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The Honolulu Advertiser
Posted on: Sunday, February 26, 2006

Cable industry fighting a la carte TV

By SETH SUTEL
Associated Press

NEW YORK It's a question that many cable TV subscribers ask: My cable company keeps adding more channels to my system, but I don't watch many of them. Why can't I just pick the ones I want?

Rupert Murdoch, a titan of TV, has a simple answer: "I think it kills the whole business model."

Murdoch echoed the views of many in the cable business when he told reporters recently that "a la carte" pricing wouldn't work for the industry and would lead to higher cable bills for consumers. Murdoch's News Corp. owns Fox News Channel, FX and other cable channels and controls the satellite TV broadcaster DirecTV Group Inc.

The industry's argument goes like this: If consumers are free to drop less-viewed channels, many of them would go out of business, and others would have to sharply raise their per-customer rates to stay afloat. "Bundling" them together helps spread costs around and supports a variety of programming.

However, pressure is building on the industry to change.

In early February, the Federal Communications Commission released a report challenging the industry's long-held position that a la carte would be undesirable for consumers.

A wave of technology breakthroughs, including digital video recorders, video iPods, video "on demand" from cable and satellite providers and the increasing availability of video over the Internet, have gotten people accustomed to picking and choosing what they watch, when and even where they watch it.

Those changes are "making the point that a la carte is not only possible but desirable," said Gene Kimmelman, senior director of public policy at Consumers Union and a supporter of a la carte pricing.

Those concerned about sexual and violent programming on television also favor a la carte TV pricing, calling it a good way to give parents greater control.

Consumers, not surprisingly, would love the chance to pick and choose their channels.

A recent AP-Ipsos poll taken in mid-December found that 78 percent of American adults prefer the a la carte option. Two-thirds of those surveyed said there was too much sex on television, and about the same number said there was too much violence.

FCC Chairman Kevin Martin, a Republican party loyalist and a longtime advocate of curbing sexual and violent programming, put the cable industry on notice last fall about raunchy programming, saying that one option to address parental concerns was to sell cable channels a la carte. Soon thereafter, several big cable companies said they would offer new "tiers" of family-friendly programming.

Many analysts believe the FCC likely won't force the industry to adopt a complete a la carte pricing model, but the agency's reversal of its previous opposition to the idea could embolden others to challenge the status quo.

All this comes just as cable companies are seeing an emerging threat from the likes of AT&T Inc. and Verizon Communications Inc., which are beginning to offer cable-like video services, carried mainly over ultra-high-speed fiber-optic cables.