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Pay for only the channels you want? Maine pushes a la carte cable

Streaming services are allowing customers to cut the cord on cable packages.
Streaming services are allowing customers to cut the cord on cable packages. Element Electronics via AP

It’s a dream that has eluded cable customers for decades: Watch all of your favorite channels without having to pay for the dozens you never view.

Maine is trying to become the first state in the country to require cable providers to offer programming “a la carte,” with a law enacted earlier this year that gives customers alternatives to the bundles of channels offered by most providers.

The effort opens a new front in a long-running debate in the telecommunications industry, but it comes as the industry is already undergoing seismic change. Millions of consumers are abandoning traditional cable in favor of lower-cost streaming services, while Disney and nearly every other major entertainment company are spending billions on new content and services that are massively expanding viewing choices.

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The Maine law is being challenged by Comcast and several entertainment companies, who argue that such a requirement would alter their businesses in a way that could result in consumers paying more for cable television service. Last week, a federal judge blocked the measure from taking effect while the lawsuit plays out.

But the law’s backers say its principles would be common sense in any other industry.

“I want to watch what I want to watch,” said state Representative Jeffrey Evangelos, the lead sponsor of the measure. “When you go to the grocery store, nobody’s telling you that if you buy steak you have to buy potatoes.”

Evangelos, an independent who represents parts of Maine’s midcoast , said he became interested in the subject while campaigning and handing out Red Sox schedules to constituents. He said some told him they could no longer afford to watch the games on New England Sports Network because their cable bills had gotten too high.

There have been years of debate among regulators and industry officials about whether an a la carte system would actually be less expensive for customers. Separate studies by the Federal Communications Commission have come to different conclusions.

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Thomas W. Hazlett, a professor at Clemson University and former chief economist for the FCC, said the desire for a la carte programming is “fundamentally ill-fashioned and reflects a deep misunderstanding of consumer welfare.”

He said it would be more difficult for cable companies to offer every customer a customized menu of channels.

“It would take them more time to record everybody’s order. To take channels away out of that lineup is literally more expensive,” he said. The costs of individual channels could quickly add up to more than the price of the packages cable companies sell, he added.

The lawsuit was brought by Comcast, along with companies including CBS, Disney, NESN, and Viacom. Comcast and Charter Communications, Maine’s two major cable companies, declined to comment.

The plaintiffs argue that the prices cable companies pay for content are determined in large part by the assumption that they will be sold as part of packages. They also noted the law singles out cable because it does not apply to other providers of similar services — such as satellite television. In addition, federal law regulating cable should preempt the state’s action, they claim.

Some in the industry argued the requirement would have other unintended consequences. Suzanne Goucher, chief executive of the Maine Association of Broadcasters, said it could mean fewer people will get traditional broadcast networks, such as NBC, over cable. She said the law is written in a way that might require companies to not only break off individual stations into separate packages, but even specific programs on the same network.

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“If I were to put on a cable operator’s hat,” she said. “I’d say this law is a nightmare.”

On Dec. 20, US District Judge Nancy Torresen granted the companies’ request for a preliminary injunction, writing that the state had not yet laid out a concrete case demonstrating the change would benefit customers. While she was not convinced that federal law would overrule the state, Torresen said there was a good chance the plaintiffs would prevail on a First Amendment argument: that the state was unfairly limiting the cable companies’ editorial control over packaging content.

Evangelos is upset with Torresen’s reception to the First Amendment argument. He compared it to the 2010 Citizens United decision, in which the US Supreme Court gave corporations full free-speech rights to spend money on elections.

He added that the law does not prevent companies from selling cable in packages: “They’re just going to offer a menu on the side that says ‘side orders.’ ”

Supporters say the latest development is another example of the outsized power cable companies have in a region where thin competition and light state regulation give consumers relatively little recourse.

“It’s created a situation here where people feel more or less powerless against these virtual monopolies,” said Tony Vigue, a retired president of the Community Television Association of Maine who now advises municipalities on cable contracts.

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Cable companies recently took the state to court on another matter: a law that pushes them to expand service and to make public access stations easier to find.

Industry observers note that customers have in recent years seen an explosion in choices. “Cord cutters” with high-speed Internet access — often purchased from the very same cable companies — can pay for streaming access to many individual channels once available only as part of packages.

That’s already changed the marketplace dramatically, though prices for cable have continued to climb. According to the FCC, the price of expanded basic service in the United States rose significantly faster than inflation between 2011 and 2016 — at an annual rate of 4.1 percent.

Traditional cable services have been hemorrhaging customers because providers have failed to offer enough choices, said Jeffrey Kagan, a veteran telecommunications analyst. But he said policy makers should instead look for ways to make it easier for competitors to enter their markets if they want consumers to benefit.

“That is what will keep prices low and innovation high,” he said. “We have to clear the path and let new competition come into every single market in the country, because that means competition, and competition always wins for the consumer.”

Evangelos said that change isn’t coming fast enough, though, so he’s hoping that if the state’s lawsuit prevails, it will force cable companies’ hand in Maine and beyond.

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“When we win, you’re going to see the bowling pins fall,” he said. “Of course everyone’s going to want it.”


Andy Rosen can be reached at andrew.rosen@globe.com.