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FCC Can't Recommend a la Carte

Most cable customers would pay more, not less, if the government forces cable systems to sell programming on a channel-by-channel or “a la carte” basis, the Federal Communications Commission told Congress Thursday. More competition, and not breaking up channel lineups, is the better course of action, it suggested.

The average household, in fact, would see monthly bills rise between 14% and 30%, the FCC found in a study of the potential impact of an a la carte mandate.

Critics of the cable industry have been pushing a la carte to remedy years of price hikes that have exceeded inflation and as a way for parents to shield kids from racy and rough-talking channels they don’t want their kids to see.

Consumer advocates argue that subscribers could cut their bills by rejecting channels they don’t want, especially ones that top  $2 per month, such as ESPN. But the FCC found that programming networks will greatly increase marketing expenses to convince subscribers to take their channels and the cost will be passed on to consumers.

In addition, niche and religious channels will go dark after losing subscribers and, consequently, advertisers.

A small group of subscribers could cut their bills the FCC acknowledged. Those who would purchase fewer than nine channels could offset the per-channel increase in prices enough to cut their total bills.

Rather than impose an a la carte mandate, the FCC said prices could be cut if consumers have more pay-TV choices. Consequently, the FCC says, regulators and Congress should encourage new options such as USDTV’s low-cost service being rolled out by broadcasters.

The FCC’s thumbs-down on a la carte came as relief to the cable industry, as well as many religious and minority broadcasters. “Mandatory per-channel pricing would put significant and harmful economic pressure on program networks,” said Robert Sachs, president of the National Cable & Telecommunications Association.

“As a network catering to the tremendously underserved African American audience, we applaud the FCC and hope this puts to rest the ill-conceived notion that an a la carte law could in any way be beneficial," said Johnathan Rodgers, president and CEO of TV One.