Would You Like Some ESPN With That?

Katherine Mangu-Ward | May 22, 2007

The FCC is pushing for mandatory a la carte cable programming, forcing cable companies to let customers assemble their own cable packages. Which sounds pretty cool on its face--just the Food Network, HBO, and cable news for me, thanks. But Randolph May (who is also the head of the Free State Project) objects at CNET.com:

An a la carte regime almost certainly would involve the government setting the prices for the unbundled channels. Otherwise cable operators could set the price for individual channels in a way that, in effect, establishes incentives not much different than those that exist in a current regime that allows blocking, but without any billing credit. This is why Martin has suggested an a la carte regime "could simply require the cable operator to reimburse consumers for the channels they request to have blocked." One way or another, the government surely will get involved in setting the reimbursement rate.

FCC chairman Kevin Martin says the new rules are necessary to protect kids from violent programming, he wants "to give parents more direct control over the television content that comes into their homes," never mind that parents can already block any channel they want. Martin answered First Amendment objections with a backwards rationale:

"While the Constitution protects the right to speak, it certainly doesn't protect a right to get paid for that speech." But this formulation misses the mark. One of the landmark free speech cases of the 20th century, New York Times v. Sullivan, involved a paid ad in the Times. What the Constitution protects against are government restrictions, in the face of less restrictive alternatives, that affect the amount of speech a speaker wishes to convey, or the format in which the speaker chooses to convey the speech to those willing to pay to obtain it.

VM|5.22.07 @ 12:42PM|#

"FCC chairman Kevin Martin says the new rules are necessary to protect kids from violent programming,"

well thank fucking zog for that. At least the chidren (sic, TM, patent pending) will be safe.

Russ 2000|5.22.07 @ 12:45PM|#

The only ala carte I want is cable broadband access without having to pay for the stupid tv channels. Any tv programming I want to see (with the possible exception of live sports) I can get over the internet so why would I want to pay for ANY channels?

|5.22.07 @ 12:45PM|#

When you accept a government-granted monopoly, you have to accept that the government gets some say in your operations.

Markets discipline suppliers to provide what the public wants, through competition. When there is not competition, and the government makes sure there will be no competition, this mechanism goes out the window.

thoreau|5.22.07 @ 12:48PM|#

God forbid that parents control what their kids watch.

|5.22.07 @ 12:50PM|#

Russ - where do you live that you can't just get cable broadband without TV?

Also, what joe said: if there were seven different cable companies offerring service to my house, I am positive that a la carte programming would emerge spontaneously. But, because the government has granted Comcast a monopoly, I have no choice but to purchase one of their packages.

thoreau|5.22.07 @ 12:54PM|#

What would be so hard about letting multiple companies compete?

|5.22.07 @ 12:54PM|#

Okapi,

To be more precise, you have no choice but to purchase one of their packages if you want to have cable television.

This isn't a point about freedom, but about a different subject that is near and dear to libertarians' hearts - how the provision of goods and services in a market-based economy promotes happiness and well being by tailoring product to consumers' demands.

|5.22.07 @ 12:58PM|#

The cable companies are spending tons of money lobbying politicians to ban competition. They already have way too much latitude given this "privilege". When state governments start allowing phone companies, power companies, and competing cable companies to provide service, I'll start supporting deregulation of cable. Until then, cable is just another public utility that seeks a monopoly while begging for deregulation of the prices they charge to consumers.

Now if they come after the dish companies by trying to enforce a la carte programming, I'm totally against it. There's competition there. Plus you need a box to watch their programming, which means that any objectionable programming can easily be blocked.

Christopher Monnier|5.22.07 @ 12:58PM|#

Randolph May is the president of the Free State Foundation, a Maryland-based think tank:

http://www.freestatefoundation.org/aboutus.html

I don't think they're associated with the Free State Project:

http://freestateproject.org/

stuartl|5.22.07 @ 1:07PM|#

Monopoly? Banning competition???

At my home, I can get TV off the air, via DSL, from satellite, or cable. FIOS is coming soon.

God forbid that parents control what their kids watch.

Thoreau, not that I am in any way advocating government control, but unless you want to police the little tykes 24x7, this is easier said than done. If you didn't know how to deceive your parents, you were a complete failure as a child.

|5.22.07 @ 1:08PM|#

Ammonium,

"Now if they come after the dish companies by trying to enforce a la carte programming, I'm totally against it."

Not sure what you mean. Most area codes seem to have only 2 competitors, that's pretty much the same as for Cable. Am I missing something ?

|5.22.07 @ 1:19PM|#

It's not the number of competitors, it the number of potential competitors. There is nothing stopping other dish companies from entering into the market.

Local governments have control over those that want to enter the cable market.

thoreau|5.22.07 @ 1:21PM|#

Good points about dish networks. As they become more competitive with cable, it would seem that the local monopoly status granted to cable companies becomes less significant, and hence it becomes less urgent* to regulate their use of that publicly granted monopoly.

*Assuming, for the sake of argument, that it was ever urgent to regulate their use of that publicly granted monopoly status. Or not.

|5.22.07 @ 1:23PM|#

The heck with all of this talk. Everything will soon be "video"-on-demand, anyway.

Russ 2000|5.22.07 @ 1:24PM|#

where do you live that you can't just get cable broadband without TV?

I can get it, but it's over $50 a month!!

If I get it with the TV service, it's about $20 a month. So what I was thinking is to get it ala carte at that price. I suppose I might have to get the bundled service and then choose to opt out of every single tv channel, or maybe keep one or two tv channels to get the broadband cheaper.

Jennifer|5.22.07 @ 1:31PM|#

Thoreau, not that I am in any way advocating government control, but unless you want to police the little tykes 24x7, this is easier said than done. If you didn't know how to deceive your parents, you were a complete failure as a child.

When Thoreau was a child they didn't have things like V-chips and other blocking technology that would enable his parents to keep TV shows out of their son's reach when they weren't around.

And cable TV is a luxury, not a necessity. If you don't like what your local cable company charges, cancel your subscription rather than whine to the government.

Russ 2000|5.22.07 @ 1:34PM|#

FIOS is coming soon.

http://www.reason.org/commentaries/titch_20060808.shtml

thoreau|5.22.07 @ 1:36PM|#

My mother couldn't always exercise complete control over me, but if she didn't feel satisfied with her extent of control she wouldn't let me have what she was worried about.

D.A. Ridgely|5.22.07 @ 1:39PM|#

The original thinking was that the cable companies would have significant infrastructure costs running cable throughout an area, that no one wanted a dozen cable hardwires running into every home and thus it "made sense" to grant local artificial monopolies.

Hell, maybe it did make sense at the time, although the irony here was that Ma Bell was being broken up at the same time and the long ago recouped capital investment of telephone wiring was made available to long distance competitors by legal fiat.

As long as hard wiring is involved, these questions will need to be fought over and sorted out. If, however, the world goes wireless, much of these current battles will quickly become OBE.

|5.22.07 @ 1:39PM|#

FIOS is available to my house. As of right now, cable is still cheaper. Hopefully that will change.

ed|5.22.07 @ 1:40PM|#

never mind that parents can already block any channel they want

The same parents who don't know the difference between a V chip and a corn chip?

|5.22.07 @ 1:42PM|#

Government has no business regulating luxuries.

Besides, cable not only competes with broadcast, satellite, video rental, and now internet, but also with books, board games, and sunny days.

If your local government grants a cable company a monopoly, fix your local government. Or ask your local government to change the pricing. It is most certainly not a legitimate function of the FCC.

|5.22.07 @ 1:48PM|#

I don't want to get too mired in details, but one of the big issues with Cable competition is franchise agreements with municipalities. The Cable companies actually have some good points in their lobbying efforts. For example, Cable companies are required to service most (if not all) citizens in a service area. Some of these citizens are obvious credit risks, some are extremely rural, etc. In short, the costs incurred by the Cable companies can't be lessened by selecting the most advantageous customers. If another company (say, Verizon) comes in without that mandate, it puts the Cable company at an immediate competitive disadvantage.

D.A. Ridgely|5.22.07 @ 1:48PM|#

When Thoreau was a child they didn't have things like V-chips and other blocking technology that would enable his parents to keep TV shows out of their son's reach when they weren't around.

Then, again, when I was a child the RCA B&W console TV that took up the most prominent place in the living room had exactly four channels to choose from (this was pre-UHF and the fourth local channel meant we had at least 33% more choices than most households in the U.S. then) and not even a remote control.

I tell you, it was all Mom & Dad could do to keep me from seeing those racier episodes of Playhouse 90, but they managed somehow.

|5.22.07 @ 1:49PM|#

It's not the point for me that I might have to "pay more" for less selection - I am perfectly willing to do that! You see, I don't want to subsidize certain crap that tries to foist itself off as "entertainment". I don't want it in my house, and I will pay a market premium to be able to make that statement. So all I want then is to be able to say, "I want that and that, but definitely not that, what do I owe you?"

Unfortunately none of the cable or satellite companies want to let me have my choice. (Who else am I going to call?!) One would even think that some enterprising little sales rep might even figure out that they could program in the block for me and charge me full fare! Yes, I'd be willing to go along with that ruse, but noooo... "Who would pay for the Golf Channel?" Here's a unique idea; let the golfers pay for the golf channel.

I hate (government protected) monopolies.

Anonymo the Anonymous|5.22.07 @ 1:50PM|#

lunchstealer|5.22.07 @ 1:51PM|#

*Assuming, for the sake of argument, that it was ever urgent to regulate their use of that publicly granted monopoly status. Or not.

I think it is entirely reasonable to vindictively regulate any company that has a cable monopoly granted by a municipality. Give free hand to any cable provider that has cable (not just satellite) competition for at least 90% of the retail residential market, and make ridiculous, even onerous demands of any cable company that allows its host municipality to grant it a monopoly.

|5.22.07 @ 1:55PM|#

When you accept a government-granted monopoly, you have to accept that the government gets some say in your operations.

What monopoly? I have two satellite providers and at least one cable provider all competing to deliver the same content to me.

The key question under anti-trust law is whether other products/services can "substitute" for whatever the alleged monopolist is selling. If so, there is no monopoly. Satellite and cable are substitutable for each other; ergo, no monopoly.

Jennifer|5.22.07 @ 2:02PM|#

The same parents who don't know the difference between a V chip and a corn chip?

Doeesn't matter. If parents don't want their kids to watch a certain show and can't figure out how to make sure the kid doesn't, it's their problem, not mine, not yours, and damned sure not the government's.

It's not the point for me that I might have to "pay more" for less selection - I am perfectly willing to do that! You see, I don't want to subsidize certain crap that tries to foist itself off as "entertainment".

Which is why the government needs to require magazines to offer a la carte articles as well. If I want to read one article in Reason I have to buy the whole damned issue, even the articles I don't want to read. Why must I subsidize the writers I don't like to read the work of the writers I do? My God, this is such a horrible conundrum I need THE GOVERNMENT to save me.

Help me, government! I'm too weak and pathetic to figure out how to turn the goddamned page away from an article I find boring! I can't work my TV set's on/off button! I only like four of the five flavors in a Life-Savers multi-roll! Aaaaugh!

thoreau|5.22.07 @ 2:06PM|#

You know, for a magazine whose best-of compilation is called "Choice", they sure don't seem fond of the a la carte option!

drink!

|5.22.07 @ 2:16PM|#

You know, for a monopoly, Comcast sure does run a lot of commercials.

"I webbed you. That means you got the apartment."

LarryA|5.22.07 @ 2:23PM|#

FCC chairman Kevin Martin says the new rules are necessary to protect kids from violent programming

Wouldn't it be a hoot if the Federal Censorship Commission mandated a la cart programming and all the non-violent channels were abandoned?

What would be so hard about letting multiple companies compete?

Getting the multiple companies to pay government franchise fees.

Then, again, when I was a child the RCA B&W console TV that took up the most prominent place in the living room had exactly four channels to choose from... and not even a remote control.

I remember those days, except my parents did have a remote control. Me.

Of course they had to keep moving me back from the screen.

Why are villagers with torches and pitchforks not cornering this guy in a dank castle right now?

Villagers? Busy raising other people's kids. Pitchforks? Because we no longer have the right to keep and bear farm implements. Torches? Oh, the carbon tax. Castles? Not in the zoning code. You there! No smoking in the mob!

Satellite and cable are substitutable for each other; ergo, no monopoly.

Unless the government regulates satellite to keep it from putting the cable franchises that pay government fees out of business. We currently have rules prohibiting satellite from running our local channels.

You know, for a magazine whose best-of compilation is called "Choice", they sure don't seem fond of the a la carte option!

Maybe because every time the government passes a law giving people more choices we somehow end up with fewer options.

|5.22.07 @ 2:28PM|#

What monopoly? I have two satellite providers and at least one cable provider all competing to deliver the same content to me.

The monopoly isn't the "content" part of your second sentence, it is the "delivery" part. The monopoly is the method of distributing the content.

|5.22.07 @ 2:33PM|#

"The tree of liberty must be, from time to time, fertilazed with the blood of tyrannts and patriots." Thomas Jefferson

Well, if not now, when people? Are we not men(and women) or cowards?
Bell is ringing bastards, the bell is ringing.

|5.22.07 @ 2:38PM|#

Wow, I didn't know 'ol Tee-Jeff was such a poor speller.

|5.22.07 @ 2:45PM|#

There is competition right now and more on the horizon. For 90% of the population there are 4 competitors - public airwaves, incumbent MSOs, and two satellite companies. By 2011, 50% of the population will have a 5th competitor in the RBOCs. By 2015 WiMAX television will be available to half of you. The internet is adding content every day. It's all one video product people.

In many instances across the country, there were cable overbuilders as well (a second cable company gained franchise rights and built out a network). These failed many times due to the debt service associated with the significant capital costs of building out. The ones that did survive don't offer a la carte pricing. They don't because the economics don't work. The satellite companies don't because of the same thing. If consumers wanted a la carte and it made economic sense one of these competitors would have done it. It would be a competitive advantage that the cable cos would have to match.

I usually agree that the best plan of action is to do the opposite of what an incumbent company wants to do, but in this case, it will not lower your bill and two-thirds of your channels (a.k.a. choices) will disappear.

Again, there are 4 competitors now, 6 within 8-10 years (only about 3 years longer than it would take the FCC to do something about any of this). In the instances were there was cable competition the channels were not unlocked.

|5.22.07 @ 3:19PM|#

I just moved and as a customer the only reason I have cable TV for the moment was it was the same price for the first three months for both cable and internet and no install fee versus the install fee and internet alone. After three months I'll drop it because cable and satillite companies won't sell me just the channels I want.

If they don't want to sell a more personalized package that's fine they won't get my money, simple market dynamics without the FCC at work.

If a place won't give me choice it's simple I don't give them my business. While I think they ought to allow us to buy such packages I won't lose any sleep over it.

FWIW|5.22.07 @ 3:33PM|#

The real movers behind this issue were the christian fundamentalists who didn't want to have to financially support channels such as Playboy and Logo by bundled subscriptions.

|5.22.07 @ 3:37PM|#

If everyone cherry-picks there own channels, how will new channels get enough traction to be economically viable?

|5.22.07 @ 3:45PM|#

As in PA, my state is also working on a bill stripping localities of the power to grant monopoly franchises to TV-by-wire. The Rs control the lower house, and the Ds have the Senate. I'm astonished to find that the fellow who represents the district I live in is the lead co-author of the bill in the upper house. I didn't vote for him in the general election, but a loony-tune lefty challenged him for the Dem nomination, so I voted for him in the primary election. He's probably the least idiotic D in the Senate. It's an odd district. The northern half is full of students at the local state university, recent grads, and bohos who enjoy living in that sort of neighborhood , while the southern half is full of single-family homes. Some of the SFHs are in the city, but some are in close-in suburbs. We've also got some high earners living on the lakeshore, and a mix of empty-nesters and young professionals filling up new high-rise condos in and near downtown. So it ranges from Reagan Democrat to vegan peacenik Green. About the only thing we can agree on is that we ought not have a cable monopoly. A few squawk that voiding the old franchise agreement might kill the public access channel nobody watches. Why these goo-goos don't object to the rotten roots (bribery or near-bribery by the competing potential vendors) of the cable contract, I'll never know.

I can survive with just rabbit ears, but as more condo towers are erected reception gets crummier. Half of the apartment dwellers can't mount a dish, either because their building doesn't have a clear view of the satellite or they can't get their landlord's cooperation. If and when AT&T's version comes on line, I'll have to look into it.

Kevin

Chucklehead|5.22.07 @ 3:48PM|#

If everyone cherry-picks there own channels, how will new channels get enough traction to be economically viable?

Subsidies?

*runs away*

|5.22.07 @ 3:48PM|#

We currently have rules prohibiting satellite from running our local channels.

What country to do you live in? Because in the US of A, satellites can and do deliver local channels (in high-def!).

The monopoly is the method of distributing the content.

Who gives a crap what the method is, if you have multiple ways of getting the same content?

The product/service at issue isn't "cable", its "TV channels." And there is no monopoly on who can deliver sweet, sweet non-broadcast TV to your house. Therefore we don't need some twat from the FCC protecting us from a monopoly, because the monopoly doesn't exist.

Seth|5.22.07 @ 3:52PM|#

Randolph May "(who is also the head of the Free State Project)"

Excuse me? He has NOTHING to do with the Free State Project, and if he ever did, it hasn't been anytime in the last 3 years or more.

|5.22.07 @ 3:54PM|#

Oh, yeah! Remind me again how this works. Arguably, over-the-air TV stations can be regulated because the government nationalized the relevant portions of the EM spectrum, and broadcasters have to beg special permission to use their assigned channels. Local cable, TV-via-DSL or Fios send their signals by wire. How does that give the FCC any authority? Broadcast TV and radio channels may be scarce goods, with the government deciding who gets to use which ones, but coax or fiber-optic can carry as many channels as can fit through the "pipe." Congressional regulation of wired TV doesn't seem to have any constitutional basis. That didn't stop them from enacting price controls, though, did it?

Kevin

Seth|5.22.07 @ 3:54PM|#

Mr. May is part of the Free State Foundation, a group with nothing to do with the FSP, to wit:

"The Free State Foundation is a non-profit Maryland-based think tank. Its purpose is to promote, through research and educational activities, understanding of free market, limited government, and rule of law principles in Maryland and throughout the United States."

http://www.freestatefoundation.org/

|5.22.07 @ 4:11PM|#

RC, I have to disagree with you a bit.

The monopoly is the method of distribution There is only one company (in most cities) that can use the government right-of-ways to deliver television to homes. One company can do it. One. No one else allowed. That's a textbook definition of a monopoly.

Stated differently, there are advantages to using an underground (or even aboveground) wiring system within public right-of-ways that only one company can legally take advantage of.

|5.22.07 @ 4:47PM|#

See, Cab, this is why anti-trust lawyers make such good money.

I think the conduit for distributing information is incidental, that it is access to the information itself that really matters.

You disagree.

Now, if we could just find someone to pay us each $500 an hour to expound on our disagreement . . . .

|5.22.07 @ 5:13PM|#

Cab,

I think the issue is that in areas where a second cable player is brought in (cable overbuilders), you don't see the impacts you are predicting. Again, in many cases they crumble under the financial burdens caused by the cost of build out and they just can't gain the scale necessary to succeed. I'm not going to call it a "natural monopoly" of that distribution method by any means, but it certainly is conceivable that it's not sustainable to have more than one traditional cable builder in the same area. I suspect that if you opened up all the roads to new builders you wouldn't have people knocking down your door to lay fiber to your curb (or at least people willing to finance that project).

Either way, I agree with RC, that the method of distribution is irrelevant. It's the content and whether it's delivered at a certain level of quality/reliability that matters. If someone were delivering bread via truck or helicopter, it doesn't bother me, as long as I get it and in a predictable manner. There is some merit to your argument from the bundling standpoint, but there is competition for those other products, as well.

Ask a group of people whether they would rather pay $50 a month for 100 channels or whether they would pay $45 a month for 50 channels and you might get a variety of responses. Tell those same people that they would lose a lower rated channel that they happen to love (i.e. SciFi Channel, HG, Spike) to save 5 bucks and you might get different answers. There just isn't a demand from consumers for a la carte. It's from regulators.

Robert|5.22.07 @ 5:59PM|#

"While the Constitution protects the right to speak, it certainly doesn't protect a right to get paid for that speech."

So the government would be within its constitutional powers to ban the exchanging of payment for reporting, producing political or cultural commentary, or producing fictional entertainment, effectively shutting down every professional branch of the press and media in this country?

Not that, but to ban the receipt of payment by perpetrators of crimes who then publish their stories. Apparently it's considered a violation of freedom of communication (which is usually better protected by state constitutions than the feds') if it prevents public'n, but not if it's just a matter of who's making money off it. So you can't legally prevent people from working for a broadcast station for money, but you can limit how many stations someone can own, or ban a station from taking paid advertising.

bubba|5.22.07 @ 6:03PM|#

When you accept a government-granted monopoly, you have to accept that the government gets some say in your operations.

I agree with joe.

The world ends tomorrow.

|5.22.07 @ 7:26PM|#

Fucking squirrels.

|5.22.07 @ 7:27PM|#

If everyone cherry-picks there own channels, how will new channels get enough traction to be economically viable?

Now that I can post again, the answer is the same way every new product enters the market: by initially running at a loss.

I'd guess that a 90-day free trial on cable systems should be more than sufficient to determine whether or now a new channel is viable.

|5.22.07 @ 7:33PM|#

i can watch sopranos on cable...i can watch it on satellite...i can rent a sopranos dvd at net flix...i can pirate sopranos off the internet...i can have my brother burn copies of it from his cable and give me a copy the next day...

I see no monopoly here.

|5.23.07 @ 2:32AM|#

"If everyone cherry-picks there own channels, how will new channels get enough traction to be economically viable?"

The same way they do it already with pay channels--show them for free for a week or so at a time with the option to subscribe permanently. It's how they've sold HBO/Showtime/etc. for years.

|5.23.07 @ 9:53AM|#

This is a tough one since I don't speak spanish or care to, nor am I evangelical, not to mention I prefer to shop in stores rather than from my couch. But I pay for all the channels that offer these wonderful things and why? I just moved and have a new cable provider as of yesterday and now I have the fucking GOLF channel and lost some other channels I had before I enjoyed.

The reason the cable companies want to keep things bundled is simple. Just like a college making you take BS classes that are not even remotely connected to you major they make you take these channels. Otherwise they know if they had to get paid per channel many of the channels would disappear from lack of money. Just like many of those college classes nobody would be signing up for unless they had to, thus they insure the continuation of that department. After all it would be hard to argue that you need some classes if no one wanted to take them.

That being said cable companies suck in general. My home town recently had a vote to run fiber to all the homes. This city has public utilities and vote on most everything. Yet Cox Cable came in and wanted it stopped as did Bellsouth. Cox ended up it appears buying off a judges decision that it would be illegal for the city to do this. People voted, Cox paid and Cox wins. Cox is a bunch of Cocks and so is any damn judge that would negate the wishes of the people.

Amy Alkon|5.24.07 @ 1:06AM|#

"FCC chairman Kevin Martin says the new rules are necessary to protect kids from violent programming,"

Who will protect the rest of us from people trying to protect kids from violent programming?

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