HomeMy WebLinkAbout2007-02-27 - AGENDA REPORTS - LEGISLATION CABLE SATELLITE (2)Agenda Item:
CITY OF SANTA CLARITA
AGENDA REPORT
NEW BUSINESS City Manager Approval:
Item to be presented by: Councilmember
DATE: February 27, 2007
SUBJECT: FEDERAL LEGISLATION: CABLE AND SATELLITE
SUBCRI13ER CHOICE
DEPARTMENT: City Manager's Office
RECOMMENDED ACTION
City Council provide direction to staff regarding a resolution calling for the City of Santa Clarita
to meet with Members of Congress, as appropriate, to explore how federal legislation providing
for cable and satellite a la carte subscriber choice might be introduced into Congress and enacted
into law during the 110th session of Congress.
BACKGROUND
This item is brought to the City Council at the request of Councilmember Tim Ben Boydston
pursuant to his request at the Council meeting of January 23, 2007. For a number of years, there
has been extensive debate over whether multichannel video programming distributors (MVPDs)
should be required to provide cable and satellite programming on an "a la carte" basis as opposed
to the current theme tiered basis.
Cable and satellite service providers typically provide programming through bundling of
channels and selling their services to consumers through tiered bundles. Consumers can
purchase bundled tiers for a set price that includes specific channels. This method often leads to
consumers purchasing channels that they might not otherwise purchase in order to acquire
specifically desired channels also contained within the bundle. With recent advances in
technology, broadening of service providers, and channel availability, new support is emerging
for federal legislation that would require MVPDs to provide their services on an a la carte basis.
Proponents of a la carte channel offerings argue that the technology exists to enable consumers to
select the programming of their choice without having to subscribe to channels that the
subscriber does not desire. They further cite the February 2006 Federal Communications
Adopted: 9!�o. 0 -ld,
Commission "Further Report on the Packaging and Sale of Video Programming Services To the
Public" that identified that a majority of consumers purchasing eleven cable channels would see
a decrease in their monthly bill of up to 13%. Proponents further argue that it is not the
responsibility of subscribers to subsidize start-up costs for niche entries into the marketplace by
being forced to subscribe to a niche start-up channel that is part of a bundled package of
channels.
Opponents of a la carte channel offerings argue that bundled programming provides exposure to
channels in which subscribers are likely to have an interest and discover that interest once
exposed to the programming. They further argue that bundled programming results in consumer
savings as disparities in pricing of individual channels are spread throughout all the system's
subscribers, resulting in lower costs for certain channels than if they were offered on a stand
alone basis. Opponents of a la carte offerings also state that bundling provides new channels an
opportunity to become established and thus provides greater choice in the marketplace.
With the expansion of technology over the past few years, consumers have become accustomed
to receiving video on demand, so they can choose what they watch, when they can watch it and
where they can watch it. Therefore, traditional bundling of channels appears to no longer be
desired by American consumers as evidenced by a December 2005 poll noting that 78 percent of
American adults would prefer the a la carte option.
Although earlier legislative efforts to require MVPDs to offer a la carte programming have been
unsuccessful, advances in technology, increased consumer desire and validation by the Federal
Communications Commission suggest that it may be appropriate to revisit this issue through the
introduction of new legislation during the 110th Congress.
ALTERNATIVE ACTIONS
1. City Council adopt resolution.
2. City Council not adopt resolution.
3. Other direction as determined by the City Council.
FISCAL IMPACT
Although specific direction is unknown, staff activities are already fully contained within the
City's adopted 2006/07 budget.
ATTACHMENTS
Resolution