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Cable channels à la carte

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It's time cable-TV subscribers had more choice over the channels they want. Rates have risen 40 percent - three times inflation - since 1996, when Congress deregulated the industry in hopes competition from satellite TV and other new technologies would lower cable's prices.

Indeed, satellite TV has upwards of 20 million subscribers. And a recent report by the Government Accounting Office found cable rates are 15 percent lower in areas where there is competition, showing that cable - with its government-sanctioned lock on fast land lines for TV - does respond when forced to compete.

But cable could compete even more if customers were able to pick channels à la carte, as the GAO report suggests, rather than being forced to buy a bundle of channels. The report found a significant number of consumers could save money with à-la-carte pricing although the industry could also lose ad revenue.

One example of the pressure for more freedom in selecting channels can be seen in a battle between Cox Communications, an Atlanta-based cable company, and ESPN, the Disney-owned cable sports network.

The two are arguing over how much ESPN charges for its programs. Cox says ESPN has steadily increased its prices to the tune of some 20 percent per year over the past five years. It also says ESPN serves only 8 percent of its basic-cable viewers (ESPN is part of Cox's basic cable package) and that it cannot afford to keep passing those costs on to subscribers.

Cox says it might bump ESPN into its expensive package to help pay for it. But ESPN could just turn around and promote the fact that its programs are available on satellite TV.

Cable companies should experiment with the à-la-carte idea. Viewers already have proven they'll pay for what they really want to watch. Congress might want to keep an eye on whether it's actually created enough competition in this business.


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