Concerned Women for America - The Case for A La Carte Cable Pricing<BR>Don't Want Their MTV? Let the Free Market Work Its Magic

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The Case for A La Carte Cable Pricing
Don't Want Their MTV? Let the Free Market Work Its Magic 4/7/2004
By Martha Kleder

It's time for cable television to come of age and enter the free market.

If viewers are told to "just change channels" when they don't want certain programs, then they should not be forced to purchase those unwanted programs in a bundled package.

The average cable customer watches only 12 to15 channels on a regular basis, but cable companies bundle 50 to 75 channels in the basic tier, and upwards of 200 in digital cable packages. That's like going to the store for a dozen eggs and being told you must buy at least six dozen.

This forced consumption of channels increases the cost to consumers. A recent Federal Communications Commission (FCC) report concludes that cable subscription prices have increased five times faster than the rate of inflation.

Under the cable bundling system, even non-sports fans are forced to pay for very costly programming such as ESPN. Sports fans, too, face higher cable bills because of channel bundling.

"A la carte" pricing, the free market solution, would give consumers complete control over what comes into their homes and would help them control their cable bills.

While being content-neutral in wording and goals, such a plan could also reduce the amount of indecent programming, as families vote with their pocketbooks.

Broadcast Indecency's Link to Cable TV
Cable networks are not bound by broadcast indecency statutes. So when some cable networks began producing their own programs, they used raw, sexualized content to draw viewers.

Broadcasters then began pushing the bounds of decency in an attempt to reclaim those viewers. "We have to compete with cable" is an excuse voiced frequently in entertainment periodicals. However, a close look at the parent companies of these cable channels shows that, in large part, they are owned by the same conglomerates that own the broadcast networks.

Gail Berman, Fox Entertainment president, told Gannett News Service in October 2002 that the racy cop show Fastlane was added to their broadcast line-up because, "[W]e must be able to compete with The Shield." The Shield, another crude and highly controversial police drama, airs on FX, a Fox-owned channel on the basic cable tier.

The idea of "competition" between cable and network TV is also undone by the fact that many themes, and even programs, have crossed from cable to network .

MTV gave us Real World and Jackass several years ago. Now, broadcast TV features shows like Big Brother and Fear Factor. Bravo premiered Queer Eye for the Straight Guy, which now runs on its sister broadcast network, NBC. The list of crossover themes and programs grows with each program cycle.

Ultimate blame for this race to the bottom lies with the FCC's lack of indecency enforcement. The FCC's inaction has blurred the lines between broadcast and cable.

Cable Companies Hold Monopoly Power
Over 94 million homes subscribe to multichannel video programming distributors (MVPDs), according to an FCC report. Of those, about 66 million subscribe to cable while the remainder subscribe to direct broadcast satellite (DBS). The number of MVPD subscriber homes accounts for 88.29 percent of all television households.

While there are about a dozen major cable companies nationwide, those companies act as monopolies in their local communities, by county charter.

Satellite systems, while starting to nibble at cable's customer base, are not yet a true competitor, and thus have no direct impact on cable prices. As Gene Kimmelman of Consumers Union notes, the cable industry is 3.5 times larger than dish systems, many DBS customers live where cable is not available, and dish placement restrictions prevent many customers from choosing that system over cable.

Along with producing the programming, media conglomerates also hold sway over cable and DBS providers in strict carriage contracts. Those contracts set the price of programming, which is steadily increasing, and also determine channel and tier placement, leaving cable operators with little discretion.

Summary: It's time for cable television to come of age and enter the free market.

Cable choice will improve cable services by:

Encouraging creation of channels that cater to their target audience.
Phasing out unpopular and redundant channels that drive up cable costs.
Allowing customers to bear the cost only of the programs they watch.
Facilitating a more direct financial impact on channels that violate the viewer's standards of decency. Don't want THEIR MTV? Don't pay for it.

Cable choice lets the free market work its magic, and it just might help clean up the airwaves.

Martha Kleder is a policy analyst for Concerned Women for America.