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AT&T backs a la carte pricing for TV service

AT&T Inc. said Thursday it would be willing to allow customers to pay for only the television channels they want.
/ Source: Reuters

AT&T Inc., the biggest U.S. telephone company that is also moving into the subscription television business, said Thursday it would be willing to allow customers to pay for only the television channels they want.

Most of the cable and satellite television industry has resisted pressure from U.S. regulators and lawmakers to embrace what is known as "a la carte service" instead of bundles, arguing it would cost more and niche channels would be squeezed out.

Still, Federal Communications Commission Chairman Kevin Martin said earlier this week a la carte may not cost more and it would help parents weed out channels that have sexual and other content they want to shield from their children.

AT&T, which recently was formed after SBC Communications Inc. bought AT&T Corp., for the first time publicly took a position on the matter, expressing its willingness to offer a per-channel pricing.

"If consumers want a la carte programming, we will be happy to offer it, so long as we are able to obtain access to the programming in that manner," said AT&T spokeswoman Claudia Jones.

"It is our goal to deliver more choices to our customers when they want it, in the way they want it," she said.

Often programming contracts bar television distributors from offering channels individually, though premium channels like HBO are typically sold separately.

A National Cable & Telecommunications Association spokesman declined to comment on AT&T's statement but said the government should not interfere with programming deals.

"We don't support unnecessary government intrusion into private marketplace negotiations," said NCTA spokesman Brian Dietz.

Verizon Communications is also rolling out video service, but has not directly endorse a la carte.

"We're looking at a variety of ways to address the demands of the marketplace," Verizon spokesman Eric Rabe said. "We're also very conscious of program contracts."

Wall Street analysts have expressed doubts that lawmakers would impose a mandate on cable operators to offer per-channel service. But they have cautioned that a la carte would hurt cable revenue and their cash flow.

"If a la carte is what the market is looking for, it might be tough for cable to respond, whereas telephone companies could pursue programming deals that permitted greater channel unbundling," said Paul Gallant, an analyst at Stanford Washington Research Group.

AT&T are rolling out television service to compete with cable companies like Comcast Corp. and Time Warner Inc. AT&T plans to begin offering its video service in earnest early next year.

One cable company, Cablevision Systems Corp., has supported a la carte in the past, breaking industry ranks.

"Our experience indicates a la carte will result in a more affordable service for all with more programming options," Cablevision Chairman Charles Dolan said in a statement Thursday.

AT&T support emerges as it and Verizon have sought help from the FCC and Congress to ease entry into the video business. Companies that want to offer video services typically have to obtain licenses from local authorities.

The FCC recently launched a review to determine whether it should intervene to ensure telephone companies like AT&T can launch service without obstacles from local officials.