News

FCC’s McDowell, Martin Still Split

4/26/2008 2:00 AM Eastern

Federal Communications Commission chairman Kevin Martin is unlikely to win the support of Republican colleague Robert McDowell on policies designed to force the sale of TV programming on a per-channel basis.

“Why should government consider imposing such a mandate when the market is providing per-episode a la carte already?” McDowell said in a speech here last Wednesday.

Martin, a Republican Bush appointee like McDowell, favors an approach that would require cable operators, for example, to sell cable networks on a la carte basis, but he has not gone forward with rules because he says the agency does not have the legal authority.

A few weeks ago, Martin floated a new idea which would allow cable operators to exclude from their most widely purchased cable programming tier — expanded basic — to any network that charged a wholesale rate of 75 cents or more per month, per subscriber. (Read about Martin’s “75-Cent Solution” in this week’s Monitor, page 14.)

That approach wouldn’t necessarily force cable operators to retail programming on an a la carte basis, but it would presumably rely on government power to force expensive cable networks to accept operator-imposed demotion to a la carte status or migration to a lightly-viewed programming tier.

McDowell said he had doubts about the structure of Martin’s 75-cent plan.

“My question for that [Martin proposal] was that it sure does seem like the sort of economic regulation that we heard he wasn’t interested in,” McDowell told reporters later. “If that’s offered up as a proposal, I’ll have a lot of questions regarding that.”

McDowell discussed trends in the video programming market in remarks at the Quello Communications Law and Policy Symposium, a program hosted by former FCC Democratic chairman and commissioner James Quello.

Martin has circulated a proposal for a vote. McDowell and FCC Republican Deborah Taylor Tate have been drifting from Martin on the need to regulate cable. In some cases, Martin has teamed up with FCC Democrats Michael Copps and Jonathan Adelstein to tighten the agency’s grip on cable, such as the vote last December to revive cable ownership rules.

Consistent with prior statements, McDowell noted government-mandated a la carte was unnecessary because the market is already serving up tons of video in bit-sized portions. In February, he said, U.S. Internet users viewed 10 billion online videos.

“I doubt that streaming video of prime-time’s most popular shows, companies with business models like Netflix and Vudu, and Web sites like Hulu and Joost would exist today if the government had tried to engineer them through regulation,” McDowell said. “If the government starts imposing mandates regarding a la carte, will the result be that consumers will pay more and get less?”

Martin has called for breaking up expanded basic because nominal cable rates keep rising. He claims consumers need more options besides large programming packages presented on a take-it-or-leave it basis.

McDowell offered a different vision of the marketplace, calling it an “exciting, market-driven, on-demand world that empowers all of us as consumers” and one not crying out for regulation.

“The better course is to equip the private sector with the freedom and flexibility necessary to resolve challenges and satisfy consumer demand on its own, while remaining vigilant — and ready — to jump in to resolve genuine harms that cannot be addressed any other way,” McDowell said.

September