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Published: Friday, 2/10/2006

Feds back a la carte cable TV services

FROM BLADE STAFF AND WIRE REPORTS

WASHINGTON - Most cable TV subscribers would save money if allowed to pay for only the channels they want, a Federal Communications Commission study said yesterday, reversing the agency's earlier finding that consumers wouldn't benefit.

The analysis by FCC staff provides new support for consumer groups and conservatives pushing for a pick-and-choose pricing system to replace the bundled services offered by the cable industry. Cable companies fear that would diminish their wide distribution.

The study gives added ammunition to lawmakers and regulators who see "a la carte" as a way to clean up raunchy television by giving parents more control over the channels their children watch.

The president of the industry's main trade group, the National Cable & Telecommunications Association, said Washington has no place mandating how the industry runs its business.

"Over the last 25 years, the American free-enterprise system created the most diverse video programming on Earth with the best value for the customer," said Kyle McSlarrow, the group's leader. "It is disappointing that the updated report relies on assumptions that are not in line with the reality of the marketplace."

Tom Dawson, spokesman for Buckeye CableSystem, a sister company of The Blade, said he doesn't see how customers would save money using an a la carte system because programmers, such as ESPN or CNN, make money based on subscriber fees to cable providers and advertising.

He said advertising revenues likely would decline because programmers would not have the same number of "potential eyeballs" viewing their stations and seeing the commercials, so they would have to charge advertisers less. They would need to make up those losses by charging cable companies more, which would pass that cost onto customers. "Nothing I've seen has changed the basic figures and facts they had in the original study," he said.

Many industry analysts also have been skeptical that an a la carte system would fly, citing in part First Amendment concerns. If customers cherry-pick the channels they want, diversity voices could be lost if smaller niche networks catering to minorities are forced out of business, according to the industry.

Currently, Congress requires cable companies to offer a basic service package that includes local broadcast stations.

In yesterday's report, FCC staff said its November, 2004, report was wrong to conclude that the average cable household would likely face a monthly rate increase of up to 30 percent under a la carte.

The FCC staff blamed its earlier finding on faulty data it obtained from the cable industry.



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