Newsroom: Cable & Satellite

FOR IMMEDIATE RELEASE

Contact: Jeannine Kenney (202) 462-6262              

Statement of Gene Kimmelman

Vice President, Federal and International Affairs

Consumers Union

on

The Consumers Having Options in Cable Entertainment (CHOICE) Act

Consumers Union applauds Senator McCain’s efforts to promote greater consumer choice over the cable channels offered to them. With cable prices skyrocketing by 68 percent since Congress passed the 1996 Telecommunications Act, consumers badly need relief from the bloated and costly cable packages forced on them.

While we are unable to endorse the specific incentives the bill offers to cable providers to make a la carte programming available, we support the spirit of the legislation―to promote greater consumer choice; enhance competition in cable programming that better reflects consumers’ demand for diverse and independent programming; and to prohibit anti-competitive bundling by large media conglomerates.

Specifically, we support Senator McCain’s effort to prevent broadcasters from requiring cable distributors to carry and pay for all of a broadcaster’s cable channels―a practice that has forced large bundles of costly and unwanted cable channels on consumers. In addition, we strongly support extension to the Internet of current prohibitions on cable operators’ coercive tactics to block programmers from using other distribution systems for program delivery. The Internet is becoming an important and less expensive alternative to cable companies as a source of video programming. It’s critical that cable distributors be prevented from using their considerable cable and broadband market power to prevent programmers from distributing their content via the Internet.

However, we are unable to endorse this legislation because it goes too far in eliminating important public obligations of video service providers to ensure nondiscriminatory delivery of cable service, diversity of local programming, and essential consumer protections, including the timely and successful resolution of consumer complaints.

We look forward to working with Senator McCain to address these concerns to ensure that consumers have both better choices of cable programming at lower costs and meaningful protections against abusive practices where robust competition fails to take hold.

***

TV served a la carte

May 25, 2006 Thursday

Los Angeles Times Editorial Pages Desk; Part B; Pg. 11 

BY: John McCain and Kevin Martin, Sen. John McCain (R-Ariz.) is introducing the CHOICE Act. Kevin Martin is the chairman of the Federal Communications Commission.

American consumers have little choice when it comes to cable television. If you want ESPN, you must pay for 60-plus channels that you may never watch. If your child loves Nickelodeon, your family must pay for the same 60-plus channels, some of which may not be suitable for young children. Now, imagine deciding for yourself which TV channels you want to purchase. You could select the channels you want to pay for, and opt out of those you don't. In fact, right now millions of TV viewers outside the U.S. have these choices. They buy their television channels individually or in smaller bundles -- and get better deals as a result.

Why can't Americans do this now? Because there is too little competition, too much regulation and not enough consumer choice in the cable TV business. As a result, in just the last two years alone cable prices have increased at twice the rate of inflation -- and more than 90% since 1995. Cable companies explain away their skyrocketing prices by saying they are giving you more and more channels. At no time, however, have the cable companies actually asked if you want those additional channels. You have to pay for them whether you want them or not.

The solution to high cable bills isn't price controls or additional government regulation. It is more competition and more choice. For that reason, Congress should pass the proposed Consumers Having Options in Cable Entertainment Act -- the CHOICE Act -- which is being introduced today. It would allow cable companies to compete nationally for your business (rather than only at the local level) in exchange for agreeing to offer channels a la carte, either individually or in smaller bundles.

The Government Accountability Office has found that cable rates are 15% lower when a community has at least two companies competing for consumers. The Federal Communications Commission found that consumers could lower their monthly cable bill by as much as 13% if they had a la carte programming options.

And parents would never be forced to purchase a slew of channels, some not suitable for young children, simply to receive those channels that their family enjoys watching together.

Real-world examples illustrate the benefits of greater choice and more competition coming through our TV sets. In Hong Kong, viewers can select and pay for only the channels they want. A family that wants to watch sports, movies, news and children's programming can receive 15 free channels plus a selection of 11 additional digital channels (including ESPN, HBO, CNN Headline News, National Geographic Channel, Animal Planet and Discovery Channel) for only $27.50 a month. To get a package that includes those channels in Washington, the cost is $82 per month -- almost $1,000 a year. That's quite a difference.

Similarly, in Canada, digital subscribers can buy channels individually or enjoy significant savings on a "5 pack," a "10 pack" or a "15 pack" of their own choosing.

Interestingly, the same companies that oppose selling channels individually or in smaller packages in the U.S. offer their programming a la carte in other countries. Their threats of financial ruin and a loss of diverse programming have proved hollow. American consumers want these companies to offer such choices. According to a recent AP-Ipsos poll, 78% of respondents said they would prefer to choose and pay for their own tailored selection of channels.

Today, cable choice and competition have been successful around the world. Consumers in Hong Kong, Britain, India and Canada are reaping the rewards of greater choice from channels being offered on an a la carte basis. So why not increase competition in the U.S. and at the same time make sure that companies offer us true choice in cable programming?  

News service provided by Lexis Nexis Publisher