FCC: Allowing cable TV subscribers to choose their channels won't lower costs

Friday, November 19th 2004, 11:02 am

By: News On 6

WASHINGTON (AP) _ Letting cable TV subscribers pay for only the channels they want won't reduce the cost for most, federal regulators told Congress in a report released Friday. Consumer groups immediately attacked the study as flawed.

The analysis by the Federal Communications Commission staff found the average cable household watches about 17 channels, including over-the-air broadcast stations. If a subscriber purchased that many channels under a pick-and-choose system the consumer would likely face a monthly rate increase of up to 30 percent.

According to the report, such a system would drive up cable companies' costs for equipment, customer service and marketing that would almost certainly be passed on to subscribers.

Consumer groups, which support the idea of letting people pick individual channels rather than paying for bundled packages of channels, attacked the findings.

``The study was rigged against consumers in favor of large cable companies, giant broadcasters and other media behemoths,'' said Gene Kimmelman, senior director for public policy and advocacy at Consumers Union, which publishes Consumer Reports.

But the cable industry argued that a so-called ``a la carte'' pricing option won't benefit consumers.

``The FCC report to Congress makes clear that government-mandated per-channel pricing would not offer any benefits to the vast majority of consumers and would in fact result in higher prices, fewer choices and less diversity in programming,'' said Robert Sachs, president and CEO of the National Cable and Telecommunications Association.

The report was requested by the House Committee on Energy and Commerce. Sen. John McCain, R-Ariz., had also asked regulators to study the issue.

Congress requires cable companies to offer a basic service package that includes local broadcast stations. The companies also offer expanded basic packages that typically include bundles of cable networks such as ESPN and CNN. For HBO, Showtime and other premium services, consumer pay an additional fee.