A la Carte Cable Programming
[from the FCC]
Per-channel or “a la carte” programming means a channel is offered on an individual per-channel basis rather than as part of a package or tier of programming. Cable television operators are not required to offer channels on an a la carte or individual basis. However, cable operators are free to offer channels other than those required to be on the basic tier on an a la carte basis. For example, premium movie services are often offered on an individual basis rather than as part of a package.
Earlier this year the FCC released a study on the effect of delivering “a la carte” cable choices to consumers. This new study [full text here] found that by offering cable channels individually, rather than bundled, cable companies could reduce rates by as much as 13%. This contradicted a study by the FCC a few years ago, under Michael Powell, that found opposite results [HERE].
With the newfound results, many people are again pushing congress to require cable operators to allow consumers to choose the channels that they subscribe to, including Arizona Senator John McCain, the Parent’s Television Council, and the Consumer’s Union. In my opinion, you have to allow consumers to choose for themselves what they watch, and just as importantly, what they pay for.
Of course, as with any issue, there are still the naysayers (mainly the major cable companies) who say that “a la carte” cable would actually reduce consumers’ choices, and raise cable prices. The National Cable & Telecommunications Association released their own study of the effects of “a la carte” cable packaging, which (surprise, surprise!) came to this exact conclusion. [Full text HERE].
The economics of such an issue seems to be such that “the experts” will come to whatever conclusion is wanted by whoever signs their payroll. Specifically, I’d like to point out comments made by Marc Gunther, a senior writer for FORTUNE, and by the Media Freedom Project (whose very name is a misnomer: who cares about citizens’ rights, it’s the media conglommerates we really need to protect! –Just another First Amendment fallacy in my book)
From Marc Gunther:
It’s a nutty idea, even by Washington standards.
And it’s not really about saving consumers money, as we’ll explain.
No kidding! There are really two issues here; not just about saving money. Some people are arguing for a la carte cable because they think it is a lower-cost alternative to the current system. The reasoning goes something like this: you pay for 1,000 channels right now, but only watch 10, so why should you pay for all of those channels you don’t watch? If you’re only paying for 10 channels then surely you can pay a lower price. The other argument is a moral argument. There is so much filth and sleaze on the airwaves, and I don’t want my money going to support it. There are channels that I really enjoy, but also channels that I think are terrible. I should be able to watch what I want to (and pay to support it) without having to flip past filth, (and pay to support it) on the channels that show content that I disagree with. This contradicts Gunther’s argument:
The thing is, 72 million people subscribe to cable. If they don’t think they are getting good value, they can switch to satellite TV providers like DirecTV and Echostar or wait for the phone companies like Verizon or SBC Communications to offer video, as they have begun to do. They could also watch over-the-air television or — please make sure you are sitting before reading on — they could watch no television at all.
I can respect the “if you don’t like it, don’t watch it” argument, and I think that’s exactly what a la carte channels would do. If I don’t like those channels, I won’t subscribe to them or watch them — and they’ll never receive a dime of my money. But the ulatimatum, all-or-nothing argument is ignorant, regressive, and not in line with consumer freedom.
We can be fairly sure, though, about one thing unbundling would do: It would drive a bunch of cable channels out of business. They’d lose subscriber fees and ad revenues. Most people would not miss G4 or Sprout or the Golf Channel or the Independent Film Channel or BET but the reason pay television has become so pervasive — about 85 percent of American homes subscribe to either cable or satellite — is that it serves a variety of niche audiences.
On one point I whole-heartedly agree. A la carte programming would drive worthless cable channels out of business. But those channels that have a “niche audience” wouldn’t be among the fatalities - they would be supported by the subscriber fees and revenue of those that wanted to watch it! In other words: quality and appealing programming would survive, while the worthless channels would die. That’s how it should be. Imagine watching cable without having to flip through 20 different home-shopping channels! Basically, Marc Gunther misses the entire moral argument here.
And then there’s the Media Freedom Project:
Cable companies currently bundle hundreds of channels together, giving consumers a wide variety of programming options while keeping prices low. An a la carte mandate would require cable operators to tailor programming to literally millions of customers – a massive regulatory burden that would increase prices significantly. Many channels that appeal to a niche audience depend on the bundling structure for the economies of scale necessary to sustain them.
“A la carte pricing would represent fewer choices at higher prices. I can’t imagine a worse deal for consumers,†said Tom Readmond, executive director of the Media Freedom Project. “The free market has done wonders for cable consumers, to the point where the vast majority of viewers get their television via cable or satellite. As usual, more government regulation will just hurt consumers.â€
Arguments that a la carte is necessary to protect children from inappropriate content are refuted by the fact that most cable operators offer customers the ability to block specific channels or programs at will.
I fail to see how offering cable channels individually would increase prices significantly - you would only be paying for the channels that you want. Also, it wouldn’t offer ‘fewer choices’ like they say it would - it would eliminate all of the fringe channels that nobody watches now anyway, and keep (actually increase revenue for) the quality channels that people want to watch. Let’s say my cable bill is $100/mo. Instead of dividing that $100 up among 1000 channels, the cable company would only have to divide it up among, maybe, ten channels. Those channels that I wanted to watch would receive more of my money, and those channels I didn’t want to watch would receive none. So the ‘niche marketplace’ argument doesn’t hold much weight when its core audience is paying more of their money toward the channels they like. Also, think about it. If right now I’m paying this hypothetical $100 per month to only watch a select few channels, why would I be less content to pay $100 per month to watch those same select few channels without the hassle and hazard of flipping through dozens of worthless channels?
It seems to me like a pretty strong argument for a la carte cable, and those spewing doublespeak rhetoric supporting the current, inefficient bundling system seem more like tools at the hands of the media conglommerates to me than the consumer advocates they are pretending to be.
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