Sen. John McCain (R-Arizona) on Thursday unveiled legislation that would upend the cable and satellite business, forcing them to let customers pick-and-choose which channels they would like to get rather than take programming in bundles.
"The video industry, principally cable companies and satellite companies and the programmers that sell channels, like NBC and Disney-ABC, continue to give consumers two options when buying TV programming: First, to purchase a package of channels whether you watch them all or not; or second, not purchase any cable programming at all," McCain said in remarks prepared to deliver on the floor of the Senate.
McCain's plans to introduce the legislation, first reported in Broadcasting and Cable, are expected to be met by stiff opposition from the broadcast and cable channels. Moreover, McCain, who was once the chairman of the Senate Commerce Committee, no longer sits on that committee.
SEE MORE: Why A La Carte TV Will Never Be
In a statement, the NCTA said that "a government mandated ala carte system is a lose-lose proposition. As countless studies have demonstrated, subscription bundles offer a wider array of viewing options, increased programming diversity and better value than per channel options."
His bill, the Television Consumer Freedom Act of 2013, is designed to give cable and satellite operators an incentive to offer programming on an a la carte basis by linking it to the compulsory license that gives multichannel systems the right to carry broadcast channels. Under McCain's bill, if the cable or satellite operator does not offer a broadcast station, or any other channel owned by the broadcaster, on an a la carte basis, they cannot rely on the compulsory license to carry those stations.
But introducing such legislation now seems timed to put the industry on notice at a time when rates have been rising, in part due to the costs of sports channels like ESPN. McCain's legislation also includes a provision that could boost Aereo, the Barry Diller-backed startup that is being challenged by broadcasters for offering digital streams of their signals without their permission. The legislation calls for pulling broadcasters' spectrum if they "downgrade" their broadcast content in favor of cable, as some have threatened in the face of Aereo's legal victories. McCain said that the legislation calls for auctioning off that spectrum "if the broadcaster does not provide the same content over the air as it provides to" multichannel cable and satellite services.
Another provision would end the sports blackout rule when events are taking place in publicly financed venues or involve public financed sports teams. McCain also wades into the dicey area of retransmission consent negotiations, with a provision that in cases where carriage disputes that fail to reach agreement, both sides must disclose their final offer to the FCC.
McCain proposed an "a la carte" cable bill in 2006, but it failed to move through Congress.
McCain's planned introduction of the bill comes as the Senate Commerce Committee prepares for a hearing next week on the state of the video marketplace. Among those scheduled to testify on Tuesday are Gordon Smith, president and CEO of the National Assn. of Broadcasters; Michael Powell, president and CEO of the National Cable and Telecommunications Assn.; R. Stanton Dodge, general counsel of Dish Network; and John Bergmayer, senior staff attorney at Public Knowledge.