By RICHARD SIKLOS The New York Times April 16, 2006
AT the National Cable and Telecommunications Association convention in Atlanta last week, the cable guys were at it again. They were kvetching that the Federal Communications Commission had gotten it terribly wrong in pushing to loosen the way that cable television channels were packaged and sold. Essentially, the cable contingent says that its current practice of selling a package of 75 or so broadcast and cable channels is better for consumers and the public good than letting people pick and choose the 10 or 20 stations they actually watch.
The average price of extended basic cable -- the type of channel package to which most of the nation's 73 million cable-watching lds subscribe -- is $41 a month, according to Kagan Research. Plenty of other premium channels and services are available, but the only cheaper option is truly basic: a package of mostly local stations with none of the popular cable channels (ESPN, MTV and CNN, to name but a few). At my house in Connecticut, for instance, basic cable runs me $13 a month.
The cable operators say that forcing them to give people more latitude over the channels they buy would constitute rank government interference, the equivalent of forcing restaurants to sell burgers and buns separately. The ala carte model favored by some regulators would lead to much higher rates for individual channels, executives argue. Whereas that same $41 might get you only 10 hand-picked channels, the bundle model both pays for the infrastructure -- all those pipes and set-top boxes and servers and repair trucks -- and preserves the smorgasbord of big and small channels to suit all demographics and tastes.
Without bundling, programmers like Disney and Viacom might no longer be able to afford shows with smaller but loyal followings. Under the current system, they can produce niche channels like ESPN Classic because they are bundled with ESPN and other channels, the programmers say.
For the most part, the F.C.C. rolls its watchdog eyes and notes that the price of expanded basic has increased well beyond other goods and services over the past few years. It and the cable association have drawers full of studies disputing the other's studies about their studies. Kevin J. Martin, the F.C.C. chairman, showed up briefly in Atlanta to reiterate that he was not giving up the fight, even after recently cajoling cable companies to agree to put together a new, smaller tier of family-oriented channels that was a few dollars less than extended basic. "Putting more control in the hands of consumers is always good," he said.
Alas, the legislative year is rapidly winding to a close in Washington, making it unlikely that Congress will pass any =E0 la carte legislation this time around. Still, even a few renegade television providers are finding it difficult not to side with Mr. Martin. Cablevision Systems in New York and the satellite service EchoStar have done so, though they remain a clear minority. Comcast, Time Warner, the News Corporation, Walt Disney and others are lined up to harrumph at Mr. Martin.
The great paradox of this debate is that it comes as the number of media options is exploding and the way they are being priced is all over the map. The much-maligned bundle will most probably prevail as the most popular business model for media, although it, too, is likely going to need an extreme makeover.