The Federal Communications Commission recently confirmed what many consumers regard as obvious: Cable-TV prices have been climbing relentlessly, much faster than the rate of inflation - an average of 6.1 percent a year between 1995 and 2010. Cable companies like to talk about the "per channel" price as a better benchmark, but last I checked they hadn't managed to increase the number of viewing hours available in anyone's day.
Sen. John McCain (R., Ariz.) has a plan to fix the problem by forcing cable companies to offer a-la-carte pricing. He testified this morning about the proposal, which he calls the Television Consumer Freedom Act of 2013, before the Senate Commerce Committee. (Use promo code W72C to access Bob Fernandez's story at Inquirer.com about McCain's appearance.) His bill would also bar blackouts of local sports events held in publicly financed facilities, and seek to ensure the future of over-the-air television.
McCain says his plan to force a-la-carte pricing is "entirely voluntary," and free of mandates and regulations. In that respect, he's being at least a bit disingenuous and playing to his conservative base. Instead, the plan builds on some basic quirks in the way we already regulate broadcast and pay television - in particular, the so-called "compulsory license" that guarantees a cable company's access to local broadcast channels - and aims to use them to the advantage of cable-TV customers.
The basic leverage: If a cable provider wants to take advantage of the compulsory license, it has to offer that channel - and any other channel offered by the same content provider - on an a-la-carte basis.
Here's how McCain described the issue, and his plan, in a Senate speech last week:
McCain's aim is to deflate a pricing bubble that has been driven by a mix of dominant companies that own near-monopoly cable systems or hugely popular sports or entertainment content - or both, in the case of Philadelphia's Comcast Corp., which two years ago took control of NBC Universal. His proposal won a quick endorsement today from Consumers Union, which has long urged an a-la-carte option for cable customers.
As analyst Jeff Kagan puts it, cable customers pay for hundreds of channels but typically watch about five to 15 of them. With so little competition, the market hasn't evolved to give consumers more choice. If the cable companies don't do it voluntarily, perhaps the government finally will.