The battle for à la carte cable is resumed

One of the more interesting media developments in recent weeks is the resumption of the debate over cable pricing. FCC chair Kevin J. Martin has come out in favor of "a la carte" pricing on cable systems. In other words, cable subscribers would be allowed to pick and choose which individual channels they would like to pay for (beyond a basic tier of broadcast and cable networks). This is a sharp reversal of the FCC's previous position, which was to support the cable industry's desire to retain the current system of bundling channels into ever larger cable packages (this is of course very profitable for the cable operators). The motive for this new initiative is, as ever with the federal government these days, a desire to protect children from indecency and violence on television. (It seems that, in terms of regulation in the "public interest," the cry of "indecency" is the only call to action that federal regulators pay attention to anymore.) Martin now thinks it would in fact be a good thing to let viewers block--and not have to pay for--"edgier" basic cable offerings such as Comedy Central and MTV. Martin now seems to have concluded that the best way to protect the children is to allow subscribers to pick and choose their own channels. Cable operators argue that if this was mandated by the government, consumers would end up paying more for fewer channels.

The FCC has no power to mandate a switch to a la carte pricing--that power is left to Congress. But Martin is certainly in an influential position to get the debate moving. As for the cable industry, it has little public support for its current strategy, that could be construed as price-gouging unhappy cable consumers. (And big cable Multiple System Operators such as Time Warner and Comcast are now scrambling to head off any possible regulatory moves.) But for years the cable industry has blithely added more and more channels to their cable lineups. Most viewers only watch a fraction of these channels--typically 17 channels out of an averagge of 88 available to subscribers, according to a 2004 FCC report (cited in USA Today on Nov 30). Yet since cable was deregulated in the mid-1990s, cable subscription rates have increased at well in excess of the rate of inflation. Many subscribers wonder why they're paying so much for scores of channels they never watch.

And now AT&T is backing the move to a la carte pricing. AT&T was for a while one of the biggest MSOs (Multiple System Operators); it got out of the business in 2001 when its cable operations were bought up by rival Comcast; but the company is now looking to get back into the game through promoting its own a la carte programming services.

(For a fuller insight into both sides of the argument, USA Today runs a pro- and con debate over a la carte pricing in its Dec 1 edition -- see here for the pro-pick and choose position and here for the leave-things-as-they-are argument.)

Lastly, it's interesting to see how this debate mixes up the ideological debate over free choice, consumer rights, regulation/deregulation, and the public interest. Those on both the left and the right seem to be divided over whether a la carte - and government moves to mandate and regulate a move to a la carte - would be a good thing. The more interesting debate, if only because it involves the people who are actually in charge of everything these days, is within the right - between, on the one hand, social-cultural conservatives operating from an indeceny-morality frame, and on the other, economic conservatives who favor leaving the market alone. The latter position is summed up by the Wall Street Journal's Holman Jenkins (thanks to a faculty colleague for pointing me to this), who notes in a WSJ commentary piece (taken from the Benton Foundation Comm Policy listserv - original requires subscription):

What about this "à la carte" debate? Supporters prattle about consumer rights, but consumers don't have a right to anything except that which somebody is willing to sell to them (without force or fraud). And everything we buy is really a package deal. Buy a garden hose at Wal-Mart and you're purchasing both a manufactured good and a service (Wal-Mart's logistics chain). Don't listen to any ninny who tells you that, because you're entitled to buy ketchup without buying mayonnaise, you should be entitled to buy ESPN without buying CNN. You can buy ketchup without mayonnaise because somebody is willing to sell it to you. In turn, you've demonstrated a willingness to make it worth his while. Today's basic cable package represents a complex set of bargains involving not just cable providers and subscribers, but two other parties: advertisers (who help pay your cable bill) and programming suppliers (who use the bargaining clout of their popular networks to get their niche networks on the air too). It's a solution that works: Everybody pays the same basic rate for channels they mostly don't watch, which is no different from saying they pay the same basic rate for the few channels they do watch -- but a lot more tastes are satisfied.

As I say, this is an interesting wrinkle on the traditional left-right bun fight over free choice, consumer rights, etc. The "solution that works" referred to above sounds surprisingly communitarian to me (at least insofar as it dovetails with commercial interests). In any contest between what individual consumers want and what big business wants, it's clear where Jenkins' loyalties lie. But one thing that Jenkins says is likely to find more general agreement: "Technology is likely to render the whole issue moot. The concept of a 'channel' is an eroding one. Internet TV will be more akin to a library, in which you order up for instant viewing the fare you care to receive."

Philly gets closer to wireless

Just before Thanksgiving, PBS's News Hour with Jim Lehrer included a segment (by media correspondent Terence Smith) on Philadelphia's ambitious (for the U.S.) plans to connect up the entire city for wi-fi, or wireless internet access. Since I was staying with my wife's family in the Philly suburbs over Turkey Day--and I sort of consider Philadelphia to be my "home" city in the U.S.--I'm particularly interested in seeing how this pans out.

"Wireless Philadelphia" is the name of a project to build a wi-fi (wireless) system for the entire city "within a year". The system follows a universal access model, based on 3,000 small antennae distributed throughout 135 square miles of the city. When complete, you'll be able to get stable wireless access anywhere in the city, indoors or out. The project, which is being pushed hard by Mayor John Street, would make Philly the first "city of its size in the nation to have wireless broadband access available to everyone, regardless of income, at below- market prices." Mayor Street sees wi-fi as an essential utility that needs to be available at affordable rates--like water or electricity. The PBS piece notes that the plan is to offer the service to all of Philadelphia's 560,000 homes and 1.5 million inhabitants, at rates between $10 and $20 per month. The goal is to erase the so-called "digital divide," which separates poor Philadelphians from their richer and middle-class counterparts, the majority of whom now have wireless internet access at home. The city took a major step forward back in early October when it tapped Earthlink to complete the network. Wireless Philadelphia is thus a public-private partnership.

Of course, other private internet providers such as Comcast and Verizon are not happy about this. These companies (and Time Warner Cable, which provides my home wi fi access in Rochester) prefer to hook people up home by home rather than provide a broad-based, public system. These companies also prefer to charge $40-50 per month rather than $10-20 per month.

A battle is shaping up between these ISPs, who see a huge revenue generator being removed from them, and cities, who see cheap and universal wireless internet access to all citizens as an essential precondition for economic growth. A recent Washington Post piece quoted Ben Scott, a policy director of Free Press, "a nonprofit group that favors the development of municipal wireless," as follows:

Increasingly, city officials view broadband in the 21st century the same way they viewed electricity 100 years ago and telephone service 50 years ago. It's falling into the category of a necessary and essential social service. . . . Cities see this as a way to spur economic growth: on the one hand to put tools in the hands of the underprivileged and give them a leg up, and on the other to provide incentives to small businesses to locate in these cities and to expand their operations.

Meanwhile, other countries, especially in Asia, push ahead with much more ambitious national wireless access plans. The U.S. strategy of leaving braodband access in the sole hands of private commercial interests has already seriously impeded growth in this sector. The result, according to a recent study reported in Slate.com ("The Fight Over Wireless"), is that "the United States has dropped to 16th in the percentage of citizens with access to broadband, trailing South Korea, Canada, Israel, and Japan, among others. There is consensus across the political spectrum that we need to go wireless—and fast." The trouble is, the federal government isn't doing much to push universal access. Most of the government impetus is coming from cities and states.

"Wireless Philadelphia" is a good start. But it's only a start. Let's hope it and programs like it don't get stymied by big cable companies and their friends in state legislatures and in Congress.