In a 6/12/13 letter to Acting FCC Chairwoman Mignon Clyburn, Sen. John McCain (R-AZ) pressed for action to make a la carte channel buying a reality for American cable subscribers. However, the FCC was forced to admit there was little it could do. Much like the FCC role in retransmission consent negotiations, in this case it lacks statutory authority.
The FCC response from Clyburn came 7/24/13; actually, the real response came from the Media Bureau, to which the letter was referred by Clyburn, in the form of a letter from communications exec Michael S. Perko. McCain went on at length about the virtues of his Television Consumer Freedom Act and said it was time for action, and asked the FCC to do what it could to shift the balance of billing power away from the providers and toward to consumers.
However, the FCC was forced point out that cable companies are actually prohibited by law from offering a la carte service at the present time, and also that the FCC’s say over channel lineups involves the must-carry rights of local broadcast stations and the prohibition of forcing tiers other than a basic tier on consumers, and little else.
RBR-TVBR notes that this is the same way the FCC must respond to the calls for action it is getting during the current CBS/TWC retransmission consent stalemate. It has the authority to step in the event one side or the other is failing to bargain in good faith – raising the question as to how such a condition can be identified. It is the view of RBR-TVBR that the power to determine good faith is essentially no power at all. Here is the exchange, with Clyburn’s brief letter of referral omitted.
June 12, 2013
Dear Acting Chairwoman Clyburn:
The time has come for television video consumers to have the option to either purchase individual channels or the tiers of channels currently offered by cable and satellite companies. Today, this option does not exist and consumers are forced to buy channels they do not want. This is wrong and action should be taken.
Recently, I introduced legislation to provide consumers with the option to purchase television channels individually from their cable or satellite provider, otherwise known as multichannel video programming distributor (MVPD). My legislation, the Television Consumer Freedom Act, contains no mandates and uses existing law to incentivize greater choice in the video market for consumers. The current television video market forces consumers to pay for channels they do not watch.
If enacted, my legislation would allow programming tiers to remain, but also incentivize the offering of individual channels to consumers. If the MVPDs are right, and the current tiered programming model is the best value for consumers, then the programmers who bundle their television channels and the MVPDs that offer tiers to consumers should not be afraid of an a Ia carte option for consumers. My instinct tells me they are wrong, and industry references to a “Golden Age” of television apply to everyone but the American consumer.
Opponents of my legislation suggest that the current model of offering television programming in tiers provide consumers with the best available value. But with studies fmding cable prices increasing over six percent a year over the last 16 years, and consumers on average only watching 18 of the 130 channels they purchase, what consumers really believe they are getting a good deal? The truth is the current socialized television model, where popular channels are subsidizing less popular channels, is incredibly anti-consumer.
The response to my legislation has been astounding. Consumers want options that the current television market is not providing. Clearly, this begins with providing consumers with greater control over what they pay for. As policymakers, I believe it is our responsibility to lend voice to the American consumer, call attention to clear market unfairness, and shift the current regulatory balance towards consumers. For too long, the government has entered the market on behalf of special interest to afford businesses the opportunity to develop and markets to mature. That time has passed. As such, I call on the Commission to review this issue and take steps to shift this balance toward consumers, by providing consumers with greater choice when purchasing television video. John McCain United States Senator
July 24, 2013 Dear Senator McCain:
Thank you for your letter concerning the marketing practices of cable television system operators and satellite television carriers as well as other multichannel video programming distributors (MVPDs). In particular, you believe that consumers would benefit if they had the option to select the programming provided by MVPDs on an individual channel, or “a La carte,” basis. I appreciate the concern and opportunity to respond.
As you know, no federal law prohibits cable television operators and satellite carriers from offering consumers all or most of their programming services on an a La carte basis. At the same time, except as expressly provided in the Communications Act, the Commission is not authorized to regulate the marketing practices of cable television operators and satellite carriers.
For example, the Commission has, pursuant to provisions of the Communications Act, implemented rules for the mandatory carriage and retransmission of local broadcast television stations by MVPDs. The Commission also has adopted rules prohibiting cable television operators from requiring consumers to purchase a tier of service (other than the basic service tier) in order to access pay-per-view or other per-channel offerings. However, the Commission does not have explicit authority to require MVPDs to provide service on an a La carte basis.
As you recommend, the Commission has advanced policies that increase competition and consumer choice in the video programming marketplace whenever possible. Such measures include modifying the franchising procedures to facilitate the entry of competitive cable television providers, adopting rules to preclude exclusive contracts for video service in multiple-dwelling units and other residential settings and instituting changes to expedite the review of program carriage complaints. These and other Commission policies have helped support the emergence of a number of alternative video content sources in recent years. Many broadcast and non-broadcast programming producers now make programming available to the public on their websites. In addition, consumer-directed technologies, such as video streaming services and other over-the-top video applications, allow subscribers to watch individual broadcast and non-broadcast programming on mobile devices (e.g., smartphones, tablets) as well as on home television equipment. This proliferation of new technologies and distribution platforms has led many consumers to look beyond incumbent providers for access to video content.
Please be assured that the Commission will continue to promote policies that increase competition and consumer choice in the marketplace for video programming. If I can be of further assistance, do not hesitate to contact me. Michael S. Perko Chief, Office of Communications and Industry Information Media Bureau
