Report Rejects 'A La Carte' Pricing Model

by David Kaplan, Nov 19, 2004, 12:00 AM

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You can't pick and choose your cable options when signing up for a package, but the FCC wants a la carte cable stations to be available for consumers. An a la carte option would allow consumers to pay for only the programming they choose, but given current viewing practices, few consumers would experience lower bills for multi-channel programming, according to a report.

The report, authored by the Media Bureau of the Federal Communications Commission, focuses on the efficacy of so-called a la carte pricing in the pay-television service industry and finds little to be desired.

The bureau estimates that the impact on retail rates of pure or mandatory a la carte sales indicates that only those consumers who would purchase fewer than nine programming networks may see a reduction in their monthly cable bill.

Over at the Cabletelevision Advertising Bureau, Sean Cunningham, the organization's CEO and president, noted that the research makes one thing clear: a la carte pricing doesn't work for anyone.

"We've been looking at this for months, and perhaps in theory it sounded like a good idea, but it hasn't worked out that way," Cunningham said. "It doesn't work for marketers and advertisers because it in effect raises their costs. And it makes it more difficult for cable operators to attract those advertisers."

Furthermore, the 108-page report includes several policy recommendations that the Congress and the FCC should consider to enhance consumer choice, foster competition, and provide consumers with the tools to prevent objectionable programming from entering their home.

Deficiencies in the program-acquisition market could be addressed by injecting greater competition at the distribution level; the increasing interest by more traditional telephone companies in entering the cable business; and the promise of broadband platforms to introduce Internet-protocol video, which currently seems to be following an a la carte model.

The Media Bureau's report was in response to a request made by members of the House of Representatives in May of this year for insight on the feasibility of selling cable and satellite channels on an individual basis or in smaller theme-based packages.

Separately, Senator John McCain (R-Arizona), chairman of the United States Senate Committee on Commerce, Science, and Transportation, asked FCC Chairman Michael Powell to "explore all available options... to promote a la carte and satellite offerings as soon as possible where such offerings would benefit consumers."

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