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May 14, 2013

What if you could pay for cable channels a la carté?

WASHINGTON — It's time to let television viewers buy individual channels, rather than being required to pay for bundles of programming, Sen. John McCain told a Senate panel Tuesday.

"Consumers shouldn't have to pay for television channels they don't watch, and have no interest in watching," said McCain, R-Ariz., who has introduced legislation to force cable and direct-broadcast satellite companies to offer channels individually, or a la carte.

Cable rates have attracted congressional scrutiny before Tuesday's hearing at the communications subcommittee led by Sen. Mark Pryor, D-Ark. The market isn't working for consumers who are paying more for TV service, Sen. Jay Rockefeller, the West Virginia Democrat who is chairman of the Commerce Committee that houses the subcommittee, said at a July hearing.

Consumers Union, an advocacy group based in Yonkers, New York that works for fair markets, has endorsed McCain's bill.

"Cable customers have to buy larger and larger packages of channels," Delara Derakhshani, policy counsel, said in an emailed statement.

The average cable bill for expanded basic service - the most popular channels package - increased 6.1 percent annually from 1995 through 2011, rising from $22.25 to $57.46, the Federal Communications Commission said in a report last year. The number of channels in such a package rose to 124, from 44, the FCC said. The price per channel dropped three cents, to 57 cents, the agency said.

Consumers are watching more TV each year, and "the value of cable's video service continues to be the best of any form of entertainment at just 23 cents per viewing hour," Brian Dietz, a spokesman for the Washington-based National Cable & Telecommunications Association trade group, or NCTA, said in an email.

McCain's bill would deny licensing privileges to pay-TV companies that don't offer programming for purchase separately, and would keep broadcasters from demanding retransmission fees if they don't let their channels be sold a la carte.

The measure also would require non-broadcasters such as Viacom Inc. to offer programming individually to pay-TV companies. In addition, it would revoke an airwaves license from a broadcaster that doesn't send an over-the-air signal identical to the signal sent through pay-TV companies.

CBS and Fox have said they may go off the air if courts don't block Barry Diller's Aereo Inc., which accesses broadcast TV signals and resells them online for $8 to $12 a month - without paying a retransmission fee.

No hearing date has been set for the bill, and no votes have been taken.

It's unlikely the bill will pass, "but it is still relatively early" in the congressional session that runs through next year, Paul Gallant, Washington-based managing director at Guggenheim Securities, said in a note yesterday. McCain doesn't sit on the Commerce Committee that handles TV legislation and it's not clear if Rockefeller will push the issue, Gallant said.

McCain, the Republican Party's presidential nominee in 2008, can bring attention to the issue, Gallant said.

Cable and broadcast groups in testimony submitted to Pryor's committee said changes aren't needed.

"The system is not broken" and changing laws that govern programming distribution "is not in the public's best interest," Gordon Smith, president of the National Association of Broadcasters, said in testimony submitted to the panel. Members of the Washington-based trade group include Walt Disney Co.'s ABC, News Corp.'s Fox, Comcast Corp.'s NBC and CBS Corp.

Lawmakers generally don't need to intervene in the marketplace, which is competitive, Michael Powell, NCTA president, said in written testimony for the subcommittee. Members of the Washington-based trade group include largest U.S. cable company Comcast, based in Philadelphia, and New York-based Time Warner Cable Inc., the second-largest.

 

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