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Mr. McCAIN. Today I am introducing the Television Consumer Freedom Act of 2013. The legislation has three principal objectives:
One, encourage the wholesale and retail unbundling of programming by distributors and programmers. Allow the consumer, the television viewer who subscribes to cable, to have a la carte capability--in other words, not be required to buy a whole bunch of channels that consumer may not wish to subscribe to--in order words, a la carte. If you want to watch one television program, you can watch it. If you do not, you do not have to. The situation today obviously is far different from that.
It would also establish consequences if broadcasters choose to downgrade their over-the-air service.
Three, it eliminates the sports blackout rule for events that are held in publicly financed stadiums.
For over 15 years, I have supported giving consumers the ability to buy cable channels individually, which is known as a la carte, to provide consumers more control over viewing options in their homes and, as a result, their monthly cable bills. The video industry--principally cable companies and satellite companies and the programmers that sell channels, such as NBC and Disney-ABC--continues to give consumers two options when buying TV programming: first, to purchase a package of channels whether they watch them all or not or, second, not purchase any cable programming at all.
There are two choices: You can either buy one of their packages or not watch it at all. That is unfair and wrong, especially when you consider how the regulatory deck is stacked in favor of industry against the American consumer. It is clear when one looks at how cable prices have gone up over the last 15 years, which was brought to the light by the most recent Federal Communications Commission pricing survey. In the FCC survey, the average monthly price of expanded basic service--basic service--for all communities surveyed increased 5.4 percent over the 12 months ending January 1, 2011, or to $54.46, compared to an increase of 1.6 percent in the Consumer Price Index. In other words, the cost of cable went up nearly four times the consumer prices people pay for everything else. You can only do that when you have a monopoly.
Over the last 15 years, this rise in cost has become even more evident. According to the FCC, the price of expanded basic cable has gone up at a compound average annual growth rate of 6.1 percent during the period from 1995 to 2011. This means that the average annual cable price has gone up about $25 a month from 1995, to over $54 today. That is a 100-percent price increase. People are on fixed incomes. People are hurting. Why in the world should they have a 100-percent cost increase? The only way it can be done is through monopolies.
Those that provide video directly to consumers, such as cable and satellite companies, are not solely to blame for the high prices consumers face today. Many articles have been written about the packages of channels--commonly called bundles--that are sold to cable and satellite companies by video programmers such as Comcast, NBC, Time Warner, Viacom, and the Walt Disney Company, which owns 80 percent of ESPN.
The worldwide leader in sports, as ESPN calls itself, thrives because of the advertising revenue it is able to generate and large subscriber fees. According to a January 2012 Newsweek article, ESPN charges $4.69 per household per month, citing a research company. By comparison, the next costliest national network, TNT, costs $1.16. Again, $4.69 for ESPN and the next most expensive one is $1.16 for TNT. Whether or not you watch ESPN--and I do all the time--all cable subscribers are forced to absorb this cost. Not every American watches ESPN. Not every American should be forced to watch ESPN and pay $4.69 per household per month in order to have it carried into their homes when they do not view it. Because these channels are bundled into packages, all cable consumers, whether they watch sports or not, are paying for them anyway.
Cable and satellite carriers that consider dropping ESPN must also contemplate losing other channels in the bundle, such as the Disney Channel. Some have described this as ``a tax on every American household.''
Others, like the CEO of the American Cable Association, have said:
My next-door neighbor is 74, a widow. She says to me, "Why do I have to get all that sports programming?'' She has no idea that in the course of a year, for just ESPN and ESPN2, she is sending a check to Disney for about $70. She would be apoplectic if she knew ..... Ultimately there is going to be a revolt over the cost. Or policymakers will get involved because the cost of these things are so out of line with the cost of living that someone's going to put up a stop sign.
Today we are putting up a stop sign. We are going to find out how powerful these companies are, as opposed to clearly correcting an injustice that is being inflicted on the American people. This legislation would eliminate regulatory barriers to a la carte by freeing up multichannel video programming distributors, such as cable, satellite, and others offering video services, to offer any video programming service on an a la carte basis. But if they want to keep bundling, they can do that too. They can make both offers to the American subscriber.
In order to give these companies an incentive to offer programming on an a la carte basis, the legislation links the availability of the compulsory copyright license to the voluntary offering of a la carte service by the MVPD. In other words, if these companies do not offer a broadcast station and any other channels owned by the broadcaster on an a la carte basis, then that company cannot rely on the compulsory license to carry those broadcast stations. The compulsory license is a benefit conferred on these corporations, so it is reasonable to ask the recipients of that benefit to provide consumers with an a la carte option. I emphasize ``an option.''
To address the notion that a la carte options are being denied distributors, the legislation conditions important regulatory benefits such as network nonduplication, syndicated exclusivity, blackout rights, and retransmission consent option on the programmers, allowing MVPDs to sell their channels on an a la carte basis.
It is time that the consumers got something in return, other than a higher bill at the end of the month.
Furthermore, because not all programmers also own broadcast stations, the bill contains a provision that would create a wholesale a la carte market by allowing programmers to bundle their services in a package only if they also offer these services for the MVPDs to purchase on an individual channel basis. If a cable operator does not want to carry channels like MTV, it would have the option of not doing so and only buying and carrying the channels it thinks its consumers want to watch.
Finally, the bill provides that if the parties cannot agree to the terms of a carriage agreement, the final offer made by each side must be disclosed to the FCC.
The second section of the bill responds to statements by broadcast executives that they may downgrade the content of their over-the-air signals or pull them altogether so that the program received by MVPD customers is preferable to that available over the air. Our country is facing a spectrum crunch. If broadcasters that are using the public airwaves in return for meeting certain public interest obligations are going to deviate from those obligations, it is my view that we should consider whether that is the most efficient use of our country's spectrum. It would be a distortion of this basic social compact if over-the-air viewers were treated as second-class citizens.
This bill provides a legislative response if broadcasters either downgrade their signal or pull it altogether. The bill provides that a broadcaster will lose its spectrum allocation and that spectrum will be auctioned by the FCC if the broadcaster does not provide the same content over the air as it provides through MVPDs.
Finally, my bill touches on sports blackout rules that can limit the ability of subscribers to see sporting events when they take place in their local community but are not broadcast on a local station. When the venues in which these sporting events take place have been the beneficiary of taxpayer funding, it is unconscionable to deny those taxpayers who paid for it the ability to watch the games on television when they would otherwise be available. Therefore, the bill proposes to repeal the sports blackout rules so far as they apply to events taking place in publicly financed venues and/or involve a publicly financed local sports team.
In the end, this Television Consumer Freedom Act is about giving the consumer more choices when watching television. It is time for us to help shift the landscape to benefit television consumers. I know the broadcasters and cable companies are likely to suggest that the government should not micromanage how they offer their product to customers and that bundling can promote diverse offerings. What those interests fail to mention is that the government has already entered the marketplace and conferred certain rights and privileges, such as a compulsory license, network nonduplication, syndicated exclusivity, and retransmission consent, which stack the deck in favor of everyone but the American consumer.
I hope the introduction of this act furthers the debate on issues such as a la carte channel selection. I look forward to the Chamber's consideration of the bill.
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