The XM-Sirius choice plan has some asking why TV viewers can't pick channels
A plan by the nation's two satellite radio companies to let consumers pick the channels they want to pay for could reignite a debate about consumer choice in the cable television industry.
"I think it will raise the profile on the issue again and people should legitimately ask if XM and Sirius can do this with radio in order to get their deal done, why can't the cable companies do this, too?" said Bob Williams, director of hearusnow.org, a website focusing on telecommunications issues that's run by Consumers Union, a group pushing for so-called a la carte pricing in cable.
In an attempt to persuade lawmakers that their planned merger won't limit choices for subscribers, XM Satellite Radio and Sirius Satellite Radio said last week that they would allow consumers to pick which stations they want to subscribe to, as opposed to buying all their stations in one package. Analysts say the move is motivated by the companies' desire to quell anticompetitive concerns about the merger in Congress.
Under their plan, consumers could pick 50 XM channels or 50 Sirius channels for $6.99 per month. They could also pay $14.99 per month to pick 100 channels from both services' menus. Additional channels could be bought for 25 cents per month each. Currently, XM charges $12.95 per month for 170 channels and Sirius charges the same for 165 channels.
Joy Simmons, a spokeswoman for the National Cable & Telecommunications Association, declined comment on XM and Sirius's plans.
While Williams and other supporters of a la carte pricing say satellite radio is similar to cable in that it is a subscription-based business in which customers pay monthly fees for access to multiple channels of programming, cable industry insiders dismiss the comparison.
Cable's economics differ from those of satellite radio because television has higher production costs, said Stephen R. Effros, a cable industry consultant and former FCC attorney. Beyond that, he said, the radio a-la-carte proposals suggest that a la carte would drive up consumers' prices.
"If you don't get the channels you want in that first 100 package, it's 25 cents a channel. All you have to do is multiply 25 cents by 200 channels, and it comes to $50; meanwhile, if you buy the package, it's $12.95," Effros said.
But Williams said that point is invalid because given the choice, most consumers would choose only a few channels, not a cable or satellite radio company's entire lineup. "Consumers shouldn't be asked to subsidize what other people want. That argument just doesn't make any sense to me," he said.
The cable industry has been criticized for forcing consumers to buy channel packages instead of letting them pick from a menu for years. The debate heated up after Justin Timberlake's and Janet Jackson's 2004 Super Bowl "wardrobe malfunction," which caused Federal Communications Commission chairman Kevin Martin to push for a-la-carte options as a way to keep explicit images away from children.
Cable companies argue that a la carte would force higher prices and limit choice.
Networks charge cable companies a per-subscriber fee to carry their signals, and the cable companies spread those fees out among their subscribers by packaging channels together in tiers. If consumers could pick which channels to buy, cable companies argue, every subscriber would have to pay full price for them.
In the case of popular networks like ESPN, that could mean paying $15 per month or more for one station, compared with getting that channel as part of a $50-per-month package that included dozens of others. Beyond that, niche channels would have fewer subscribers and wouldn't make enough money to keep operating.
Josh Martin, a media and entertainment analyst with the Yankee Group, a Boston consultancy, said the cable companies have a valid point regarding their economic models.
But he also noted that the underlying economics in cable had never been challenged by another pricing model, because the industry has generally regarded offering more choice as too cumbersome for itself and its customers.
"Is it the best way? I don't know, but that's the way it's always been," Martin said.
"Plus, I don't know how consumers would respond to an a-la-carte cable service. If you start saying you can get your basic channels and you can pick and choose from this menu, I think the paperwork and the application process would be too confusing."
Keith Reed can be reached at reed@globe.com. 
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