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New FCC report advocates a la carte TV pricing

A la carte TV could be on way for cable, satellite subscribers, as FCC changes mind about economic feasibility of new business model.

Viewers of cable and satellite TV may soon have the option of subscribing to only the channels they want to watch, if the Federal Communications Commission gets its way.

On Tuesday FCC chairman Kevin Martin spoke to a forum, sponsored by the U.S. Senate Commerce Committee in Washington, which has been examining indecency on radio and television. Martin told the forum that the FCC will soon release a report that concludes that offering TV programming a la carte is economically feasible and in the best interest of consumers.

Today, instead of subscribing to the channels they want to watch, cable and satellite TV consumers must buy packages that include a standard set of channels.

The new report, not yet released, contradicts an FCC report published in November 2004, under then Chairman Michael Powell. The earlier report concluded that a la carte and tiered pricing models, such as a family tier, would result in higher cable prices.

"I had many concerns with this (earlier) report, including the logic and some of the assumptions used," Martin said during his testimony to the Senate forum. "I asked the media bureau, as well as our chief economist, to take a more thorough look at the issue. The staff is now finalizing a report that concludes that the earlier report relied on problematic assumptions and presented incorrect and incomplete analysis."

Several parent and consumer advocacy groups, including the Parents Television Council and the Consumers Union, have urged Congress to consider legislation that would require a la carte options for television. These groups believe that allowing consumers to subscribe to individual channels instead of purchasing entire packages would lower costs and provide parents with more control over what programs their children watch.

But cable TV companies have argued that pricing individual channels would result in fewer choices for all consumers. They believe that a la carte pricing would make it too expensive to offer less-popular channels that presently are bundled with popular channels.

Martin said he doesn't plan to push the industry to adopt a new business model, but he suggested that more restrictions on basic cable programming be added if the industry doesn't offer consumers more choice.

"I share your concern about the increase in coarse programming on television and radio today," he told the forum. "I also share your belief that the best solution would be for the industry to voluntarily take action to address the issue. But I do believe that something needs to be done."