Key members of the House Commerce Committee have asked the Federal Communications Commission for a detailed study on the feasibility of cable and satellite companies offering their subscribers the ability to pay for the individual channels they want.
Most satellite and cable companies require their customers to subscribe to packages of channels, arguing the system allows them to maintain robust lineups at affordable rates. But a la carte pricing, which would allow subscribers to pick and choose the channels they want, has been gaining momentum among some lawmakers and consumer groups as costs have risen and concerns have grown over televised indecency. Several parents groups have complained that consumers should not have to pay for channels that air content they find offensive.
In the letter sent Tuesday, Commerce Committee Chairman Joe Barton (R-Tex.) was joined by ranking member John D. Dingell (D-Mich.), Fred Upton (R-Mich.), Edward J. Markey (D-Mass.) and Nathan Deal (R-Ga.) in asking FCC Chairman Michael K. Powell to have his agency determine -- within six months -- whether a la carte pricing would be technologically and economically feasible.
Powell has not publicly taken a position on the alternative pricing scheme.
Lawmakers so far have held off attempting to impose an a la carte structure on cable and satellite companies. Deal recently withdrew an amendment to satellite legislation that would have required the companies to offer a la carte. Instead, lawmakers are asking cable and satellite companies to offer a la carte in addition to the packages they already sell subscribers, which typically come in bundles of dozens of channels.
The members asked the FCC to examine whether offering a la carte programming would end up costing subscribers more, or if it would hinder the ability of lesser-watched channels to exist when not bundled with popular channels. They also want to know whether cable and satellite companies have the ability to buy channels individually from programmers, such as Viacom Inc. (generally, they do not), and if a la carte subscribers would be required to have new set-top boxes. Finally, they asked the FCC to consider what legal issues might arise if Congress decided to mandate a la carte.
The cable industry opposes a la carte, saying it would ultimately raise subscriber costs and harm diversity on the airwaves. Currently, popular channels subsidize less-popular ones, which the cable industry says provides more options for viewers.
"As the General Accounting Office has found, 'a la carte' pricing would likely lead to a choice of fewer cable channels at higher prices for consumers," the National Cable & Telecommunications Association said in a statement, referring to a December GAO study. "The economic facts have not changed over the six months since GAO issued its comprehensive study. We believe that an FCC study would further confirm that 'a la carte' pricing would be very harmful to ad-supported cable networks and consumers by reducing programming diversity and driving up the cost of cable and satellite television."
The NCTA is the trade group representing the largest cable companies, such as Comcast and Time Warner Cable. However, the American Cable Association, which represents smaller cable companies, endorses a la carte pricing.
"We are pleased that Congress has listened to the overwhelming public outcry against cable rate increases and requirements that consumers purchase channels they do not want or that they find objectionable," Consumers Union said in a statement yesterday. The advocacy group, which publishes Consumer Reports magazine, has pushed for a la carte pricing and is working on legislation, requested by Sen. John McCain (R-Ariz.), that may require a la carte pricing in addition to channel packages.
"We are confident that once the FCC looks past industry innuendo and unsubstantiated assertions to find the real facts about the benefits of allowing consumers to select and pay for their own channels, cable and satellite carriers will no longer be able to resist public pressure to offer such options," Consumers Union said.