Martin: Expanded Basic a Tying Arrangement

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Federal Communications Commission chairman Kevin Martin said Thursday that cable’s expanded-basic tier is a “tying” arrangement because consumers are denied refunds for channels they either block or refuse to watch.

Martin, who supports the a la carte sale of cable channels, told Wall Street analysts cable's most popular programming tier is not an example of bundling in an economic sense because none of the channels is available for sale outside of the tier.

Instead, he added, expanded basic is an example of commercial tying.

“Tying is taking things that are sold separately and stopping selling them separately and only selling them together in a bundle,” Martin said. “Tying is what’s occurring in the cable industry, and that’s different from just bundling.”

Martin -- who spoke on a conference call co-hosted by Aryeh B. Bourkoff, cable, satellite and entertainment analyst at UBS Investment Research -- stressed that consumers needed relief from rising cable rates, noting that many consumers are paying more to receive channels they don’t want to watch.

“Cable prices for the expanded-basic tier are up almost 100% -- it's about 90% -- since the 1996 [Telecommunications] Act was passed,” Martin said. “If [subscribers] don’t want to have X channel -- MTV -- come into their home and have to have it blocked, why should they have to continue to pay the 50 cents per month ... for a channel they’ve asked to be removed?”

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