Congress eyes rising cable TV prices

Consumer complaints about the rising price of cable television have caught the attention of Congress.

Sen. John McCain (R-Ariz.) recently introduced legislation that would pressure cable and satellite TV providers to allow their customers to pick and choose the channels they pay for.

Cable companies usually require customers to purchase a tier or bundle of channels. McCain says his legislation would bring down monthly cable bills by allowing consumers to opt out of the dozens or even hundreds of channels that they don't watch.

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In a speech on the Senate floor, McCain cited government research that found that the average price of "expanded basic" cable service has increased from $25 per month in 1995 to more than $54 today.

“This is unfair and wrong — especially when you consider how the regulatory deck is stacked in favor of industry and against the American consumer," McCain said.

The Senate Commerce Committee will discuss McCain's legislation at a hearing on Tuesday on the state of the video marketplace. McCain no longer serves on the panel, which has jurisdiction over technology and media issues, but he will testify to push for his bill.

Sen. Jay Rockefeller (D-W.Va.), the committee's chairman, has long expressed an interest in driving down cable prices.

"Although consumers often have the choice of video providers, rates continue to go up faster than the rate of inflation year in, year out.  They are tired of it.  I am tired of it," Rockefeller said at a hearing last year. "And rather than being able to pick smaller packages or choose the channels they want, consumers are still forced to purchase larger and larger packages of channels no matter how few they actually watch. This says to me that the market isn’t working."

Rockefeller's office did not comment on McCain's bill, the Television Consumer Freedom Act.

McCain pushed similar legislation to encourage an "a la carte" cable TV system in 2006, but the bill found little traction at the time.

The new legislation will likely face furious opposition from both the TV broadcasters and cable providers. One television industry official who asked not to be named predicted that McCain's bill has "no chance" of becoming law.

John Bergmayer, a senior staff attorney for consumer advocacy group Public Knowledge, said a member of the Senate Commerce Committee will likely need to champion the legislation before it can begin to move in Congress. He said the issue could gain momentum despite the political pull of the cable and broadcasting industries.

"Although these guys are very politically powerful, voters matter, and voters are outraged at their high cable bill," Bergmayer said. "Periodically, the tide turns against the incumbents."

Even if McCain's bill stalls, it could "spark a conversation" that leads to similar legislation, he said.

McCain's Television Consumer Freedom Act would void a copyright benefit for cable providers that insist on bundling their channels. The step would create legal headaches for cable companies when they try to offer local broadcast stations.

The legislation would also condition certain regulatory benefits for media companies on them allowing cable providers to sell their programming on an a la carte basis.

McCain argues that his bill only leverages special government benefits that TV companies currently receive and does not mandate a specific business model.

"The government has already entered the marketplace, and conferred certain rights and privileges like the compulsory license, network nonduplication, syndicated exclusivity and retransmission consent, which stack the deck in the favor of everyone but the American consumer," he said.

The National Cable and Telecommunications Association (NCTA) said in a statement that an a la carte system for picking channels would be a "lose-lose proposition."

"As countless studies have demonstrated, subscription bundles offer a wider array of viewing options, increased programming diversity and better value than per channel options," the cable lobbying group said.

Brian Dietz, an NCTA spokesman, said in an interview that cable offers an "unmatched" value for entertainment.

"If you look at the price of one month of cable versus going to the movies or to a sporting event or to a concert, there is virtually no better entertainment option than to subscribe to a month of cable," he said.

He said that cable costs an average of about 23 cents per hour of viewing — a figure that has been going down as customers watch more television per month.

Bergmayer, who is scheduled to testify at the Senate hearing, said cable bundles can be beneficial for many viewers and said they should remain an option. He predicted that only consumers who watch a minimal amount of TV would choose to pay for channels individually.

He argued that a better way to reduce TV prices would be to support competition from online video services. He urged policymakers to crackdown on monthly data caps, which he said limit online video consumption, and to make it easier for online services to buy access to copyrighted works.

"But I'm glad to see someone like Sen. McCain going out there with these measures definitely designed to protect consumers," Bergmayer said.

The other witnesses at Tuesday's hearing will be Michael Powell, a former FCC chairman and the current head of NCTA; former Sen. Gordon Smith (R-Ore.), the CEO of the National Association of Broadcasters; and Dish Network General Counsel R. Stanton Dodge.