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Copps Mulling Wholesale A La Carte Mandates

FCC Democrat Weighs Cable Provider, Distributor Concerns

By Ted Hearn -- Multichannel News, 1/29/2008


Washington -- Federal Communications Commission Democrat Michael Copps said Tuesday he was still debating whether to force cable programmers to wholesale channels on an individual basis to cable and satellite TV operators.


“I think we're having a lot of meetings with a lot folks to understand exactly what is involved. I think we all understand some of the problems that creates,” Copps told reporters in his FCC office. “I’m trying to get a full understanding of both sides of the issue before we opine much further on it.”


FCC chairman Kevin Martin, egged on by small cable operators, is proposing rules that would deny the Walt Disney Co., for example, from bundling ESPN in a package with other Disney-affiliated networks and offering the whole thing to distributors on a take-it-or-leave it basis.


Copps’s tentative approach for now could be encouraging to cable because he has been an eager participant in Martin’s extensive anti-cable agenda. Martin went after cable starting in late 2005 after the industry refused to allow consumers to buy all cable channels on an a la carte basis.


Copps indicated that he was sympathetic toward the American Cable Association’s concern that large program providers effectively force pay-TV distributors to license more channels than they want to buy, with carriage of cable channels tied to permission to carry local TV stations.


“Do folks seem to have legitimate arguments, smaller operators about the cost of these [channels]? Yes,” Copps said. “So I think we need to do something.” But Copps did not say that by “something” he meant wholesale a la carte mandates.


Requiring wholesale unbundling without FCC regulation of the per-channel prices would seem susceptible to evasion, especially because programmers could defend their bundling strategy by charging exorbitant a la carte rates.


To the extent the FCC imposed wholesale a la carte, Copps said he believed it could be done without price controls.


“I guess it depends on how your craft the rules. I would imagine it’s within the ability of us to craft some rules that wouldn’t necessarily go to regulating price by price,” Copps said.

http://www.multichannel.com/article/CA6526763.html
 

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I've wavered on this issue. Both pro- and con- sides of the a la carte debate have some merit, given the near-certain "unintended consequences" of such a mandate.


One thing on which I'm not wavering: I've grown plenty tired of paying such high cable bills for a multitude of garbage. More packaging options (such as HD without having to subscribe to all the SD) are certainly warranted.
 

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I personally think there are too many cable channels, and a few of the popular ones are carrying significant loads for the smaller channels. I think most of the channels I watch could survive quite well a la cart and I would LOVE for a way to strike MTV and their associated dreck from my airwaves (if only to spare my wife from the tempation to watch yet another "Sweet Sixteen" show).


I think a better plan would be fixed rates for X number of channels, your choice. I bet I could squeeze my viewing out of 15 channels, tops. I would miss some syndication heavy channels, but I'd survive. Actually, at this point 95% of my viewing is on HD anyway, 100% will be once BBC-HD, FX-HD, and CW-HD come to town.
 

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Quote:
Originally Posted by IAM4UK /forum/post/12977975


I've wavered on this issue. Both pro- and con- sides of the a la carte debate have some merit, given the near-certain "unintended consequences" of such a mandate.


One thing on which I'm not wavering: I've grown plenty tired of paying such high cable bills for a multitude of garbage. More packaging options (such as HD without having to subscribe to all the SD) are certainly warranted.

Not implying you didn't know this already, but the a la carte being discussed above is for media companies selling channels to cable providers, not cable providers selling channels to consumers.
 

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The article has nothing to do with consumer-level a la carte pricing. This has everything to do with content providers bundling their networks and demanding placement in tiers en masse.


This is why, eventually, the basic package for DirecTV will include ESPN8. This is why the few viable channels of VOOM are stuck not being carried: because you take all of them or none of them.


This is about the distributors (cable, Dish, DirecTV) complaining that they are forced to carry channels they don't want. The distributors will undoubtedly argue that this forced carriage led to overcompression and the degradation of picture quality.
 

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...and the title should be corrected.


The article is titled with Wholesale being obvious. Correcting the thread title would point out that this is wholesale a la carte, not consumer-level a la carte.
 

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Quote:
Originally Posted by agregjones /forum/post/12978732


This is why, eventually, the basic package for DirecTV will include ESPN8.

The Ocho!


I think the issues of bundling channels are similar, whether at the distributor level or the customer level. Having to pay for stuff you don't want to get stuff you do want is a generally bad deal. Distributors can pass along the cost, but the bandwidth devoted to the junk can negatively impact the PQ of the good stuff.


In principle, I like the idea of letting each channel "compete" for carriage on its own merits. We'd have far fewer channels (viewing options), but I'm willing to make that trade.
 

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> Wholesale a la carte and consumer a la carte are completely different issues.


While wholesale a la carte won't necessarily lead to consumer a la carte, it does seem like consumer a la carte can't exist unless a la carte at the wholesale level also occurs.
 

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Quote:
Originally Posted by Thomas Desmond /forum/post/12984681


> Wholesale a la carte and consumer a la carte are completely different issues.


While wholesale a la carte won't necessarily lead to consumer a la carte, it does seem like consumer a la carte can't exist unless a la carte at the wholesale level also occurs.

They are related, but separate topics. Mislabeling them doesn't help.
 

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Quote:
Originally Posted by Thomas Desmond /forum/post/12984681


While wholesale a la carte won't necessarily lead to consumer a la carte, it does seem like consumer a la carte can't exist unless a la carte at the wholesale level also occurs.

If wholesale a la carte occurs, I can't wait to hear the creative arguments that cable and satellite providers use to deny consumers pricing a la carte.


-pretzelbag.
 

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It's all about money, not consumer choice. Both programmers and providers will fight to squelch ala carte pricing. That's the American way.
 

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Discussion Starter #13
FCC Chairman Vague On Capping A La Carte Prices
Martin Has Yet To Spell Out How Mandate Would Work

By Ted Hearn -- Multichannel News, 1/31/2008 5:53:00 PM


Washington – Federal Communications Commission chairman Kevin Martin wants big cable programmers to offer their channels one at a time to cable and satellite TV providers, but he hasn’t made clear how so-called wholesale a la carte mandates would be effective if the FCC won’t police the per-channel rates being sought.


Martin danced around the issue of a la carte price controls on Thursday, telling reporters that he is relying on assertions by members of the American Cable Association that unbundling mandates on the Walt Dinsey Co., Viacom, News Corp. and NBC Universal would take pressure off retail cable rates. ACA represents hundreds of small cable companies.


“I thought [wholesale a la carte] was an idea that some members of the cable industry -- small cable operators – had of having to address high cable rates,” Martin said. “I think that’s an idea for the commission to consider and I think it could end up helping addressing it – at least small cable operators have all said it would help them try to address it and lower cable rates.”


At least in theory, programmers could set a la carte prices so high that the only rational option would be the purchase of the bundle. But Martin did not indicate how wholesale a la carte mandates could be effective if the agency would let programmers use pricing strategies to defend the bundle.


The Walt Disney Co., for example, provides ESPN, its popular sports channel, on a stand-alone basis. But the company refuses to distribute ESPN2 and ESPNEWS in the same manner, requiring anyone interested in ESPN2 to license the rights to ESPN. Disney has argued that the FCC has no legal authority to stop programmers that elect to wholesale channels only on packaged basis.


The FCC is expecting to receive a final round of comments by Feb. 12. After the record closes on that date, Martin could bring the matter up for a vote at any time.


“At bottom, I am open to all kinds of ideas that people might have to help consumers address the fact that cable rates are rising every year,” Martin said. “I think [wholesale a la carte] is one of them.”

http://www.multichannel.com/article/CA6527816.html
 

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Quote:
Originally Posted by pretzelbag /forum/post/12995067


If wholesale a la carte occurs, I can't wait to hear the creative arguments that cable and satellite providers use to deny consumers pricing a la carte.

They don't need to try hard. Let's start with, "Government doesn't get to set consumer pricing strategy for businesses." In the absence of a retail a la carte mandate, that's all that is necessary.


Beyond that, I think the way consumer a la carte would work would be that there would be an a la carte "package" fee, a base rate reflecting all the overhead costs and some of the profit contribution of the current package fees. Then you could pay $2-$4 per channel on top of that. If you're only getting a five or six channels, you would come out ahead. Otherwise, you wouldn't. The point being that any change along these lines must be revenue neutral or it can be opposed as simply a government tax on business.
 

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Quote:
Originally Posted by Fred M /forum/post/12997264


Disney has argued that the FCC has no legal authority to stop programmers that elect to wholesale channels only on packaged basis.

...and here lies the problem with forcing companies to offer channels unbundled. The FCC really has no grounds to dictate how a company sells their product.


Sure, I might want to get automatic comfort climate controls on my car without buying the sport cast aluminum wheels, but the car company isn't required to (nor will they) sell the car to me that way.


In the end, though, Disney, Universal, Fox and all the other studios have much better lawyers and a much bigger lobbying budget than the FCC.
 

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Who knows what may happen down the pike. The only thing I know is, this would be a bad time for the big studios to turn to the Feds for more copyright protection laws.


I actually almost have to wonder if the FCC fining ABC for a scene from NYPD Blue from 5 years ago is it's way of saying, "see what power we have, Disney? Now unbundle your channels before we force you..."
 

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Quote:
Originally Posted by NetworkTV /forum/post/12998149


Who knows what may happen down the pike. The only thing I know is, this would be a bad time for the big studios to turn to the Feds for more copyright protection laws.

I don't know about that. This may be the last time for four years that they have a sympathetic ear in Washington.
 
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