McCain works to break up cable bundles, experts push back

Brendan Thomas Contributor
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Arizona Republican Sen. John McCain appeared at Tuesday’s Communications, Technology and Internet Subcommittee hearing to promote his “Television Consumer Freedom Act,” which he presented as a way to tame greedy cable and satellite providers.

The legislation, which McCain introduced on the Senate floor last week, would provide “consumers the ability to buy cable channels individually, also known as ‘à la carte,’ giving Americans more control over their viewing options and, as a result, their monthly cable bill,” he said at the time.

“The video industry, principally cable companies and satellite companies and the programmers that sell channels, like NBC and Disney-ABC, continue to give consumers two options… First, to purchase a package of channels whether you watch them or not; or, second, not purchase any cable programming at all.”

By the end of the “State of Video” hearing regarding possible changes to federal communications law, however, the state of McCain’s legislation seemed very much in doubt, as witnesses from industry groups and non-profits either refuted his statement or presented viable alternatives to government intervention.

Michael Powell, CEO and president of the National Cable and Telecommunications Association, suggested McCain’s legislation could actually raise cable bills, because niche channels with smaller audiences would have to raise their prices or perish.

To McCain’s example of the elderly woman who would be shocked to learn she pays $70 yearly to Disney for ESPN sports channels, which she never watches, Powell countered with the example of the minority viewers and owners who would loose their cable channels in a more competitive market.

Powell said McCain’s ideas seemed “reasonable and noble,” but “many third parties, including the Government Accountability Office, Federal Communications Commission and Congressional Research Service have raised serious questions as to whether consumers would have lower bills.” In other words, is it better for consumers to pay $10 for 10 cable channels or $10 for 100 of them.

Before leaving the hearing early, McCain insisted he was not meddling in a market where government already has a very large presence. He argued those who think the federal government should stay out of the television industry overlook benefits it provides, such as copyright enforcement. He said his goal was only to “restore proper operation of the market by empowering American consumers” who do not want cable bundles.

Others testifying at the hearing, such as Gordon Smith, president and CEO of the National Association of Broadcasters, and John Bergmayer, senior counsel at Public Knowledge, an “open Internet” advocacy group, said there were already solutions to the problem McCain was tackling.

Gordon said his members offer free TV and movies to anybody with a signal. Bergmayer said that, with an Internet connection, anybody who wanted them could purchase à la carte offerings from iTunes or take advantage of the relatively cheap bundler, Netflix — both of which Powell made sure to mention are available via broadband service that cable operators also provide.

South Dakota Republican Sen. John Thune mused that perhaps information technology is moving too fast for any legislation to catch up.

After McCain left the proceedings, Democrat Sen. Mark Pryor from Arkansas, sensing resistance, asked the room for “any suggestions short of à la carte” programming. Powell said there are multiple opportunities for consumers to view TV and movies using various “windows,” such as re-runs.

Powell posited that TV should be a process of discovery anyway. “I can’t say my habits wouldn’t change,” he said, referring to the limitations of just a few select channels.

McCain, whose office said he had another meeting to attend shortly after delivering his opening remarks, was not present for the give and take. Nobody in attendance voiced clear support.