Adelstein Says FCC Should ‘Start Over’ on a La Carte

ATLANTA -- The FCC should give cable a la carte a fresh look because dueling Commission reports that came to different conclusions have created confusion (CD Feb 10 p2), said FCC Comr. Adelstein. The latest report, supported by FCC Chmn. Martin, said selling channels individually can help cut customer bills - repudiating a previous Media Bureau study that said it wasn’t a good idea. The Congressional Research Service recently chimed in on the controversy, backing neither report. Citing CRS, Adelstein told a luncheon here at NCTA’s National Show that there’s “understandable confusion about which was the right report.” The recent FCC report, which suggested cable operators should offer more bundles of programming, has been criticized by NCTA, Disney and Viacom.

“Of course we want people to have more choice,” said Adelstein. “The question is does a la carte accomplish that. The answer is, we don’t know.” Concerns include whether upstart and new networks would gain or lose under a la carte, said Adelstein: “There’s a lot of questions that are still open.”

The FCC should “start over again” on a la carte, he said: “We have to kind of scratch our heads.” Adelstein was coy when we asked how the FCC could address a la carte concerns. He didn’t call for another study and said he wasn’t asking for a notice of proposed rulemaking on the subject. The a la carte report came up during a panel with Martin’s legal advisor, Heather Dixon. “There’s a lot of discussion, which is good,” she said. “In terms of where it’s heading, that’s unclear.” Another FCC official, speaking to us from D.C., said the CRS study partly “backed up the findings of the further report… The further report was important because it did correct some errors in the report” issued in 2004 by the Media Bureau under then-Chmn. Powell.

CRS Specialist Charles Goldfarb wrote that Powell’s “Initial Report” and Martin’s Booz Allen-prepared “Further Report” on A la Carte cable pricing reach contradictory conclusions. And most claims in the Booz Allen study against the initial report are not backed by available market data or “cannot be proven one way or the other,” wrote Goldfarb. A la carte pricing generally benefits cable subscribers who watch limited amounts of programming, but could have serious implications for diversity in programming, wrote Goldfarb.

“The Commission itself when it puts out a report has to be as careful as it can be,” he told us. “I don’t know what process it will be… We just have to determine what its impact is on consumers” and diversity, he said. Adelstein confirmed that an item on the Adelphia cable deal (see separate story) isn’t yet circulating on the 8th floor - at least to his office - when asked about it at a press briefing.

Local franchisers want video competition, said Adelstein in response to a question from moderator Dan Brenner, NCTA senior vp law & regulatory policy. “They're falling over themselves to award these franchises,” he said. Verizon has told the FCC otherwise at forums including a Commission meeting in Keller, Tex., where Bells aired concerns on the franchising process (CD Feb 13 p2). Under intense questioning from audience member Steve Effros on whether Bells should be required to fully build out their TV systems, Adelstein demurred: “I don’t think we can go any farther.”

Parents have the ultimate responsibility to monitor what TV their kids watch, not govt., said Adelstein. He praised cable’s efforts to inform customers about V chips and other parental controls, which some critics have said don’t go far enough in addressing indecency concerns. “Parents have to get actively involved,” he said. “Cable has taken a lot of steps on its own.” NTIA Acting Dir. John Kneuer agreed. “These are consumer choices and parental choices,” he said. “The cable industry is commendable” in offering parental controls.

Cable also got praise for spurring broadband development from Adelstein. Spamming and Web security are among areas of concern, FTC Comr. Jon Leibowitz told the panel. That agency is working with firms to cut down on spam, said Leibowitz, who praised efforts of Cisco and Yahoo. He said he’s worried “not if but when we have a significant attack on networks… The threat is very real, and its impact can’t be overstated.”

- Jonathan Make