The Marketplace Report: Custom Cable Subscriptions

Alex Chadwick talks to John Dimsdale of Marketplace about the move by federal regulators to urge cable television companies to allow consumers greater flexibility. The Federal Communications Commission is suggesting that viewers be allowed to subscribe to individual channels, instead of prepackaged bundles of cable networks.

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ALEX CHADWICK, host:

Back now with DAY TO DAY. I'm Alex Chadwick.

This is the way cable TV works. You want to get your favorite news channel, you have to buy it in a package that includes the Ski Channel or the Shopping for Little Dogs Channel. It's called bundling and it's long been the practice of cable and satellite TV systems to sell a package of channels. Selling channels individually is called a la carte pricing. The chairman of the Federal Communications Commission today endorsed a move in that direction. John Dimsdale joins us from "Marketplace's" Washington bureau.

John, is this a reversal of the FCC's position?

JOHN DIMSDALE ("Marketplace"): It is. You know, just last year the FCC issued a report that essentially rejected individually priced channels as bad for consumers. But in the interim, there's a new chairman who seems more favorable to the idea. Kevin Martin was at a Senate forum today on indecency on TV, and he told senators he asked his staff to review last year's report.

Mr. KEVIN MARTIN (Chair, Federal Communications Commission): Based on a more complete analysis of the cost and benefits of bundling and the potential costs and benefits of a la carte pricing, our new report concludes that purchasing cable programming in a more a la carte manner in fact could be economically feasible and in consumers' best interests.

CHADWICK: So, John, what you're talking about is you'd pay $5 a month for one particular channel or maybe two or three rather than $30 a month for a whole bunch. So here's the chief regulator of the cable and TV satellite industry saying this is better for customers. What's he going to do?

DIMSDALE: Well, he could force the industry to switch if he got the support of Congress, but first he's asking the cable and satellite industries to change voluntarily and offer more a la carte pricing, you know, on their own. Doesn't sound like that's likely to happen. Here's Brian Dietz with the National Cable & Telecommunications Association.

Mr. BRIAN DIETZ (National Cable & Telecommunications Association): If the government required cable operators and satellite companies to sell those channels individually, then the price of each channel would go up significantly, plus many of the niche channels that are now part of a package would not be able to survive on their own.

DIMSDALE: Those niche channels are the less popular ones. And Dietz says they're less able to build their own customer base. Under a la carte pricing, they'd have to spend a lot more money to market and promote themselves, and that would be passed on to consumers, who would only get about six or eight channels for the price that they get 80 channels for now.

CHADWICK: You mentioned that this issue comes up at a forum on decency in television.

DIMSDALE: That's right. Advocates of parental controls over the growing amount of sex and violence on television say that parents should be able to order only the channels they want their children to see and no more. So these groups have joined with other consumer advocates to put pressure on Congress to get the cable and satellite industries to change to a la carte pricing.

Coming up later today on "Marketplace," we're talking basketball and looking at the impact Yao Ming has had on the sport's future and future of the Chinese economy.

CHADWICK: Thank you, John.

John Dimsdale of public radio's daily business snow "Marketplace," produced by American Public Media.

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