Expand Choices for Customers
FOR IMMEDIATE RELEASE Wednesday, August 18, 2004
Contact: Mark Cooper, Consumer Federation of America, 301-384-2204
Susan Herold, Consumers Union, 202-462-6262
(Washington, D.C.) – Giving consumers the choice to buy cable TV channels individually or in a package is not the doomsday scenario the cable industry paints, but rather will encourage more consumers to try cable due to the expanded choice and more diverse programming cable a la carte is expected to generate, consumer groups say.
“The industry has painted a doomsday scenario for a la carte in hopes of scaring consumers into believing that the current situation – lack of choice and high prices – is the best deal they can get,” said Mark Cooper, research director for Consumer Federation of America. CFA joined Consumers Union in filing reply comments with the Federal Communications Commission on the benefits of competition that would result from increased cable choice. The FCC is expected to report to Congress on cable a la carte Nov. 18.
“In reality, the cable industry is vastly overstating the costs of a la carte and completely ignoring the benefits of an environment where consumers are allowed to purchase either bundles of networks or individual networks,” Cooper added.
The groups’ proposal would give cable operators the ability to offer their subscribers networks individually on an a la cart basis. The groups’ comments predict that a relatively small percentage of existing cable customers would choose the a la carte option at an expected cost of $1 to $3 per channel after the basic tier. The cable industry has incorrectly predicted a massive shift of subscribers from channel packages to a la carte, claiming that shift will harm its economic model and cause it to dramatically increase prices.
By giving consumers the choice to buy channels individually in addition to packages, the groups say the industry will have to more competitively price its channel packages, which have increased 58 percent in eight years — almost three times faster than inflation, according to the federal Bureau of Labor Statistics.
“Under our proposal, consumers would be able to use their purchasing power to encourage the cable industry to fairly price channel packages and offer more options,” said Gene Kimmelman, Consumers Union senior director of public policy and advocacy. “A voluntary a la carte system also would lead to greater diversity, as truly independent programmers would have the chance to break in and get their programming before customers who never had access to them in the packages.”
To read the group’s comments on the benefits of competition of cable a la carte click here.