FCC Chairman Vague On Capping A La Carte Prices

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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.”

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