Media Feeds on A La Carte Provision in '92 Cable Act

Cable World,  Nov 25, 2002  

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Byline: SHIRLEY BRADY

Reporters have jumped on a story claiming operators have concealed consumers' newfound freedom to buy channels like HBO and Showtime along with basic cable, sending it ricocheting from coast to coast.

Although customers might not be compelled to forego ESPN and MTV, the negative articles - related to the provision of the 1992 Cable Act which says cable operators can no longer require subscribers to buy tiers of programming in order to receive pay-per-view and premium services - could create a PR mess for operators.

An NCTA spokesman said operators were given a heads-up by the NCTA a full six months before the provision went into effect Oct. 5. The spokesman added that a telephone survey confirmed that all MSOs are compliant with the rule - many have noted their compliance in SEC filings leading up to the deadline - and that CSRs have been briefed on the rule.

The flood of articles was touched off on Nov. 6 when BusinessWeek published a story on its website with the headline, "Big Cable's Package-Pricing Ploy: Consumers could be saving money by selecting their premium channels a la carte, but don't expect to hear it from your cable outfit."

By Friday, more than 300 newspaper and TV outlets had run stories on the subject.

The Center for Digital Democracy last week followed suit and issued a consumer alert on its website. The center's executive director, Jeff Chester, says he is planning a media blitz, including radio talk shows, in the coming months.

The majority of people want networks such as Comedy Central or the Food Network along with their premiums, says Cox spokesperson Laura Oberhelman.

"Our research indicates that an overwhelming number of customers choose to buy cable to receive access to a broad array of programming choices that includes highly rated networks such as CNN, Nickelodeon, ESPN and MTV," she says.

As to the charge that operators aren't marketing the option, she adds, "Cox is no different from other businesses in the way we market our services. There's a reason that McDonald's allocates significant resources to advertising combo meals of a burger, fries and a soft drink, rather than highlighting every choice on its menu."

Mediacom has been slapped down by local authorities for failing to market the option. The operator was threatened with a $73,500 fine by officials in its Iowa City system in late September for "inconveniencing customers" by not alerting them to the coming change. Last week the company offered to pay a $7 rebate to anyone who purchased a digital package since February thinking it was necessary in order to receive premium channels.

At least one observer feels it might benefit MSOs to be proactive on this issue.

"They need to stem the damage on this," says Todd Weiner, president of Innovista Research. "Otherwise, satellite will jump all over this and try to screw the cable ops."

THE NEXT QUESTION:

*Will other systems be punished for not spelling out the new rule to its subscribers?

*Will any cable operators heed Todd Weiner's advice to be proactive on the subject?

COPYRIGHT 2002 Access Intelligence, LLC
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