major savings, but Kenney said it would be welcome relief for cable customers who have been socked with annual increases of between 5 percent and 7 percent in recent years.

But price isn't the only consideration.

Sridhar Balasubramanian, an associate professor of marketing at the University of North Carolina at Chapel Hill, said that with a la carte pricing, niche channels with small audiences would disappear because they wouldn't be able to generate sufficient revenue. And choosing among hundreds of channels would be more of a burden than many viewers would want. "Research has shown that customers get overwhelmed by too much choice," he said.

But Richard Evans, 59, a Time Warner Cable subscriber in Raleigh, is a fan of the idea of selecting his own menu of channels. "I'm not a sports fan," said Evans. "I would dump every sports channel in a heartbeat."

Another Time Warner subscriber in Raleigh, Andy Kozak, 52, craves the ability to exert more control over the channels that his two daughters, ages 14 and 12, can view. "I wouldn't pay 3 cents" for MTV, he said. "It's a bone of contention in our family."

But, Kozak added, he would go only for an a la carte plan if it offered up substantial savings.

Only Congress has the authority to require pay-TV companies - a group that includes satellite television - to give consumers free rein to choose their channels. Most observers believe that a Republican-led Congress won't go there.

One indicator of how charged the issue has become is that Time Warner Cable isn't even commenting on the situation. It referred inquiries to an industry trade group.

James Vanderweide, a professor at Duke University's Fuqua School of Business, doesn't think that Martin intended to lobby Congress.

"I got the impression that Kevin was throwing this out to goad the cable companies to act voluntarily, rather than to push Congress into action," he said.

And if Martin fails, competition may succeed.

Telephone companies are itching to get into the business of providing TV service, and offering consumers more choices would be a way to set themselves apart.

[zekmoe]

I personally voulenteer to pay anyone's cable bill for a year if they actually end up playing less with somewhat comparable service.
You will pay more for some channels, less for others, and it will either be the same or more.

[dkennedy]

Time Warner Pans à la Carte

Cable operator takes exception to Cablevision’s support for à la carte pricing for cable channels.

December 5, 2005

Red Herring Magazine

Time Warner Cable, the No. 2 U.S. cable operator in the United States, on Monday became the first to challenge Cablevision on its assertion last week that à la carte pricing for cable and satellite TV channels would actually be good for the cable industry.

In an address in New York City, Time Warner Cable CEO Glenn Britt called the proposal for per-channel pricing a bad thing for the industry. He said the U.S. Federal Communications Commission had tied à la carte pricing to complaints about indecency that politicians on both sides of the aisle have been hearing (see FCC Open to a la Carte Cable).

“There is clearly a concern about content among some consumers,” he said. “It’s important for us to listen to our consumers. Our industry needs to come together and find a resolution. But à la carte is economically a very bad thing for the industry.”

Shares of Time Warner eased $0.06 to $18.21 in recent trading.

Last week Cablevision Chairman Charles Dolan came out in support of a proposal by the U.S. FCC that the industry adopt à la carte pricing. Mr. Dolan advocated this position despite the cable industry’s overwhelming stand against it (see Cablevision Backs a la Carte and TechSpin: Cablevision Dissents).

Mr. Britt challenged the press and analysts in attendance at the UBS Global Media Conference to ask Mr. Dolan if his company would be willing to sell its network programming on an à la carte basis. Cablevision, like many cable operators, owns some of its content, which it markets to other cable operators.

“À la carte is not a solution,” said Mr. Britt. “The economics are pretty clear. À la carte will drive prices up. For instance, ESPN is in the $2.00 price range right now. Faced with à la carte, ESPN would have to guess how many people would buy it. If they thought only 10 percent of the base would sign up, they would charge $20.”

Past the Million Mark

Time Warner Cable, one of the first cable operators to offer voice services, also said on Monday it had surpassed the 1 million mark for voice customers.

The entry of cable operators like Time Warner Cable into the voice business has touched off a war between telecommunications carriers and cable operators, however.

Verizon and AT&T, the two largest telephone companies in the U.S., have responded. They are currently building very expensive fiber-optic networks that will support multichannel video to the home—and compete for cable’s core audience.

Those developments have raised concerns among analysts about the viability and competitive readiness of cable companies, most of which have historically operated within monopolistic and semi-monopolistic cocoons.

Analyst reaction has been so negative that it has prompted a number of cable operators to buy up their available shares and take their companies private.

“You have to respect any competitor, but we had a low-cost entry into the voice business,” said Mr. Britt. “They are spending billions to get into the video business. By the time they get into the video business, we would’ve moved somewhere else.”

Voice Pricing Wars

Responding to a question about Verizon’s dramatic reduction in the price of its voice services, Mr. Britt challenged whether customers will actually see the kind of pricing that the phone companies advertise (see Verizon’s ‘Street Fight’ Prices).

“When the phone companies advertise prices, they are very good at hiding additional fees as taxes,” he said. “Many times, some of those additional charges are not taxes.”

Mr. Britt was also asked about Time Warner’s decision to partner with Sprint as a wholesale supplier of wireless services rather than enter the wireless services-provisioning business itself (see Sprint, Cable Hit Prime Time).

“We looked at the option of assembling a national wireless footprint,” he replied. “But for a new entrant, acquiring spectrum and spending billions to build a network was far too daunting.”

[dkennedy]

TV a la Carte

The FCC wants pay-TV operators to let you choose your own channels instead of offering packages. Would that raise your bills?

December 7, 2005

By Anush Yegyazarian, PC World Magazine

Television is undergoing a fairly major evolution: First, it's going high-def and digital. On top of that, telephone companies will soon be joining cable and satellite vendors with their own TV services. And video on demand will eventually do away with TV schedules, a process already in progress as digital recorders such as TiVo make such schedules irrelevant.

These transitions have not escaped the notice of Congress and the federal government, which have in fact promoted some of them--especially the switch to digital TV . More recently, the government has also started the process of putting telephone companies on an equal footing with cable and satellite operators, as these companies increasingly compete with each other at every level. Now, the Federal Communications Commission is preparing to release a study that reverses its own previous conclusions , and that could lead to federal regulations that would encourage or force cable and satellite operators to give us all more control over which channels we subscribe to.

One of the main arguments for an a la carte system--one in which pay TV customers would be able to choose which channels they pay for and receive--is to give parents greater control over the programming that is beamed into their homes, and in turn, made accessible to their children. The impact of such choice, however, would extend far beyond parents and kids.

Right now, you and I must sign up for a tier of service that includes a pre-set number and selection of channels. The more you pay, the more channels you get--but we don't get to pick individual channels. In fact, even when we choose premium movie or sports packages we may end up with more than we actually want. For example, the various HBO channels are often bundled with Cinemax channels that you pay for and get whether you want them or not.

I receive 200-plus channels with my DirecTV service, but I actually watch only about 30 or 40 of them, tops, over the course of a year--far fewer on a regular basis. The rest are dead air as far as I'm concerned. I'm only paying for those 200 because there were two or three of them that I really wanted, but couldn't get with a more basic bundle.

I'd love to trade some of the channels I do have for others that aren't available unless I pay even more per month, but no cable or satellite company gives me that option.

If the FCC has its way, I soon might have mine. But even if I get to shed a few dozen unwanted channels and gain a couple I'd prefer, there's no guarantee that I would be paying any less per month than I do now. When the government first examined the issue in mid-2004, plenty of people argued that prices would rise, not fall--and that we'd get fewer programming options.

It's a basic assumption that we make every day: If you go for the bundled deal, odds are good that you're paying less than you would for the individual items purchased separately. Restaurants work that way with their prix-fixe meals, as do computer vendors that offer a great deal on a printer and digital camera if you buy them along with your new PC. Cable and phone companies have been working hard for years to convince us that we save on bundled phone, TV, and Internet services.

The same principle applies to those 200 channels on my satellite box. As they're bundled now, I pay something like a quarter per channel. What do you want to bet that the price would be significantly higher if I were to create a lineup of my own? Customization costs.

Both the older FCC study and a separate contracted study by Booz Allen Hamilton indicate that, in many cases, prices would rise under an a la carte model. This finding held true regardless of whether that model was a complete free-for-all, where customers would always pick all channels; a partially restricted scenario, where users would supplement a basic offering with a themed selection of channels (family, kids, sports); or a hybrid scheme in which customers would get to choose between a la carte or bundled service-tier pricing.

Judging from FCC chairman Kevin Martin's remarks to a Senate Committee at the end of November, the new unreleased study may dispute some of the calculations and assumptions that went into the earlier document. The new study focuses on some analyses within the 2004 Booz Allen Hamilton study that showed that under certain conditions, digital cable subscribers might experience a nearly 2 percent decrease in their bills with an a la carte option. Since all these calculations are still theoretical, I'm betting someone will come along and dispute the new numbers as well.

What's harder to dispute is that the current economic models underpinning most broadcast and cable networks depend on broad viewership to get advertising revenues. If stations don't appear in markets at all because no service carries them, they can't make enough money selling ads, and they won't be able to cover their costs, which in turn affects their ability to produce programming. Some stations may fail altogether. Others may raise their licensing rates to cable/satellite companies in order to recover their lost revenue--increases that cable/satellite vendors may well pass on to you and me. Moreover, allowing customers to create their own bundles may require new equipment on the pay TV operator side, such as networking gear and set-top box upgrades, along with software to enable and bill for customer choice.

Another disturbing potential consequence of getting rid of today's channel bundles: We might lose narrowly focused stations altogether. My service tier includes all sorts of specialty channels--some ethnic, some theme-oriented (such as science, country, kids), some educational--that might not survive the financial shakeout if a la carte critics are correct. The argument goes that not enough people would be willing to pay for these channels to keep them afloat outside a bundle. If my personal choices are any indication, I would say that's a fair prediction: Some of those specialty stations definitely would not make the cut if I could prune my channel lineup, or exchange some of the channels I get for others that I would prefer.

Are there channels we should protect based on merit even if, in a more open market, they would not survive? We've chosen to protect industries before (farming and airlines, to name two), and we certainly have rules and guidelines about how broadcast stations should meet their government-mandated obligation to operate in the public interest. Should we use tax dollars to ensure that ethnic, religious, or gender-themed networks remain viable while allowing food networks to duke it out and live or die by the market?

We all have our own answers to these questions; coming up with a consensus may be practically impossible. I believe, however, that customized programming choice is inevitable based on the other current trends--primarily video on demand, Internet video, and IPTV .

We won't know actual costs until some company starts offering customizable pay TV. But it seems highly unlikely that I would end up paying the same amount for the same number of channels I now get in a bundle. That doesn't bother me much, though: I would rather pay more and get exactly those channels I want than get a discount on 100 channels I never watch. Your bottom line may vary.

[dkennedy]

Time Warner chief fears TV regulation

Proposal for a la carte pricing would cost viewers more, he warns

December 8, 2005

By R. D. Heldenfels, Beacon Journal television writer

Television and related technologies are making wonderful strides, said Stephen Fry, president of Time Warner Cable's Northeast Ohio Division. He hopes the government doesn't get in the way.

Speaking to the Akron Press Club on Wednesday, Fry used R.E.M.'s It's the End of the World As We Know It as a refrain.

He said that a television viewer coming home a few years ago would have to worry about missing the beginning of a favorite television show -- while today's viewer can record the program with a digital video recorder. (He could also have noted that videocassette recorders made that possible 25 years ago. But DVRs are easier to program.)

A student doing research for a school project no longer has to battle other students for library resources but can instead collect information, pictures and video from the Internet, Fry said. Changes like high-definition television, high-speed Internet connections and digital telephone services all add up to ``the end of the world as we know it.''

Consumers once resisted the set-top boxes Time Warner wanted to use for programming, he said. Now ``we can hardly keep digital set-top boxes in stock.''

But Fry feared that new federal regulation of TV and other communications will ``bring this era (of new technology)... to a screeching, grinding halt.''

He singled out recent proposals to mandate the sale of programming services on an ``a la carte'' basis -- meaning you would pay based only on those cable programs you watched, instead of for a bundle of services.

Although a la carte advocates believe that approach would reduce the cable fees for many customers, Fry argued that it would cost customers more. And he said a la carte programming would hurt the diversity of programming options by killing off specialty services like BET and Bravo.

He wants those and other services to continue, providing an array of programs that viewers can access on demand.

Fry also questioned the merits of congressional attempts to toughen indecency standards, a movement that gained momentum after the notorious Janet Jackson Super Bowl incident.

Time Warner's digital cable subscribers already have ways to block potentially offensive programs, he said. And different viewers will consider different programs indecent.

On another point, Fry said that there is still no deal with the Cleveland Indians that would move the team's games from FSN Ohio to an Indians-run network distributed via Time Warner and other cable and satellite services.

[dkennedy]

Pushy service on cable TV

December 9, 2005

By Monica Collins, Boston Globe

My digital cable package delivers 901 channels. The vast majority are blue screens of no consequence. I watch maybe 10 regularly.

My primary destination is usually HBO, with occasional stops at HGTV, E!, Comedy Central, Animal Planet, and whatever else I graze upon. I am always happy to find a ''Gilmore Girls" rerun on the ABC Family channel, the hilarious ''Most Extreme Elimination Challenge" on Spike TV, an obscure documentary on Sundance, and the latest Britcom on BBC America. I used to enjoy watching ''Oprah After the Show" on Oxygen before Comcast pulled the plug. When I called to find out what happened, I learned that Oxygen had become part of the Digital Premier Pack. I would have to pay more for a bunch of other channels just to breathe Oprah's air. I decided to watch snippets over the Internet.

Random selections rule on my TV set. I haven't memorized the channels, the remote is hard to operate, and the cable box has a mind of its own. I merely pay the price for all this chaotic channeling. The bill usually runs more than $110 per month.

As a reporter who covered the cable industry from its beginning, I have railed against the fascistic business plan whereby subscribers must support channels they don't want or need. Allowing TV customers to make a la carte program choices -- as they might select a salad and appetizer for dinner from a restaurant menu -- seemed so much more consumer-civilized. Alas, the cable cabal has acted as the pushy waiter forcing us to order entrees when we're not hungry enough to eat. The industry has resisted letting customers make choices because the marketing strategy of channel bundling brings in more advertising. Programming buys are also more cost-effective.

The cable behemoth has staunchly resisted freedom of choice -- until viewers had other choices. Dishes sprout on many rooftops and satellite subscribers rave about the TiVo upgrade. Verizon and AT&T, the country's giant phone companies, promise they're building a fiber optic network to deliver video services. And moving pictures over the Internet, still creaky at broadband speed, have not yet realized their potential.

Now the monopolist-friendly Federal Communications Commission finally rumbles about mandating a la carte programming. FCC chairman Kevin Martin framed the introductory discussion around broadcast decency at a hearing last week on Capitol Hill. The Bush administration seeks to please the religious right, which doesn't want their MTV. Martin stated ''something needs to be done" to give parents the ability to subscribe to children's channels without intrusion by seedier networks.

The kid-TV issue seems a smokescreen for pushing a la carte cable. The real reason must be that corporate rivalry compels the industry to seek new ways of doing business. Already, Cablevision Systems' chairman Chuck Dolan, the New York televisionary who wired Boston and offered an initial $2.50 basic package to get customers hooked, says he supports the a la carte plan: ''We do not believe in the long term that selling programming a la carte will be detrimental to either programmers or cable operators." No doubt the cagey Dolan has already figured out a way to make more money on the deal.

You can bet digital disciple MBAs are hard at work in glass office towers figuring out how to organize the a la carte options so viewers pay top dollar for channels. In a new era of choice, it will come down to this: Do you care enough to open your checkbook for CNN, Spike TV, or HGTV? (Even with designer Debbie Travis turning rooms into faux Restoration gumdrops, I wouldn't pay more than $5 a month for the domestic arts feed.)

Already, one executive hints at a dizzying price war: ''A la carte is not a solution," said Time Warner cable CEO Glenn Britt in a recent speech. ''The economics are pretty clear. A la carte will drive prices up. For instance, ESPN is in the $2 price range right now. Faced with a la carte, ESPN would have to guess how many people would buy it. If they thought only 10 percent of the base would sign up, they would charge $20."

Yes, sports fans would suffer at first, but a selective cable universe would surely shake up an industry used to having its way. Channels would emerge and channels would fall out. The scramble to sell would be entertaining. Look for pay TV to become a clicker's bazaar.

[dkennedy]

Indecency, unbundling: cable TV's battle front

The war over unwanted or racy content escalates from rhetoric to rules

December 11, 2005

By Joanne Ostrow, Denver Post

Cable TV is like a restaurant that forbids substitutions. You don't want fries with that? Sorry, that's how it comes.

A la carte menus are appealing if you think you'll pay less and you won't be tempted. You usually end up spending the same for your smaller, pickier portion. (And sometimes you want a nibble of the fries anyway.)

OK, enough with the metaphor, but it does make a point about infotainment: These days everyone wants something a la carte.

Consumers expect customized selections in everything from iPod playlists to on-demand news. So no one should be surprised that a battle is brewing over cable-TV offerings that is drawing in consumer activists, Christian groups, children's advocates, Congress, cable companies and those concerned about whether government should exert any control over cable content.

With monthly cable bills rising and with four separate pieces of legislation in Congress aimed at extending broadcast indecency regulations to cable, the rhetoric is escalating. So far, it's just rhetoric. The government isn't pushing new rules about a la carte yet, a constitutionally suspect move, right now, just sabre-rattling. Still, some say the industry could be forced to move channels like MTV, FX and Comedy Central to a premium tier to satisfy regulators.

At a Senate panel on indecency, the Federal Communications Commission recently reversed itself on a la carte pricing, the option of paying for individual networks instead of the "bundle" that includes the big ad-supported ones like USA, TNT, CNN, ESPN and Discovery. Suddenly, the FCC is pushing a la carte.

Under such an approach, consumers would be able to order only what they want, and shield themselves and their children from what they don't want. (Never mind that the V-chip is already available and useful. Some folks resent paying for what they consider objectionable programming beaming into their homes.) According to FCC number-crunching, a la carte pricing might actually reduce monthly cable bills.

The prospect of a la carte terrifies cable programmers. They'd rather fight than unbundle.

Beyond arguments about sheltering children from sexual or violent images on television, or giving customers the choice of gardening shows or celebrity poker, this is a long-standing conflict about money and programming contracts. The debate makes strange bedfellows of consumer advocates and conservative and Christian groups, pits certain cable companies against others, and - if you believe some activists - marches in lockstep with the conservative Republican political agenda. The debate has raged for decades, but the FCC intends to settle it now.

For, against - and why

So who is who in the battle over a la carte? Here's a rundown of who's for, who's against, and why:

Most cable companies hate the idea of a la carte pricing for financial reasons. Afraid of the unknown, they dread taking down the working economic model. The big networks like Discovery, ESPN and USA are quite content to be part of 60-channel packages as they exist. Both the big, expensive networks and the little upstarts like that model.

One estimate says ESPN might have to charge $15 per month as a standalone network to cover its major-league contracts. Small niche networks without advertising or marketing money would have trouble getting noticed. Cable's lobbying group, the National Cable Television Association, is adamantly against a la carte, maintaining that government shouldn't regulate private marketplace negotiations.

A few companies, like EchoStar, AT&T and Cablevision, are on record supporting a la carte. They say they're at the mercy of big media (Viacom, Disney and others that charge them for the right to beam their programs), and could do better if freed from those contracts.

In testimony before the Senate panel, EchoStar chief David Moskowitz said the pay-TV company would consider a la carte, or a "family tier," but cannot because of contracts that require bundling.

Minority and niche networks are wary of a la carte, saying it poses a threat to diversity in cable. As currently constructed, the big cable networks financially support the little cable networks in the bundle. You want Time Warner's TNT? You're going to get its Cartoon Network too. The promise of cable, the operators say, is to let a thousand channels bloom, not to filter out unpopular choices.

Consumer advocates favor a la carte. "It's about allowing the marketplace to reflect what consumers want," said Jeannine Kenney of the Consumers Union in Washington, D.C. "A la carte is a good and necessary thing for consumers, not only because it will offer more choice but it will reduce the overall cost of cable for most consumers." She's not afraid of diminished diversity. In fact, "if consumers were able to choose their channels one by one, cable companies would know what people want to see."

The Parents Television Council, the activist group that hates MTV, wants a la carte cable as part of a crackdown on indecency.

Programmers despise the idea because it threatens ad rates. Program producers such as Disney, Viacom, Time Warner and Murdoch's News Corp. fear they'll lose their dual revenue stream - the license fees from cable operators and the advertising income (they'll get less money for fewer eyeballs).

Quid pro quo

Media analysts suggest the FCC might back off its threat to require a la carte if cable programmers voluntarily agree to police themselves according to the same guidelines that apply to commercial, over-the-air broadcasters. That could force Murdoch's FX and its racy shows like "Nip/Tuck" and "The Shield" to become a premium channel.

For casual viewers, there's reason to dread the loss of random channel surfing that sometimes turns up surprising offerings. You may not actively subscribe to the Outdoor Life Network. Then again, you may be tickled to find a grand slalom on OLN on your way through the channel lineup.

A more cynical view finds a censorious political agenda at work behind the scenes.

Jeff Chester, head of the Center for Digital Democracy, is concerned about the impact the a la carte policy is meant to have on programming diversity at the behest of religious conservatives.

"Sure, TV deserves to be roundly criticized for the coarsening of the culture. However, this will be passed not because Congress wants to finally offer consumers relief, but because of a powerful constituency at the core of the Bush administration's political support, that it wishes to reward as a way of bolstering the GOP's political standing."

In this view, consumer groups have made a pact with the conservative Parents TV Council and Concerned Women of America who want to see "The Real World," "The Shield" and the rest off basic cable.

Yes, the big media companies have been lining their wallets for years, Chester says. On the other hand, "how did this issue get to be on the front burner of politicians? Because religious conservative groups embraced this strategy as a way of punishing media companies because of content."

Brent Bozell, head of the Parents Television Council, testified before the Senate forum that, "the incessant sleaze on MTV presents the most compelling case yet for consumer cable choice." MTV has carried programs about AIDS, safe sex, homosexuality, condoms and the youth vote.

In his view, "MTV is a subsidized network. As it now stands, parents have no choice but to take - and pay for - MTV if they want basic cable in their homes. Given a choice," Bozell said, "how many parents now being forced to take and pay for MTV as part of a basic cable package would continue to do so?"

"There's a social agenda to change television," Chester said. "Under the guise of fair rates for consumers, this is likely to be a major victory for the right against media."

The Consumers Union dodges the political point but agrees "it's galling to conservative groups that they have to pay for programs they don't want and then take extra steps to block it," Kenney said.

To her, it's as if Time magazine required its subscribers to take Field & Stream too, or go to extra trouble to stop it from arriving in their mailboxes. "From an intuitive standpoint it is completely unfair," Kenney said. "From a First Amendment standpoint, we don't see a problem with a la carte. It doesn't tell you what you have to air."

Defining a "family tier"

What is a problem for consumer activists, the Parents Television Council and First Amendment advocates is the creation of a "family tier" of unobjectionable networks, a compromise floated by the cable industry.

"The problem with a family tier is, who's going to define it?" Kenney said.

The family tier solution "doesn't accomplish the fundamental goal," said Dan Isett, director of corporate and government affairs for the Parents Television Group. "If you're not comfortable with content on 'The Shield' or 'Nip/Tuck,' those channels are in the basic or expanded-basic tier, not something you can select individually."

Because forces are converging, it may be that the time for a la carte has arrived. Viewers want customized services like video-on-demand and video

iPods. The new FCC chair is on the indecency bandwagon. And several cable competitors have conceded they want the option of a la carte as a way to break free of the big media companies.

The FCC's report is expected the next month. After that, Congress may enter the fray.