Washington— Cable has gotten the message: Powerful lawmakers want to mess with their business.
For years, cable operators have been selling Cable News Network, Discovery Channel and MTV: Music Television in a large, one-size-fits-all package, elevating efficiency over consumer choice and flexibility.
But if two powerful members of Congress get their way, cable’s business model, which calls on customers to buy it all and block the bad stuff, could wind up in the Smithsonian next to shards of the Berlin Wall.
Taking the fight to cable are Senate Commerce Committee chairman Ted Stevens (R-Alaska) and House Commerce Committee chairman Joe Barton (R-Texas). It’s unacceptable that children can access objectionable cable programming on a random basis, they say, and they believe cable’s channel-blocking efforts are insufficient. Aides to Stevens called cable companies and were dissatisfied with the experience. They found blocking technology complicated and access codes frustrating to use. One cable company contacted wanted to charge a monthly fee to provide blocking technology.
“You have to pay extra to block,” a Stevens aide said.
Last year, the top 10 cable companies promised not to charge consumers that did not already have a V chip-enabled TV or a set-top box.
Stevens and Barton clearly have cable’s attention. Major cable operators and programmers are working on a response that’s expected to go well beyond the recitation of constitutional objections and newfangled ways to promote parental controls.
“This is not being taken lightly by anyone in the industry,” a cable-industry source said, speaking not for attribution. “Everyone realizes this is a serious threat and they need to respond in a … meaningful manner to address the concerns expressed by Sen. Stevens and other members.”
Cable has to play ball with Stevens and Barton because so much more is at stake, including legislation ending the DTV transition and reforming the Telecommunications Act of 1996.
“It’s not really wise for us to come out fighting hard against Stevens when we are going to be [before him] on several issues in the coming days, weeks, months and years,” a cable-industry source said.
In a speech last week, Stevens pressed the cable industry to offer at least one family-friendly tier, to adopt a movie-industry rating system for other tiers and to allow subscribers to pay only for those channels they want.
MET WITH McSLARROW
Stevens met last Monday with National Cable & Telecommunications Association president Kyle McSlarrow to discuss his concerns. He will also meet with cable leaders at the National Show in San Francisco in two weeks to garner reaction to his proposals.
“I’m asking the industry to do what the movie industry did: Find a way to meet the outcry from the public and give us a package that we think we can say, 'That’s great. If that’s followed, we agree,’ ” Stevens told reporters last Wednesday.
He indicated that the National Show meeting could determine whether legislation is necessary.
“We asked them to tell us when they are ready to talk, and that’s why I’m stopping in California,” Stevens said.
The fate of any legislation is in cable’s own hands, Stevens said.
“I told them the other day that I can envision a situation where we say, 'We are not going to legislate any further on decency because this system will work,’ ” he said.
The cable industry, Stevens said, should offer a basic tier that includes local TV stations (already covered by federal indecency rules) and public-access channels. He wants other tiers with cable channels rated for content so parents know exactly what they are getting.
TIME FOR TIERS
“It’s time that cable really introduces a new system, and that is a tiered system,” he said. He added that he didn’t want to restrict carriage of certain cable channels, but he wants “people to know in advance what they are buying.”
Stevens wants cable to go even further. Cable systems, he said, should not impose a full tier charge on subscribers who do not want to pay for certain channels due to inappropriate content for children.
“We also want people who object to all but, say, one or two of those programs within a package not to have to pay for the whole package in order to get the one or two things that children could watch,” Stevens said.
Stevens said he had not crafted a plan that would provide channel rebates for cable subscribers.
Asked for a comment, the NCTA repeated its concern about shielding children from inappropriate content, but the group did not disclose whether it was fashioning a plan consistent with the criteria endorsed by Stevens.
“We look forward to working with members of Congress to explore how we can all strengthen our industry’s commitment to provide parental-control devices and utilize the TV parental guidelines ratings system. We will continue to explore new ways that we can better educate parents about the tools and resources available to help them make responsible viewing decisions for their families,” NCTA spokesman Brian Dietz said in a statement.
Barton last week outlined a proposal that tracked with the ideas expressed by Stevens.
Cable operators, he said, should offer an introductory tier suitable for children and adults. Content suitable for adults only should be sequestered on additional tiers which require an affirmative purchase by adults. This approach would eliminate the need for parents to buy a single tier and block channels inappropriate for children.
“I guess what we trying to say is we think you ought to opt in — you know, go above and beyond to get that material, as opposed to having parents of children having to opt out,” Barton explained. “The average person shouldn’t be the one who, in my opinion, has to go out of their way to prevent certain material from coming into their home.”
Neither Stevens nor Barton has addressed the financial impact on programmers and subscribers. For instance, they have not spoken about the financial hit on networks that would be thrown into a mini-tier that’s not as widely penetrated as basic and thus made less attractive to advertisers.
There is also a possibility that cable rates could go up for millions of subscribers that simply want to maintain the same level of service, in that a three-tier lineup with 20 channels in each package could carry a combined retail price substantially higher than the price of a single 60-channel tier.
In his comments last week, Stevens limited his analysis to the marketing of cable programming.
“Some of these packages are salted with something that you’d want to watch with your child, but it has other things you wouldn’t want to watch with your child,” he said. “In today’s viewing public, I think that is not acceptable.”
Stevens and Barton are powerful but not omnipotent.
Rep. Fred Upton (R-Mich.), chairman of the House Telecommunications and the Internet Subcommittee, shares cable’s concern that government-mandated balkanization of expanded basic with a content-based purpose is unlikely to get past the courts.
“Constitutionally, you’d have great difficulty seeing that happen,” Upton said last week.
Upton fears that attempts to regulate cable indecency could derail his House-passed legislation increasing the fines for broadcast indecency from $32,500 to $500,000 per offense.
“We are trying to keep this pure and simple, and we’ll see what happens,” he said.
Small cable operators want the burden of any cable-indecency legislation to fall on programmers. Matt Polka, president of the small MSO American Cable Association, said the source of the problem lies with programmers that insist on expanded-basic carriage for their networks regardless of content.
“The scrutiny needs to be where it belongs, and that’s on the people who own the content and not on the cable operators, who are actually trying to address this problem [by having] more choice and flexibility,” Polka said.
Regarding Stevens’ rated-tiers proposal, Polka said, “It’s basically what we said: Take the bad actors out of expanded basic.”
The Walt Disney Co., rarely on the same side as small cable, isn’t discouraging pay TV-indecency regulation, either.
“We don’t favor regulation of any of our businesses, but the historical basis for distinguishing between broadcast and expanded basic cable/satellite no longer exists — broadcasting is no longer uniquely ubiquitous, and there is no real difference in blocking opportunity as between broadcast channels and cable/satellite channels,” said Preston Padden, Disney’s executive vice president of worldwide government relations.
Adam D. Thierer, senior fellow at the Progress & Freedom Foundation and director of the D.C. think tank’s Center for Digital Media Freedom, said Congress would likely attempt to impose content regulation on cable by claiming that tiering, ratings and channel rebates are a form of economic regulation that courts have found less problematic.
“I think the courts are smart enough to see beyond what Congress is trying to do here, get behind it and probably strike it down as unconstitutional regulation of speech on subscription-based media,” Thierer said.
A few weeks ago, Stevens indicated that he wanted to apply broadcast-indecency rules to cable, which would ban airing racy content between 6 a.m.-10 p.m. and would subject cable systems that violated the rules to Federal Communications Commission fines.
Stevens said he had been misunderstood.
“I never said that they should have the same rules apply to them that apply to over-the-air broadcasters,” he said. “I said there ought to be a level playing field, and that when people watch that [TV] set, they ought to be able to understand which channels they are not going to see that stuff on and be able to set it so that they can prevent their children from seeing, or to just not buy it at all.”
Stevens also indicated support for legislation (S. 616) introduced last Tuesday by Sens. Kay Bailey Hutchison (R-Texas) and Jay Rockefeller (D-W. Va.), which would regulate cable content for indecency and violence if the FCC found that ratings systems and blocking technology were ineffective.
“It’s rather detailed — not far off of what we are talking about,” he added. “I believe that violence is part of it.”
Linda Moss contributed to this report.