NCTA Paper: A la Carte a Debacle

5/05/2004 10:36 AM Eastern

Mandated a la carte pricing would have a devastating impact on the cable industry and backfire on its proponents, the National Cable & Telecommunications Association said in a paper released Wednesday.

"It would destroy the economic underpinnings upon which companies have invested billions of dollars to build new infrastructure and develop new programming," the NCTA said in a 22-page paper that represented yet another attempt by the industry to poke holes in the case for a la carte services.

The paper comes as the a la carte issue builds momentum on Capitol Hill not just as a tool to combat rising cable rates, but also to block programming channels that parents consider indecent and inappropriate for their children.

In the paper, the trade group said a la carte was unproven as a viable business model. It added that the inability of cable companies to bundle channels in a tier would be fatal to existing niche channels and prevent the launch of new ones.

In additional to a loss of programming diversity, a la carte would hammer advertising revenue, forcing networks in a position to do so to recover lost revenue through rate hikes, the NCTA said.

"As a result, a la carte would actually reduce consumer choice. While some of the most popular networks may be able to survive a switch to a la carte by raising their prices, other networks would not be able to do so," the trade group added.

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