Solons, cablers joust over a la carte rates
WASHINGTON — Cablers appear to have dodged the regulatory bullet for now.
Cox Communications prexy James Robbins and ESPN chieftain George Bodenheimer sparred with Sen. John McCain (R-Ariz.) at a Capitol Hill hearing on rising cable rates Thursday.
Despite McCain’s strong support for offering customers the ability to choose individual channels instead of buying a pre-set cable package, there is little political will for imposing an a la carte solution this year.
That didn’t stop senators and industry execs from engaging in a lively debate over ways to control cable rates, which have risen 56% — or nearly three times the rate of inflation — since 1996.
“Why should parents have to subscribe to a cable channel that undermines their core beliefs?” asked McCain, who chairs the Senate Commerce panel.
Instead of calling for legislation to regulate rates, McCain said he is interested in pursuing a pilot program involving a la carte or tiered pricing.
Robbins blamed escalating programming costs for the increased cable rates and flatly rejected any move toward a la carte offerings. He argued that such a process would drive up costs for cable customers by reducing the number of viewers advertisers can reach.
“We need to fix our own problems and we don’t need your help to do so,” he said in a defiant moment during the hearing.
No love for cable guys
Although senators on the committee were divided on the a la carte solution, most were critical of the cable industry and thought some kind of compromise solution could be reached.
Sen. Ron Wyden (D-Ore.) called for more consumer options than just the basic package with some 25 channels and an expanded version carrying about 60 channels, such as a family-friendly grouping.
“Consumers don’t get to decide if the price is too high (per channel) because it’s bundled into the package,” Wyden said. “You’ve locked these people out of what’s just Economics 101.”
Wyden was referring to the high costs of sports programming, such as ESPN. During heated testimony, Wyden demanded to know whether Bodenheimer worried about consumer costs and controlling the price of ESPN programming.
“I couldn’t be more competitive,” Bodenheimer responded. “I’m in a dogfight for ads every day.”
Wyden brushed aside the claims.
“I don’t think you have to worry about it at all,” he retorted. “You cook your deal because you know consumers like sports.”
Some lawmakers and execs agreed that eventually, the digital revolution will radically transform the cable industry, allowing companies to offer tailored TV packages to consumers.
Sen. Ted Stevens (R-Alaska) agreed but warned that that future cannot be too far away. “Those smart-driven solutions better come fast or Congress will have to act,” he said.
Robbins predicted a transformation “over time” but said there are major financial hurdles the industry must overcome. “There’s like a $30 billion- $40 billion bridge to make that technology available to every television set in America,” he said.