Court Blocks Maine Attempt To Force Cable Providers To Sell Individual TV Channels

from the Constitutional-right-to-predatory-pricing dept

For the better part of two decades, the cable industry has fought tooth and nail to prevent having to sell cable channels individually (a la carte). Historically, the cable industry's defense of this opposition is that letting consumers buy individual channels would do two things: kill off niche channels, and raise rates on consumers. Granted you're supposed to ignore that both things have been happening anyway. Despite streaming competition, cable rates continue to skyrocket, and cable operators themselves have been dumping less watched channels from their lineups anyway in a bid to shore up tightened margins.

The streaming sector's impact on these issues remains a work in progress. And state or federal efforts to force cable providers to sell channels individually haven't gone particularly well.

Case in point: back in September, Comcast sued the state of Maine for trying to force the company to sell users individual cable channels (LD 832). Comcast lawyers insisted that the new law violated the company's First Amendment rights, and told news outlets the law would "suppress competition and result in higher consumer prices and less program diversity." Historically, "this violates our company's First Amendment rights" is an argument telecom lawyers throw against the wall in every case in a bid to try and see if it sticks.

In this case, it appears to be working. Comcast's argument was twofold: the law violated Comcast's editorial decision making right to require consumers to take bundles of programming, and violates the First Amendment's prohibition on speaker-based regulations -- since the law applies to incumbent cable providers but not other pay TV providers. It's that latter argument that appears to have swayed U.S. District Court Judge Nancy Torresen's decision to impose a preliminary injunction preventing the bill from taking effect. She appeared to be less swayed by Comcast's phony concern that such laws would raise cable TV prices:

"At this initial stage, I cannot conclude that the State has carried its burden of showing that [the law] will, in fact, be likely to reduce prices and increase affordable access to cable," she said. But she also said: "The evidentiary record is weak at this point, but the record does contain evidence that cable pricing has greatly exceeded the pace of inflation over many years. This may provide a separate special characteristic that would support differential treatment of cable operators. Because I ultimately conclude that the State has not met its burden of showing that it is likely to succeed under intermediate scrutiny, I do not need to decide this issue at this time."

At this point it's probably not worth trying to force cable's hand on this subject. In large part because growing competition in the pay TV space should ultimately do the heavy lifting here. Streaming competition is completely restructuring the pay TV landscape, resulting in traditional cable operators (especially those who refuse to compete on bundle flexibility or price) losing millions of pay TV subscribers each year. Even if this law fails, competition should ultimately pressure even Comcast to begin actually listening to consumers if the company wants to remain in the pay TV business.

The real problem remains in broadband, where giants like Comcast have secured a growing monopoly thanks to US telcos that have lost interest in the fixed residential broadband market and refuse to upgrade their networks. As pay TV margins tighten from competition, giants like Comcast and Spectrum will simply raise the price of broadband, most prominently via bullshit usage caps and overage fees. And since we've effectively neutered most federal oversight of the barely competitive US broadband sector, it's a problem that's going to stick around for a while (no, 5G isn't a panacea).

Filed Under: 1st amendment, a la carte, bundles, cable channels, maine
Companies: comcast


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  • identicon
    Anonymous Coward, 31 Dec 2019 @ 11:47am

    "Comcast lawyers insisted that the new law violated the company's First Amendment rights"

    Yeah? Well not meeting customer demand is violating the customer's first amendment rights ... makes about as much sense.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 31 Dec 2019 @ 12:35pm

    Historically, "this violates our company's First Amendment rights" is an argument telecom lawyers throw against the wall in every case in a bid to try and see if it sticks.

    What a shocker! When you grant fundamental human rights to a class of non-human legal fiction with a centuries-long track record of sociopathic and exploitative behavior, they abuse these "rights" to more effectively exploit people and behave like sociopaths! Who'da thunk it?

    reply to this | link to this | view in chronology ]

  • icon
    Bt Garner (profile), 31 Dec 2019 @ 12:36pm

    I am truly surprised ....

    ... that cable companies don't honor this, but charge a base "fee," ($10 infrastructure) then some outrageous price (price per channel basically equals the monthly fee for whatever cheapest tier has that channel in it). That way they "honor" the law in word, but certainly not spirit. . .I'm not giving them ideas am I?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 31 Dec 2019 @ 6:12pm

      Re: I am truly surprised ....

      There is no schema you could invent for which the cable companies do not already have a detailed analysis. Only a sucker would bet against them playing their strongest hand at all times; They stacked the deck themselves via lobbying.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 1 Jan 2020 @ 6:19am

        Re: Re: I am truly surprised ....

        There is no cable program that I absolutely have to watch.
        Their hand is not strong enough to force me to watch their programming.

        reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 31 Dec 2019 @ 1:11pm

    Just STRANGE THOUGHT..

    Niche channels.?
    Is the cable corp paying for them, or is the Niche Channel Paying them??
    WHO CARES?? as cable pays 99% of channels Pennies to host the channel...
    Or am I wrong.. Do the Channels Pay Cable..that is something no one has answered yet.
    They post the Prices, but Who pays Who??

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 31 Dec 2019 @ 6:22pm

      Re: Just STRANGE THOUGHT..

      The cable companies pay the content/channel owners using money collected from viewers. Of the funds allocated to paying for content, the big channels take the lions share (Sports, HBO, Cinemax, etc) and the rest goes to the smaller operators, probably based on gamed viewership numbers. Of course, the funds allocated to paying for this content are only a small portion of that collected from viewers.

      Cable operators don't want to sell ala carte because:

      1. Selling bundles with "OMG 480 channels!" sounds better than "Pick the one or two you'll actually watch"
      2. Selling only the individual channels people want to watch means that only a small fraction of those who paid for those channels when they were in bundles are still paying for them. Rates per channel must increase dramatically to justify keeping those channels available. Nobody would pay the increased rates just to watch lesser channels.
      3. When the cable operators are forced to drop lesser channels from their lineups their total offering dwindles and those who only subscribed for those channels can no longer justify paying for cable -- their favorites are gone.
      4. This, overall, leads to less variety in the cable lineup (their argument on this is actually correct) and fewer subscribers. Those who remain pay only for the channels they care about, probably at increased rates despite no longer paying for bundled channels they don't watch. It also leads to reinforcing the "big channels" and killing off the small ones, hurting "innovation" (does this still exist in new channels?) and preventing competition.

      In the end the cable operators would probably not lose any money over this in the short term but, thanks to the big channels operating their own streaming options, would drive customers away over the long term. This is happening already but ala carte offerings would accelerate the process. There is No Fucking Chance™ the cable operators are going to let that happen.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 1 Jan 2020 @ 5:45am

        Re: Re: Just STRANGE THOUGHT..

        For how long do you think the watch when we say model survive when its competition is watch when you want?

        If the cable companies had any sense, they would be setting themselves up as CDN networks and hosting providers and selling that service to content producers, building their business on infrastructure and not content.

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 1 Jan 2020 @ 6:22am

        Re: Re: Just STRANGE THOUGHT..

        Sucks when your business model fails.

        reply to this | link to this | view in chronology ]

      • icon
        ECA (profile), 1 Jan 2020 @ 3:08pm

        Re: Re: Just STRANGE THOUGHT..

        Ala carte, is interesting for a reason..
        How many have access to Cable/sat and not the internet..
        Or
        Dont want the internet, because they already pay for sat/cable.
        How many dont want a computer..Dont like computers, have no concept of how to use a computer.
        There are still areas of the USA that have very little, easy access to Cable..and have to use SAT. to get any TV, unless they wish to raise a 40+ foot tall Mast to install an antenna on top..to even get Local service.
        Even Cable TV, uses Sat to receive shows to broadcast.
        Goto Sun Valley Idaho and test out the systems up there..they SUCK..
        Who wants to TRY, and use Sat, for youtube or to play video games?? 5-7 second delay, unless someone creates a laser based SAT system, which SUCKS because of the atmosphere interference.. it took the military YEARS to figure out Lasers to destroy things take TONS of power and cant reach Miles and miles away, because of the atmosphere..

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 1 Jan 2020 @ 7:42pm

          Re: Re: Re: Just STRANGE THOUGHT..

          Internet is available via satellite, too. Even cellular. Not just cable/fiber/phone lines. And we're not talking about games where latency is an issue. We're talking about movies and TV shows where latency is not an issue.

          All of the money is in serving high-density areas. Those areas all have internet service and most within those areas have internet. There is no mystery why cable operators are focused on those customers who also have internet and are clinging to a diminishing future. Sorry rural customers, you're not the priority (which should be insanely obvious by now).

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 2 Jan 2020 @ 1:13am

            Re: Re: Re: Re: Just STRANGE THOUGHT..

            Sorry rural customers, you're not the priority

            At least until Elon gets enough satellites into orbit, as the unserved and underserved worldwide are his target audience.

            reply to this | link to this | view in chronology ]

          • icon
            Norahc (profile), 2 Jan 2020 @ 6:48am

            Re: Re: Re: Re: Just STRANGE THOUGHT..

            Considering how many cable companies are ALSO the dominant ISP, do you really believe they wouldn't jack up internet prices to recover their lost profit margins?

            reply to this | link to this | view in chronology ]

            • identicon
              Anonymous Coward, 2 Jan 2020 @ 9:58am

              Re: Re: Re: Re: Re: Just STRANGE THOUGHT..

              Hell no. What I really believe is that they'll do everything in their power to not just hang on to current revenue but increase it. This, as always, is sure to backfire on them nd accelerate their demise but a cornered beast rarely acts rationally.

              reply to this | link to this | view in chronology ]

              • icon
                ECA (profile), 3 Jan 2020 @ 12:13pm

                Re: Re: Re: Re: Re: Re: Just STRANGE THOUGHT..

                AC,
                Agreed.
                They will take every shortcut, cut every job they can, Pay the gov. State, cities Tons of money and Pay the executives Tons, and not fix anything. Also Cut Stock payouts. because they can.

                There are a few reasons. Fixing the whole system would mean New contracts with everyone including Running over property lines. And paying High wages for people to work the sewers to get things done.

                But for Raising prices to Pay off everyone, as well as paying exec wages, 1 years wages is about 10 times your lifetime wages..
                They could have rebuilt the whole system, with abit of state help in reclaiming Bypass Land claims.(what is that word) Eminent Domain.

                reply to this | link to this | view in chronology ]

          • icon
            ECA (profile), 3 Jan 2020 @ 12:07pm

            Re: Re: Re: Re: Just STRANGE THOUGHT..

            In all of your first reply.,.
            They are all connected to the backbone..
            I mentioned Sat, cable, cell, Wired Phones, internet, and just about every form of Data transfer there is..
            From fax, email, msg, All of it.

            How many times do we need to pay for the 1 option.
            And the dreams of corps telling us, "everything it covered", It isnt.

            In all of this is 1 Big problem from the past. From the Builders of the system, to those Bill collectors(only) that dont build/update/fix/improve anything.
            They dont want to be paid once. They want to be paid 3-4-10 times for the SAME THING..
            There is even tech out there, that can us Fiber to bring Power to the home... We could have 2-3 Fiber wires in 1 drop line/1 connection to the home and have everything.
            A box on the side of the home with Every TV channel in the world, Internet, A small wireless home system, a Cellphone antenna, electrical power, and a few other things.

            But the systems are so old, they dont want to try and fix it, even after We have paid for years for all these things seperatly..$40 here, $100 there, $20 for this, $120 for that, then Long distance services on TOP.. Charge me $150 per month and leave us alone.

            For evey penny spent Against upgrading the system. To the states, the Gov. to Ajit Pie. They could have rebuilt the whole system over and over. Installed a system that Could be upgraded and fixed. Not buried up to its neck in Asphalt and concrete, and endless wire.

            As to RURAL. I get 150mbps at $80 per month. Just off the freeway in a town of 2600. And I laugh every time a person complains about connections in Major metro..

            reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 31 Dec 2019 @ 2:49pm

    ...the 1st Amendment defense is totally bogus because the issue has absolutely nothing to do with free speech/religion/etc.
    That Federal Judge doesn't buy it either, but sees that the Maine government has no hard evidence to justify its action.

    However, there is a big constitutional issue/defense related to "Bill of Attainder" which prohibits legislative action targeted at specific individuals/entities.

    The State of Maine officials were clearly targeting COMCAST for commercial practices that were otherwise deemed acceptable as exercised by similar business entities.

    "Bill of Attainder" is an existential threat to the entire American government regulatory apparatus, but luckily U.S. courts are extremely selective in which provisions of the Constitution they choose to enforce.

    Cable-Channel-Packaging sucks -- but in general it's none of the government's concern how any business firm choose to package and market its products.
    Packaging products to the detriment of consumer choice is a common practice throughout American industry, but it's usually tempered by competition.

    Cable/Broadband corporations suck because of special legal privileges bestowed upon them by dirtbag politicians and alleged regulators... which stifled competition.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 31 Dec 2019 @ 10:10pm

    Canada tried this in 2014, IIRC.

    A little over five years ago, the Canadian government under then-PM Stephen Harper required the cable companies to provide a "skinny basic" service tier with just the OTA stations (CBC/RC, CTV, TVA, Global, a butchered copy of the US border stations and the like) for C$25/month and stop bundling the speciality channels.

    Of course the cable companies played every loophole. One scheme was that they encrypted every signal on the system, including in-market OTA signals which any antenna could find for free, and charged rent for converter boxes to descramble the mess. That added several dollars a month, per TV set. Another scheme was to charge inflated prices to add back individual speciality channels - like continuous news. They've also been refusing to activate any converter box which didn't originally come from their system - even if the subscriber already owns the box outright. So somehow, magically, a Rogers box is somehow different from a Cogeco box is somehow different from a Shaw box is somehow different from an Eastlink box, even if they're the same make and model - and even if Rogers directly or indirectly owns just under 50% of Cogeco cable.

    So the supposed $25/mo subscription ended up with an extra $7-8/mo to rent the HD converter box (complete with unlimited PPV liability because, in Soviet Canuckistan, TV watch YOU!!) plus $6 (in 2014) per channel to add back things like continuous news - at a time when ten speciality channels were $13 (in 2014). As there's no regulation on the price of much of anything other than the "skinny basic" tier, the cable bandits just overcharged for everything else.

    I like my Channel Master 4228HD. I point it at the US stations and watch for free. Anything to keep the government in Ottawa-Hull from telling me what I'm allowed to watch. Too much ownership of everything (landline phone, cable, Internet, dish, individual TV/radio stations, OTA TV networks, speciality TV channels) is concentrated in the hands of too few large companies here, even compared to the US, and it's all overpriced garbage.

    And no, there is no "fee for carriage" for OTA channels on Canadian cable. Considering the cable company paid nothing for that signal, they sure do charge an arm and a leg... meanwhile, many terrestrial transmitters are being shut down in all but the large cities instead of moving them to new channels after the repack. I'm sitting midway from Toronto to Montréal and get one digital subchannel from Canada; the rest is all Watertown NY out here.

    Unbundling makes sense as it allows people who don't watch sports to avoid paying $8/mo for individual channels like ESPN. Nonetheless, unless government steps in to regulate everything, a cap on prices in one area is merely met by cablecos overcharging in some other area that lacks regulation... just because they can.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 31 Dec 2019 @ 10:16pm

      Re: Canada tried this in 2014, IIRC.

      So the supposed $25/mo subscription ended up with an extra $7-8/mo to rent the HD converter box (complete with unlimited PPV liability because, in Soviet Canuckistan, TV watch YOU!!) plus $6 (in 2014) per channel to add back things like continuous news - at a time when ten speciality channels were $13 (in 2014).

      ...and, by 2019, that mix-and-match block of any subscriber-selected ten speciality channels had jumped from $13/mo (five years earlier) to $27.50/mo. One channel alone jumped from $6/mo to $7/mo. And then there's the blasted box rental... and why exactly should a CableCard TV even need a converter box?

      One way or another, the corporations will shear the sheeple.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Jan 2020 @ 5:56am

    What about consumer protection where cable companies forcing consumers to pay for programs they don't want violates consumers' right to choose appropriate viewing for their home? This is just a cable industry that is lazy and dying.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 2 Jan 2020 @ 10:01am

      Re:

      Dying, yes, but lazy? Hell no. It may seem so from a consumer perspective but lawmakers must be spending a huge portion of their time fielding bids from cable industry lobbyists.

      Where in the Bill of Rights does it say "The People have a right to choose individual cable channels"?

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 2 Jan 2020 @ 11:49am

        Re: Re:

        Its bad faith to force consumers to pay for what they don't want just to get what they do want. Its coercion if not flat out extortion. Consumers have rights just because they are not written in the Bill of Rights. Where did you get that idea?

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 2 Jan 2020 @ 11:51am

        Re: Re:

        The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people, especially to choose individual cable channels.

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 2 Jan 2020 @ 4:21pm

        Re: Re:

        I think they are just afraid of sorting it all out if individual channels lists goes full on.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Jan 2020 @ 6:22am

    I am finally getting rid of cable TV

    I decided last year that I'm finally going to get rid of my TV and phone from my cable subscription after a few things happened. The fact that I haven't done it yet is a testament to how difficult they make to cancel services. I'm dreading how much time they're going to waste of mine. Ironically, I'm probably going to increase my internet speed a bit since I wouldn't mind being able to download (or redownload) the often ~50 gigabyte games that I've bought. Whether I do that it or not depends on how much of a pain it is to change my service.

    Right now I pay $270 a month for TV, Internet, and Phone, most of which goes to TV. Last year, I was watching a movie that has entertaining end credits. But Starz decided this was prime commercial time and cut them to show me advertising instead. I know it's a bit ironic that Starz is causing me to drop Comcast considering they're locked in a licensing battle right now, but there you go. But it wasn't just that. All of Cinemax and most of the Starz channels have no disappeared from the channels I receive, and yet my bill is the same. I also find that I just don't watch it as much as I used to.

    And in the end the only thing I'm really going to need to replace is HBO (note to self: Watch the rest of Watchmen this weekend), and a few local channels (note to self: buy an antenna this weekend). And even though many people seem to decry how many streaming options we're getting these days, I love it. I'm constantly on the lookout for new streaming services that may have things that I want to watch, and a large part of that is because you can sign up and cancel them so easily.

    In the end, I really want to stay with regular TV, because I like flipping around looking to see what's on, but Cable TV has done nothing to try and keep me. Their innovations are largely around "Here's some things that have existed for years but now we'll finally offer them" offerings like DVRs. What they really should have been doing is offing more channels that don't have commercials. More streaming options that don't ask you to pay (I don't ever both to try to use On Demand anymore to look for shows because it invariably will say "Yes we have that show at $3.99 per episode"). But they won't. They'll squeeze that stone dry and when it runs out they'll drive everyone off wired connections completely once 5G Jesus saves us all.

    Techdirt was right again.

    reply to this | link to this | view in chronology ]

  • icon
    nerdrage (profile), 4 Jan 2020 @ 2:36pm

    this is ridiculous

    By the time they settle this, the cable industry will be dead, killed off by streaming. it only has a few years left now.

    reply to this | link to this | view in chronology ]


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