Out of Control Policy Blog

Kevin Martin weighs in on "a la carte" cable

The Kevin Martin FCC continues to disappoint. News from Washington this morning is that the Federal Communications Commission Chairman is planning to call for "a la carte" pricing of cable TV channels.

This has been a favorite demand of liberal groups such as Consumers Union, who, somewhat disingenuously, believe that cable prices will decline if customers can pick and choose specific channels.

Of late, conservative groups such as the Parents Television Council, which bristle at the idea of any television, radio or motion picture entertainment aimed at audiences older than 9 years old, have added their voice to the cause.

Notably, Martin's comments are not part of a policy hearing on broadband or telecommunications, but are expected to come today during a Senate forum on indecency in media, a topic on which the FCC spends way to much time considering the work that needs to be done on Universal Service reform, Intercarrier Compensation and Spectrum Management.

Martin, like his predecessor Michael Powell, is a Bush appointee. Unfortunately, he lacks much of the principled thinking that formed Powell's policy agenda. Instead, Martin has a penchant for espousing easy, populist "solutions" that in the end, accomplish little. Recall it was Martin who joined Democratic appointees in resisting changes to the FCC's popular but self-defeating line-sharing UNE-P scheme.

He was also behind the requirement, extended twice before it was abandoned, that VoIP providers get confirmation from every single customer that he or she understood VoIP's limits vis--vis 911 calls. For a scathing critique on Martin's "Emily Latella" VoIP regulation, see Ray Gifford's entries here and here at the Progress & Freedom Foundation's blog.

Martin's call for a la carte pricing seems to be in the same vein. While extolling its virtues, it appears he won't go as far as making it an FCC requirement. This is a key concession to the economics of cable programming. Tiered service lets cable companies spread costs. For example, according to the Wall Street Journal, ESPN costs cable providers $2.50 per customer, while the Cartoon Network costs 15 cents. While many Chris Berman fans may never watch "Drawn Together," the bundling approach keeps service prices low by reducing the average cost of programming per subscriber. Indeed, an FCC study last year concluded that a la carte pricing would not lead to lower prices. In lending his support to the a la carte idea Martin says these earlier FCC conclusions have been "revised."

As always, competition adds a new factor. Phone companies are entering video and more and more TV programming is becoming available via the Internet. Competitive pressures might force broadband entertainment providers to restructure rate plans and bundles. Some bundled family tiers may yet emerge. Still, chances are they will fit into the changing economic and market structure that competition is creating. This is all the more reason we don't need government meddling in cable service provision.


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