New FCC Chairman Says New Study Proves A La Carte Cable, DBS Can Benefit Consumers

Updated, read below: FCC Chairman Kevin Martin used his testimony (pdf) during a U.S. Senate Commerce Committee hearing on indecency today to introduce a new study that contradicts one from the Powell FCC. At issue, whether consumers can save money by paying only for select cable or satellite channels rather than being forced to accept an entire package. Martin offered a la carte as an option for allowing consumers to avoid indecency; other options include family-friendly tiers as alternatives to expanded basic or extending current indecency regulations for broadcast television to channels in cable and DBS expanded basic packages. Martin didn’t like the results of a report presented last year, when Michael Powell was chairman; he asked for a new study “that concludes that the earlier report relied on problematic assumptions and presented incorrect and incomplete analysis.” The full Martin version hasn’t been released yet but he says it concludes that going a la carte could be in consumers’ best interests. Powell disagrees, noting to the FT that the first report was not the only one to reach that conclusion: “Our initial going in instinct [before the report]…was that a la carte was a good policy. Our view was changed by the pursuasiveness of the data,” he said.
Remember, cable and DBS operators as well as many manufacturers already offer controls that allow channels to be blocked. But Martin and others contend that they should be allowed to pick and pay only for channels that meet their parenting choices. Cable operators have long argued that the economics would not only make operating their businesses more difficult, but would not save money, could cost more in some cases and would limit program diversity. They’ve also argued, as was the case with NCTA president Kyle McSlarrow’s statement today, that government pay-per-channel regulation would violate the First Amendment.

What happens next? In the most basic sense, absolutely nothing except a lot more chatter and dueling numbers. Martin didn’t suggest direct FCC or legislative action and even if he or someone else tries, the status quo would be in place for quite some time. Another aspect to keep in mind … at some point, AT&T, Verizon and others offering IPTV video packages in competition with cable and satellite likely will be dragged into the discussion.

Updated: WSJ does some more analysis…

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