Rising Cable Rates Draw Senate’s Ire

Mar 29, 2004  •  Post A Comment

A new cable TV industry vow to provide many subscribers with technology to block offensive programming doesn’t go far enough because it still requires consumers to subsidize fare they don’t want.
At least that was the reaction last week from Sen. John McCain, R-Ariz.
“They shouldn’t be required to block it out and then pay for it,” Sen. McCain said during Senate hearings.
Under the initiative at issue, the National Cable & Telecommunications Association announced that cable companies serving 85 percent of the nation’s cable subscribers have agreed to provide free channel-blocking technology to all customers who request it.
“No one wants policymakers to have to choose between protecting children or preserving the First Amendment,” said NCTA President and CEO Robert Sachs.
But during the hearings, Sen. McCain made clear that his preferred cure would be an a la carte system that would allow cable’s subscribers to pick and pay for only the programming they want.
“There is something terribly and fundamentally wrong with requiring consumers to pay for a product they don’t want, and may even find offensive, in order to get something they do want,” said the watchdog Parents Television Council, in a statement.
But the concept of a la carte drew jeers from industry witnesses at the hearing.
“It would be a consumer disaster for Congress to force ESPN and other channels out of the expanded basic lineup,” said George Bodenheimer, president of ESPN and ABC Sports.
Jim Robbins, president and CEO of Cox Communications, who recently threatened to shift ESPN to a la carte on his company’s systems, said Cox now agrees that an a la carte scheme would drive up costs for cable customers. “This technical and economic model does not work and is not in consumers’ best interest as it results in higher prices and fewer program choices,” Mr. Robbins said.
Under the gun from Sen. McCain, Mr. Robbins said that his Senate testimony suggesting the contrary last year had been intended to get the “attention” of The Walt Disney Co., ESPN’s owner, in a dispute over ESPN rates on Cox systems. That dispute has been settled.
Technology Bridge to Cross
At last week’s hearing, Mr. Robbins said he believes the marketplace is pushing cable toward a video-on-demand model that will clear the way for consumers to pick and choose the programming they want.
“But there’s something like a $30 [billion] or $40 billion bridge to get over to make that technology available to every television set in America,” Mr. Robbins said. “I honestly think the marketplace is driving us in that direction.”
Still, Sen. McCain made clear that he is interested in promoting a la carte. He told reporters that one approach he is considering would be to establish a “pilot program” to test the concept on cable systems that have switched to digital.
“When it comes to purchasing cable channels beyond the basic tier today, consumers have all the choice of a Soviet election ballot: one option-take it or leave it,” Sen. McCain said.
Also at the hearing, lawmakers warned that the cable TV industry will have to move quickly to put a lid on skyrocketing rates-or lawmakers will do it.
Like several other lawmakers on the panel, Sen. Lott said he does not want to intervene and would prefer that the industry crack down on rates on its own. But according the lawmakers, rates have risen 56 percent since 1996, nearly three times the rate of inflation, angering their constituents.
“You’re knocking at that door,” Sen. Lott said. “This is fair warning. If you don’t do something about it, we will.”