Ore. Sen. Attacks Bundling Policy

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Washington -- Sen. Ron Wyden (D-Ore.) last week criticized
the cable industry's practice of bundling dozens of networks into a single package,
arguing that consumers are forced to buy networks that they don't want to watch.

"Are citizens, in effect, paying for 50 channels when
they really only want to watch 10 and, in effect, subsidizing a whole lot of channels that
they don't want to actually see?" Wyden asked.

Wyden spoke out June 4, during a Senate Communications
Subcommittee oversight hearing of the Federal Communications Commission's Cable
Services Bureau.

Wyden said greater programming choice was especially
important to seniors and others on fixed incomes who only want to watch 10 channels.

"I have to think that we can figure out a way to make
sure that they don't pay for 50 more," Wyden said.

Rep. Billy Tauzin (R-La.), chairman of the House
Telecommunications Subcommittee, has voiced similar concerns. He is planning to introduce
a bill this month that would withhold deregulation of cable systems on March 31, 1999,
unless the cable operator offered greater programming choice to consumers.

Cable-industry leaders have said that government-mandated
unbundling of programming tiers would undermine the economics of cable networks, which
rely on subscriber penetration to maximize license-fee and advertising revenue.

John Logan, the CSB's acting chief, who testified
before the Senate panel, told Wyden that he was unaware of consumer dissatisfaction with
the cable industry's marketing practices.

"We are not finding evidence -- hard, quantitative
evidence -- that consumers are rejecting their packages," Logan said.

Logan noted that large multichannel tiers are not always
the choice of cable operators, adding that programmers insist on contracts that include
carriage on the most highly penetrated tiers.

Wyden asked about expanding a la carte options as a way of
increasing consumer satisfaction.

Logan replied that he did not believe that current
technology would allow for widespread a la carte, and that the costs of upgrading systems
to be a la carte-capable would likely be prohibitive.

Logan said a la carte opponents in the cable industry have
told him, "It would be more expensive for the consumer to get individual choice than
it is for us to make the choice for the consumer, based on our market studies."

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