WASHINGTON – Federal regulators rejected on Friday the idea that allowing cable TV (search) subscribers to pay only for channels they want would lower high cable bills. Consumer groups said the analysis was flawed.
In a report to Congress, the Federal Communications Commission (search) said cable bills would increase under a system that would let people pay for individual channels instead of the bundled packages they currently are offered.
The analysis by FCC 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, he probably would face a rate increase of at least 14 percent and as much as 30 percent, the analysis said.
According to the report, an "a la carte" pricing system would drive up cable companies' costs for equipment, customer service and marketing, and the charges almost certainly would be passed to subscribers.
Smaller niche channels, such as those with religious programming or channels aimed at minorities, could disappear with the loss of advertising revenue and extra costs that cable operators would have to pay, the report said.
Consumer groups denounced 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 (search), which publishes Consumer Reports.
Consumers Union said the FCC failed to consider other options to rein in skyrocketing cable bills, such as a voluntary choice system that would let customers buy bundled packages.
Consumer groups point to government statistics that show cable prices have increased 56 percent since 1996, when Congress deregulated price controls for cable programming services. The most recent FCC figures, released in July 2003, showed the average monthly cable bill increased by more than 8 percent in the previous 12-month period, up from $37.06 to $40.11.
The cable industry maintained their customers would end up the losers in an "a la carte" system.
"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 chief executive of the National Cable and Telecommunications Association.
The report was requested by the House Committee on Energy and Commerce. Republican Sen. John McCain of Arizona, who chairs the Senate Commerce, Science and Transportation Committee, also had asked regulators to study the issue.