WHEEL OF FORTUNE! <click> It slices, it dices- <click>Tony Romo, back to pass <click>.  These are the sounds of America’s quintessential channel surfers, as they look for that perfect show to watch.  But if Federal Communications Commission (FCC) Chairman Kevin Martin has his way, this activity would be under stricter government control and ultimately more expensive to consumers.

Chairman Martin has been on an ongoing crusade to augment the FCC’s power over cable television companies.  His most recent gambit was to dust off a 23-year old FCC rule to help “prove” cable’s dominance, which, when accomplished, would then open the door to greater regulatory authority by the FCC. 

In 1984, Congress passed the 70/70 Rule, which mandated that when 70 percent of all U.S. households have access to cable, and 70 percent of those with access had subscribed, the FCC had the authority to implement new regulations to ensure information source “diversity.”  

Martin used flawed data gathered by Warren Communications, an independent industry data publishing group, to justify his attempt to trigger the FCC’s power to regulate the cable television industry.  The Warren data showed that the 70/70 threshold had been met, but not only were fellow FCC commissioners and industry experts skeptical of Warren’s numbers, the head of Warren Communications told a Dow Jones reporter on November 27th that “the data shouldn’t be used to underpin a comprehensive finding about cable’s market share, because it was incomplete.”

Luckily, the other FCC Commissioners insisted on giving the cable industry time to crunch their own numbers regarding the 70/70 threshold.

Chairman Martin has his sights set on using the 70/70 Rule to mandate a la carte programming to increase “diversity.” An a la carte pricing system would force cable companies to stop bundling their programming and sell individual channels separately.  Such a system would require every home with cable to install a set top cable box called an addressable converter box. 

The FCC’s 2002 survey data estimated that the cost of renting a set top is approximately $4.39 per box per month. The biggest inconvenience would be the immediate need to modify or replace cable ready televisions.  All televisions would be required to have an addressable converter box, making it impossible to get cable television access by simply plugging in a coaxial cable into the back of a television as current cable-ready televisions are able to do. 

A la carte pricing would also change television advertising, making such a system more expensive than the current, tiered system.  The General Accounting Office (GAO) reported in 2004 that, “Adopting an a la carte approach… could alter the current business model of the cable network industry wherein cable networks obtain roughly half of their overall revenues from advertising.  A move to an a la carte approach could result in reduced advertising revenues and might result in higher per-channel rates.” 

Advertising companies sell their commercial advertisements hoping to reach a diverse audience and would no longer be able to accomplish this under an a la carte pricing system.  For example, a company might run an ad on ESPN hoping to reach primarily sports fans, but also reach others who are surfing through channels.

So, next time you decide to channel surf, remember there is an FCC Chairman lurking in the white noise waiting to overregulate, decide what you can or cannot watch, and hike up your cable television bill. 

  -- David E. Williams