[Congressional Record Volume 159, Number 65 (Thursday, May 9, 2013)]
[Senate]
[Pages S3329-S3330]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCAIN:
  S. 912. A bill to allow multichannel video programming distributors 
to provide video programming to subscribers on an a la carte basis, and 
for other purposes; to the Committee on Commerce, Science, and 
Transportation.
  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,

[[Page S3330]]

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.
                                 ______