This Year's Marxist Economics
On Feb. 9, the FCC issued its “Further Report” on cable à la carte pricing that Chairman Kevin Martin unexpectedly announced at November's “indecency summit.”
Authored principally by FCC Chief Economist Leslie Marx, the new report reversed the commission's 2004 report to Congress. As Chairman Martin said it would, and using some of his exact words, the new report concludes that consumers might benefit from cable à la carte.
Although it contains more qualifiers than an Olympics tryout, the report should be seen for what it is: a piece of advocacy, not reasoned policymaking. This is evident from the new report, which repeatedly brands the FCC's 2004 conclusions as “biased” and “mistaken,” while claiming that its new conclusions are based on “more-balanced analysis.” A cursory review of the new report reveals that it is anything but balanced. No new data was collected; the FCC instead reviewed a small portion of the record.
This complete reversal of the FCC's position within one year of the agency's original report to Congress is unprecedented. It ignores prior studies of the issue, including those by the Government Accountability Office, and it seriously misstates the record the FCC has previously assembled.
It does not rely on any affirmative studies to support its conclusions. Instead, the overwhelming focus of this review was a critique of a study by Booz Allen Hamilton on behalf of the cable industry, which, the FCC now concludes, contained mistakes and unrealistic assumptions. The FCC's press release states that Booz Allen even acknowledged its errors. This grossly mischaracterizes statements by Booz Allen, which, contrary to the FCC's claims, stands by its original findings.
One of the biggest weaknesses of the report is its cursory and speculative treatment of the issue of diversity. It ignores substantial evidence supporting the FCC's original conclusion: that an à la carte requirement would harm diversity both at established networks and at small, special-interest networks.
The report's lack of substance likely doesn't matter, since it may already have served its purpose. Announcing the redo helped Martin pressure major operators into creating family-programming tiers.
The report also led the usual array of pro-regulation advocates to crow about the reversal and to demand a legislative response. Serious policymakers should demand more: a real study instead of a stratagem.