WASHINGTON, D.C. – Proponents of government regulation that would require cable operators to offer customers the ability to purchase networks on a pay per channel or a la carte basis have failed to show that such a system is a viable business model, will reduce monthly prices for the majority of consumers or will increase diversity and provide more opportunities for independent and minority-owned businesses, the National Cable & Telecommunications Association (NCTA) said today in comments filed with the Federal Communications Commission (FCC).
In fact, NCTA said, the vast majority of parties that have submitted comments as part of the FCC's inquiry into a la carte and themed tier programming models oppose a la carte because it would increase prices for most customers plus negatively impact programming diversity and drive many new and emerging networks out of business. The FCC record shows that hundreds of organizations and individuals representing many social and economic perspectives have raised concerns about negative consequences of a la carte for the diversity of voices in the media.
"A multitude of cable operators and program networks, as well as the largest direct broadcast satellite (DBS) provider, recognized that à la carte would drive up the per-subscriber cost of programming, while imposing costs of additional equipment, additional bandwidth, and customer care on operators – all of which would result in higher prices, reduced program quality and less diversity of programming for their customers," NCTA said.
"In addition, an overwhelming number of commenting parties who have no business interest in the production and distribution of video programming but who have an interest in the quality and diversity of available programming recognized the serious threat that à la carte would pose to that interest," NCTA said.
NCTA says the evidence about harmful effects of a la carte is significant, including an economic study by the global consulting firm Booz Allen Hamilton which concluded that, if voluntary a la carte was available, even customers who choose to purchase a current tier of service would see their cable bill rise by 7 percent to 15 percent because of the related costs of implementing a government-mandated system. Booz Allen also said that half to three-quarters of all emerging networks would be likely to fail and niche, independent networks would be least likely to survive if a la carte was available.
NCTA said the proponents of a la carte – substantially smaller in number than the opponents – presented no evidence, business plan or economic model to demonstrate how cable networks would operate and consumers would benefit from a la carte. Further, a governmental restriction that would prevent networks from negotiating for carriage on basic or expanded basic tiers is anything but a "voluntary" approach that some have suggested, NCTA said.
"None of these parties provides a business model or economic analysis that explains how requiring the provision of services on an à la carte basis would enable consumers to pay less to watch the programming they want," NCTA said. "None provides a model or analysis that explains how à la carte would somehow result in more diverse programming or greater opportunities for independent and minority-owned businesses."