FCC: 'A La Carte' TV Service Would Be Cheaper

American consumers could see their cable or satellite television bill fall by as much as 13 percent if they could pay for only the channels they want, the U.S. Federal Communications Commission said Thursday, contradicting its earlier study.

FCC Chairman Kevin Martin, consumer groups and some lawmakers have pushed channel choice, often referred to as "a la carte service" instead of bundles, as a way for consumers to block programming they do not want their children to see.

Martin has said there were many flaws in the FCC's 2004 study that found a la carte would cost consumers more.

"A more balanced analysis suggests that a la carte could produce many consumer benefits that the first report fails to consider," the new FCC report said. "A la carte may reduce consumers' prices, thereby potentially increasing demand" for subscription television service.

The cable industry has long opposed a la carte service arguing it would cost consumers more, squeeze out niche channels that attract casual viewers and upset advertising revenue for operators.

The new report found in some scenarios for a la carte that monthly prices could fall 3 percent to 13 percent, instead of rising 14 percent to 30 percent as earlier forecast.

The new study also found that customers could receive up to 20 channels, including six broadcast channels, without seeing their bill increase. The 2004 study said costs would not go up if a customer picked only nine cable channels, but did not fully account for broadcast channels.

The average household watches about 17 channels, according to the FCC. Cable rates have consistently outpaced inflation, rising 5.4 percent in 2003, the latest FCC data available.

A National Cable & Telecommunications Association spokesman had no immediate comment on the report. A 2003 Government Accountability Office report found that while a la carte would give consumers more choice, it could lead to higher prices.

The FCC's original report relied in part on an analysis by Booz Allen Hamilton, which was funded by the cable industry. The organization has since acknowledged some of its calculations were wrong, the FCC said in the new report.

Recently, cable operators like Comcast Corp. (CMCSA) and Time Warner Inc. (TWX) have unveiled family-oriented packages of channels in an effort to soothe concerns about indecent television content.

Telephone company AT&T Inc. (T), which is entering the video business, has said it would be willing to offer a la carte programming if it were able to negotiate the necessary programming agreements. Often programming contracts bar television distributors from offering channels individually.

Martin and other FCC commissioners are scheduled to see a demonstration of AT&T's video service Thursday in Texas.