Government: A la Carte–Still on the FCC’s Table

This is going to be a very confusing year for cable in Washington. We’ll probably hear more this year about the toughest telecommunications issues than we did in the entire last decade. But because these issues are so difficult, it’s not clear that any will be fully resolved. To be fair, they have been avoided for years, and with good reason—they present the most political risk. In addition, the best word to describe what’s going on in Washington is distraction. With some key members of Congress concerned about their links to the lobbying scandal and only four of five FCC commissioners on board, it’s not clear when Washington will seriously tackle these issues. None of them will really be new to us; they’ll just come with different names and in different shapes. What was "copyright" is now "digital rights management." What was "common carrier status" is now "network neutrality." What was "program content control" has become "indecency." "Rate regulation" is "a la carte" now. Then there’s the question about who issues franchises and for what. At least they still call it "franchising"! Some of you may be surprised that I included a la carte on the list. That was last year’s issue, wasn’t it? Didn’t the FCC and the GAO agree with the cable industry that the economics of a la carte wouldn’t make sense? That ultimately it would hurt consumers and both existing programmers and those hoping to break into the business? But a la carte is still on the table. It’s being used as a stalking horse for several policy objectives. FCC Chairman Kevin Martin links it to the indecency issue. Presumably lots of people want to choose only "decent" channels. The new family tier offerings and full parental control have blunted that argument. Chairman Martin says there is a new study that shows a la carte could be economically viable; however, as of this writing, the study has yet to be released. Others link a la carte to cable prices and theorize that consumers would pay less to get channels they watch. But as the accompanying chart shows, if people watched what they do today, the per-channel prices would be higher than what cable is offering (and astronomical on a per program basis). That, however, won’t stop a la carte from popping up. It’s easy to say, and sounds good. Unfortunately, that’s what resonates in Washington, especially as elections grow near. This isn’t good. Bad laws get written when lawmakers are distracted and don’t understand the implications of their work. Our job is to keep them fully informed. Stephen R. Effros, a former FCC attorney, is a columnist and consultant in the cable television industry.