Washington — An incumbent cable operator that offers channels a la carte could escape local franchising and trim franchise-fee payments to local governments under a bill circulated last Thursday by Sen. John McCain (R-Ariz.).
McCain has pressured cable operators for years to break up their programming packages into smaller selections. He is planning to introduce his long-awaited, incentives-based approach to the a la carte issue soon. Multichannel News obtained a copy of a draft version of the bill, which is not expected to change materially upon introduction.
One twist: a broadcaster that refused to permit the a la carte sale of an affiliated cable network would lose nonduplication rights under Federal Communications Commission rules. In a real-world example, a cable company could import an ABC affiliate if The Walt Disney Co. refused to allow the cable system to offer ESPN a la carte in a market where Disney owns the ABC station. Disney owns the ABC Television Network, 10 ABC stations and the ESPN sports channel.
“The National Association of Broadcasters does not believe any changes to the FCC's network-nonduplication rules are warranted,” NAB spokesman Dennis Wharton said.
The National Cable & Telecommunications Association, which has opposed anything but voluntary a la carte, attacked the McCain bill. “It is completely unnecessary for the federal government to disrupt a competitive marketplace and engage in the pricing and packaging of video services,” an NCTA statement said.
The legislation would apply to any video provider — including a phone company — using public rights of way.
Phone companies would likely have immediate access to a national cable franchise. A phone company that did not own cable channels could avoid local franchising simply by promising the FCC to provide digital video subscribers a la carte access to any channel whose owner permits retail a la carte, under the bill. A new entrant may not be required to build out its video network in any particular manner.
“Sen. McCain's initiative adds to the momentum for passing video-choice legislation this year,” Verizon senior vice president for federal government relations Peter Davidson said last week.
Last Thursday, FCC chairman Kevin Martin co-wrote with McCain a column in The Los Angeles Times endorsing the bill as means of exposing cable incumbents to more wireline competition and providing consumers with greater programming options. “The solution to high cable bills isn't price controls or additional government regulation. It is more competition and more choice,” the two wrote.