Advocates Of A La Carte Mandates Misunderstand Infinite Goods

from the bundling dept

Some minority organizations are making the case that a la carte mandates would destroy the market for niche channels. They point out that the market for minority programming like BET and Univision is relatively small, so they (and minority viewers) benefit from being able to tag along with channels that have broader interest. FCC chairman Kevin Martin disagrees, saying that "if a cable operator only wants to carry one channel, it should not be required to buy 10 or 20 channels in order to do so." Martin seems to be thinking of cable channels as tangible products like cars or toasters: if people are only "required" to buy the channels they really want, they'll save money because they won't be "forced" to waste money on other channels they're not interested in. But this argument ignores the fact that television content is an infinite good. The costs of delivering cable content is almost all fixed; once coax has been run to a customer's house, it costs almost exactly the same to provide a given customer with every channel on the cable network or with only one channel. As a result, bundling is economically efficient: throwing in additional channels increases the value of the cable service without imposing any extra costs on the system.

People imagine that an a la carte mandate would mean that if they're currently paying $50 per month for 50 channels, then they should be able to pay $1 per month for one channel. But that doesn't make any sense. Switching a given customer from 50 channels to 1 channel doesn't reduce costs (the other 49 channels would presumably still be produced for other viewers), so why should the customer expect a lower bill? If anything a switch to a la carte actually makes things more expensive because in some cases cable companies have to install new equipment and set up a more complicated ordering and billing system to keep track of who had signed up for which channels. In reality, what would happen is that the cost of each channel would go up a lot. Instead of $1/channel, cable companies might charge something like $8/channel, with each customer choosing 6 channels on average. The result would be that most people would pay about the same for a lot fewer channels.

It's a mistake to think of bundling as being "forced" to pay for channels we don't want. After all, non-sports fans don't get outraged about the fact that they're "forced" to take the sports section with their morning paper. The right way to think about it is that you're paying for the parts of the bundle that interest you, and the rest of the paper is a freebie that doesn't cost you anything extra. It would be silly to demand that newspapers price each section of their paper separately and let you do without the sections you don't want. It's equally silly to demand that cable companies not show you channels you're not interested in watching, since those aren't costing you anything either.



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    Lutomes (profile), Jun 3rd, 2008 @ 5:32pm

    Pricing

    Even with A La Carte pricing, there needs to be tiered costs. Either as something like $x per month for the "cable" with no channels this covers the network, maintenance, admin, support, billing etc.

    Then you pay an amount per channel, which might be $1 per channel or $10 per channel. Depending on the cost of production, different providers can potentially charge independantly.

    There is some argument though about many of the minority channels that are currently "free" with a cable package that may disappear if people are not willing to pay seperately for them. I'm not sure if this is a good or a bad thing, its hard to tell.

     

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    GeneralEmergency (profile), Jun 3rd, 2008 @ 5:34pm

    Ummm...I still disagree, Tim.

    I will continue to favor ala carte pricing for cable and sat television because the bundling defeats the consumer's ability to drive and shape EXACTLY what and HOW MUCH they are willing to pay for in a marketplace artificailly deprived of real competition. And I'd like to point out that until consumers are given this power, Cable and Sat seriously risk being side stepped by ala-carte internet based offerings, assuming that nonsense like bandwidth capping gets trashed in the marketplace or by law.

    Bundling is a fundamentally immoral and coercive practice that makes customers angry. And I don't think anyone really expects $1 dollar channels. What we expect is to be able to keep the HomeShopping/WrestlingNow/500WaysToPaintABedroom dreck out of our faces.

    With ala-carte pricing the old phrase "500 channels and not a damn thing to watch" just may fade from memory.

    And...I'm still chewing on your assertion that TV programming is an infinite good.

     

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      Anonymous Coward, Jun 3rd, 2008 @ 6:13pm

      Re: Ummm...I still disagree, Tim.

      Tim, your shooting yourself in the foot and missing the point entirely.

      The point is having cable companies go A La Carte will NOT make things THAT much cheaper. Hell, depending on the cable company and your area it may make your costs go up.

      The reason TV programming is an infinite good is the same exact reason why MUSIC is now an infinite good. It's called the DIGITAL AGE and anything that can be turned into an e-format can be duplicated for practically ZERO cost (real cost is small percentages of a penny).

      The point is, with cable TV you are paying for the actual cables to your home more than anything else. With satalite TV you are helping pay for the satalites that supply you with a feed. In either one you are paying for the maintanence to keep those methods working.

      What most people don't realize is that TV broadcasts no longer work like they used to. They're digital, which means they work more like websites on the internet.

      Tell me, do you pay Comcast or whatever ISP you have for access to 5 million websites and just 'not get' the others? While the technical details differ, the economic details are essentially the same now.

       

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        Alex, Jun 3rd, 2008 @ 6:50pm

        Re: Re: Ummm...I still disagree, Tim.

        The point is, with cable TV you are paying for the actual cables to your home more than anything else.
        The point you and Tim are both missing is that while the marginal cost of content distribution may be very close to zero now, the cost of content creation is nowhere near zero. It's the cost of creating content (that I'll never watch) that accounts for the difference between the $13.00/month basic package and the $117.50/month premier package.
        Tell me, do you pay Comcast or whatever ISP you have for access to 5 million websites and just 'not get' the others? While the technical details differ, the economic details are essentially the same now.
        If my ISP had to pay a per-subscriber fee to espn.com (like the cable company has to pay to ESPN), you'd better believe there'd be different access tiers on the Internet like there is with cable.

         

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        LarryD, Jun 3rd, 2008 @ 7:54pm

        Almost there...

        Re: "Tell me, do you pay Comcast or whatever ISP you have for access to 5 million websites and just 'not get' the others? While the technical details differ, the economic details are essentially the same now."

        Cable does not charge me a fee and then let me get to all of their content.

        Right now the cable companies are playing the role of content provider and carefully creating packages to milk all they can get out of certain channels and offset their costs for others.

        A La Carte would put the cable companies back in the role of service providers and then the market could decide which channels live or die - the way it should be.

        Perhaps instead of A La Carte, what we need to do is call it the same thing we do for the web... Network Neutrality.

        LarryD

         

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        NPGMBR, Jun 4th, 2008 @ 8:18am

        Re: Re: Ummm...I still disagree, Tim.

        I don't quite buy that argument. Its my understanding that the installation and other fees pay for the maintenance of the infrastructure.

        Those items surely are not going up in price after they have been installed. What we are paying for are the ever escalating salaries of those in the entertainment industry. Its all about the content!

         

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    Alex, Jun 3rd, 2008 @ 5:58pm

    Good points, but...

    I've always been in the ala carte camp (it's the reason I don't have cable today - I can't see paying $60/month for the 4 or 5 channels I might regularly watch). You do make some good points about the fixed/variable costs of running the coax to the house vs. sending content over that cable.

    I do disagree with you that the cable companies would need to charge a lot more per channel with ala carte pricing because they'd have to upgrade their billing systems, etc. Why? Because they already have ala carte pricing of sorts - they're just called "premium" channels - and they're already billed on a per-channel, per-month basis.

    Why can't we pay a simple flat rate for basic cable ($13.00/month in our area) and then treat everything over and above that as "premium" channels that are billed on a per-channel, per-month basis? If they can do it with HBO and Starz and MLB Extra Innings and Howard Stern On Demand, they can do it with ESPN and the History Channel and the Food Network just as easily.

     

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    Internet Tv watcher, Jun 3rd, 2008 @ 6:23pm

    Channel noise

    In my opinion a la carte systems provide me for something the tech industry sorely lacks, simplicity. I currently have 18 channels in my cable subscription (temporary situation I assure you). My box gives me 901 channels. I can't filter out the disabled channels with the hardware included in the box!

    Having too many channels makes watching tv an organization nightmare on the user side. Ever since when has this site thought that it's a valid business model to not improve service because it would incur capital cost. Changing the organization structure is a sunk cost. They should be forced to pay it to compete just like the mobile service providers keep on improving their services in order to survive.

     

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    Mark Murphy, Jun 3rd, 2008 @ 6:30pm

    Big Dish Satellite

    At the risk of piling on...

    My folks, up until about a year ago, had "big-dish" satellite TV -- using a dish that looked more like Arecibo than DirecTV. While you could buy packages for big-dish, a la carte was also available, which my folks used. They wound up paying under $10/month, as I recall, for maybe a couple dozen channels (note: they needed a UHF/VHF antenna for local channels). Some of those channels were "free" because they were effectively subscribing to the satellite feed, not the individual channel. The only reason they stopped was their receiver died and it was ridiculously expensive to replace, in part because big-dish has generally faded away from consumer TV.

    Getting to some of your specific points:

    "If anything a switch to a la carte actually makes things more expensive because in some cases cable companies have to install new equipment and set up a more complicated ordering and billing system to keep track of who had signed up for which channels."

    CATV billing systems already handle pay-per-view, their existing tiered packages, a la carte premium channels, Internet access, phone service, and the like. They probably already are sufficiently powerful to handle a wider variety of a la carte channels.

    "Instead of $1/channel, cable companies might charge something like $8/channel, with each customer choosing 6 channels on average."

    And you just pulled those figures out of a hat, right? If not, please provide a citation.

    Because if we're pulling figures out of hats, it's just as likely that instead of $1/channel, it's $0.50/channel on top of a base $10/month subscriber fee. Heck, all they need to do is price the flat subscriber fee to cover costs plus an acceptable profit margin, then pass along the per-head fees the cable channels charge, perhaps with a small markup.

    The ones who lose in this arrangement are the cable channels. Recall the brouhaha over NFL Network and...Comcast? Cablevision? one of those C cable firms, when the cable carrier didn't want to have NFL Network on "basic cable" because it was too expensive. NFL Network, of course, wanted it on basic cable to get the millions of heads automatically. With a la carte, they're the ones who won't be able to charge $8/channel and, therefore, will lose a fair chunk of revenue. On the other hand, they have other revenue streams (e.g., ads) to fall back on.

    "It's equally silly to demand that cable companies not show you channels you're not interested in watching, since those aren't costing you anything either."

    You're also forgetting the moral aspect, which IIRC is what got Mr. Martin into this area in the first place. Think of a la carte cable as the V-Chip writ large.

     

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    Tom Erskine, Jun 3rd, 2008 @ 6:34pm

    bundling/vs a la carte programming

    Mr. Lee is an apologist for somebody and his logic (or should I say lack of it!) falls short of reality for the average cable/satellite customer. The reason why the cable and satellite bills have increased by over 60% in a few years is directly because the customer is forced to take programming he neither wants or needs. One fine example is DirecTV's programming....I could care less for ESPN or many of the other sports channels that are included in almost every package they offer. Indeed, 80 to 90% of the programming I am forced to pay for I NEVER watch!! I don't watch sports as a ruleā€”and those that I am interested in on occassion, I'm willing to purchase a la carte. I had a 10 foot C-band dish for almost 25 years and switched to DirecTV only because of lack of reliable maintenance in my home area. I am utterly disappointed with the offerings on satellite and cable!

     

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      Anonymous Coward, Jun 5th, 2008 @ 1:51pm

      Re: bundling/vs a la carte programming

      really now? so where you live, in that same period of time that cable and satellite bills have increased by over 60%, your selection of channels has grown considerably?

      I don't think so, hence, increase in price doesn't seem too strongly correlated with the channels they offer...

       

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    Clueby4, Jun 3rd, 2008 @ 7:01pm

    Big piece you (intentionally?) failed to mention.

    Is that some channel charge more and/or require the subscription to additional channels. And even more damning is cable companies fail to disclose these charges to their customers.

    The anti-ala-carte flappers, seem to think all channels charge the same and aren't encumbered with obtuse requirements. I mean if the world was so frelling rosey as the astro-turfer's article implies I wouldn't have to wonder why my cable company doesn't carry the Anime network.

    I shouldn't, nor should the cable companies, have to pay for any channel/content that contains advertising, PERIOD. This is especially galling when local cable companies replace nation ads with local or even more disgustingly their own ads.

    And please don't obtuse claim infinite good, they are a number of factors that make that claim effectively false, ie wheres my Anime Network, channel limitations, bandwidth, licensing, and the simple fact that the additional channel are not free hence the infinite droolings are not experienced in the real world.

    I mean seriously the only thing infinite on a cable network are infomercials.

     

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    John, Jun 3rd, 2008 @ 7:04pm

    The incremental cost of actually delivering the bits and bytes of the programming of a given channel may be tiny, but the problem is that the cable providers pay money to the channels on a per subscriber basis for channels they carry.

    You are concentrating on the physical costs of carrying the channel, when that is not the problem with bundling vs. a al carte. My problem is the programming fees passed on to me by the cable operators for the 70% of channels that I will NEVER watch.

     

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    Anonymous Coward, Jun 3rd, 2008 @ 7:19pm

    NFL Network

    The NFL network was in a dispute with the cable company, because they wanted the cable company to carry their channel in the standard tier and pay PER SUBSCRIBER.

    I don't know what J. Jones intent was, but it was a perfect example of why we need a la carte.

     

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    Kevin, Jun 3rd, 2008 @ 7:22pm

    They're not charging for distribution

    It's true that the cost should be based upon distribution, which would just be the coax cable line running into your house. But the reality is that it's not.

    Instead, cable operators are forced to buy stations and then charge the customers accordingly. And they're forced to buy stations in bundles, and must then pass the cost along to consumers. The costs of the coax cable that's been run into my house for the last 30 years hasn't changed. But the price that cable operators want to charge has gone up substantially. That's because popular stations are either demanding more money, or are forcing the cable operators to buy in a package of programs.

    A-La-Carte is an attempt to fight back against high prices through the introduction of market forces. If a station wants to charge $1 for a popular station, but then force it to be bundled with 4 $0.50 channels, then A-La-Carte will unbundle it. If a popular station thinks that it can demand $8 for a station, that's fine, but then people might dump the channel and watch something else. Currently the major stations have a mentality that thinks "Well, the cable operator is FORCED to carry this channel since it's so popular, so therefore we'll do X to charge extra".

    Kevin Martin is absolutely correct, because the current billing system is based on station pricing and bundles, not for the distribution.

     

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      Hulser, Jun 3rd, 2008 @ 8:15pm

      Re: They're not charging for distribution

      A-La-Carte is an attempt to fight back against high prices through the introduction of market forces.

      I couldn't agree more. Let the people vote with their remote controls. Let market forces naturally dictate which channels survive. Bundling of cable channels is just a distortion of free market system.

      Besides, I think the impact on niche channels is way overblown. If you had a la carte cable channels, the competition would force a consolidation of channels. So, you'd only have 10 home improvement shows instead of 50. But even if you cut the average American's cable bill in half, I just don't see how there wouldn't be enough money to pay for the content that most people want to see, plus some left over for public interest or niche programming. The purpose of cable television is not to subsidize the entertainment industry, but to entertain. Let the invisible hand decide where the entertainments dollars go.

       

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    Hulser, Jun 3rd, 2008 @ 7:42pm

    It's the content cost, not the delivery cost

    The costs of delivering cable content is almost all fixed; once coax has been run to a customer's house, it costs almost exactly the same to provide a given customer with every channel on the cable network or with only one channel.

    The delivery costs seem to be almost completely irrelevent to the topic of a la carte cable. As someone else pointed out already, it's not the delivery cost that is in question, but the cost of the content.

    As a result, bundling is economically efficient: throwing in additional channels increases the value of the cable service without imposing any extra costs on the system.

    Adding extra channels may indeed add to the value of the cable service, but as anyone who has paid a cable bill for more than a couple of years would know, the cost of the content is getting passed on to the consumer. As I understand it, the content creators force the cable providers to buy bundles of channels. So of course the cable providers pass the cost along. The cable companies don't just "throw in additional channels" for free. Someone gotta pay for that content. Perhaps from the cable companies viewpoint it's "econonicaly efficient" to add more content and raise the price without giving the consumer an option, but to most people, this is just going to seem unfair. And not just a little unfair, but unfair to the point of infuriating millions of people.

    The right way to think about it is that you're paying for the parts of the bundle that interest you, and the rest of the paper is a freebie that doesn't cost you anything extra. It would be silly to demand that newspapers price each section of their paper separately and let you do without the sections you don't want.

    I think the flaw of this analogy is the very large difference in cost between a newspaper and a monthly cable bill. How much is a newspaper these days? 50 cents? A dollar? Whatever. I have friends that have triple digit monthly cable bills. When it's only fifty cents, who cares if you're paying for sections of a newspaper you won't read? To make your analogy work, newspapers would cost $20 per edition, but would be a foot thick. You used to read the comics and do the crossword puzzle for a quarter? Too bad. Now you have to pay 20 smackers for those sections. But don't worry! We're giving you enough newspaper to line bird cages and wrap fish for a lifetime, all for "free!" Using your logic, this is economic efficiency.

     

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    IEEE, Jun 3rd, 2008 @ 8:12pm

    I am totally 100% for a la carte... why should I pay for the crap on MTV. I don't want even a milli-cent (how do you like that) going to the culture trash they call TV.

    On the other hand.... Can you imagine if cable/sat goes to a la carte then turns around and says.. huh well if people don't mind paying for each channel, they won't mind paying for each website. They'll get their wish to ram net un-neutrality down our throats.

     

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    Tom, Jun 3rd, 2008 @ 8:49pm

    Infinite good?

    The biggest cost for a cable company isn't the infrastructure, it's the content! All those channels that the cable company delivers cost that cable company some amount each month PER subscriber. This negates much of what is said in the original post.

     

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    withersteen, Jun 3rd, 2008 @ 8:50pm

    No TV - No Problem

    That's how I solve the conundrum.

     

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    Anonymous Coward, Jun 3rd, 2008 @ 9:13pm

    18: I agree, Throw the damn Cable box out the window, hope it lands on a comCRAPst exec



    I don't have cable anymore, just watch over the air when I do watch, otherwise I find the shows I want Elsewhere.

    DEATH TO THE CORPORATIONS!

     

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    Chiropetra, Jun 3rd, 2008 @ 10:37pm

    Can you say 'crapware'?

     

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    Ben, Jun 3rd, 2008 @ 10:53pm

    Price per subscriber

    Like Tom said, cable companies have to pay per subscriber for channels. According to the proposal I read, only channels costing more than $0.75 per subscriber per month are eligible for this.

     

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    Anonymous Coward, Jun 3rd, 2008 @ 11:18pm

    If these cable stations are charging so much to the cable companies, or to us through the cable company... why do we have to watch advertising on those channels. It used to be you paid the cable company for the infrastructure to deliver content (as opposed to over-the-air programming), and watched ads on stations so they could develop their content. Seems to me thats how it should still be if we have to watch ads on cable stations. Any channel that shows ads, and wants special per-subscriber fees from the cable companies ought to be laughed out of the office when they demand those fees.... but the cable companies don't do that because they make huge $$ too by forcing customers to upgrade to "premium" bundles full of hundreds of channels they'll likely never watch in order to access the most popular channels. The cable companies go along -- crying all the way about how they have it so hard.

    It is only the consumer that loses, and IMO not enough people have cared enough in recent times for it to make any difference.

     

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    AdamR, Jun 4th, 2008 @ 2:27am

    Hmmm, never seen so many people wrong about A La Cart beening cheaper, in the short term prices will fall but the fees will rise over time so you be paying more for less. You might not want Espn,BeT, Univision, or the Oxygen channel but the owners of those channels will make sure that you pay thru the nose for the channels you want and which they own.

     

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    Twinrova, Jun 4th, 2008 @ 4:16am

    Cable and satellite are in need of changes.

    Tim,
    Answer this question: If the fee for distribution is relatively the same, then why does every cable company/satellite distribution offer tiered programming?

    Based on your summary, we should all be paying one base price for every channel that's not subscription based or pay-per-view.

    Yet, Brighthouse cable recently increased its prices on all THREE of its tiered programming options.

    Ever see those "$19.99" ads by DirecTV? Ever see what you get for that amount? Now take a look at what it costs you for the channels you really want. Bye-bye $19.99.

    The simple fact is cable can now offer ala carte programming. Most cable systems are now set up such that an operator can flip a switch and disable/enable specific stations.

    I know this to be true because there was a recent addition to some HD channels, but something glitched and I lost several non-HD channels.

    When I called to bring up the issue, the service rep simply got onto their computer and reactivated each channel independently while I sat and confirmed its return.

    So why am I paying for channels I don't ever watch? If the distribution costs are the same, then I should be able to dictate to the cable channel which channels I want to watch.

    What pisses me off is the assumption that people make that bundling stations saves us money. This is a load of crap. In fact, in order to bundle those channels, the station charges a fee to carry its signal. Making it worse is these "local" channels to the area pay nothing for the very station I have to pay $70/mo to get and have to deal with commercials.

    ANY STATION THAT BROADCASTS ADVERTISING WITH CONTENT SHOULD BE FREE TO THE PUBLIC.

    There is no excuse why anyone has to pay $50/mo to get TBS, TNT, Superstation, Lifetime, or any other channel with ads.
    Note: DirecTV ups its price to get these channels because they KNOW these are channels consumers want.

    Ala carte pricing will never happen to save consumers money because you can bet cable companies will find ways to screw over consumers to make up for the lost revenue.

    Cable companies have NEVER, EVER been proactive to consumer wants but reactive to changing times, often catching up after the fact and over charging consumers once they dominate the market.

    This is why most areas don't have multiple choices in cable subscriptions. It's also why satellite prices are relatively identical in order to stay competitive (re: price fixing).

    As for the comments about the content, not distribution, being what costs, this is also incorrect.

    There's no way to place a cost on content value. Some of you may enjoy watching CSPAN and find it's worth a monthly cost while others will never watch this station, forcing it's worth to $0. A cable company can only base an ala carte price based on the number of viewers and the length of time one watches the show.

    This means CSPAN will cost less per month than Lifetime and this is NOT an ala carte structure we will want. We'll all be paying more for popular stations while lackluster stations are virtually free.

    Right now, everyone pays the same basic amount for these stations we enjoy. Go ala carte, and the ones you really enjoy will increase in price so fast, it'll make you wish for bundled packaging.

    Of course, after seeing what's been on lately, it's almost getting to the point of dropping TV altogether when it's nothing more than content covered by advertising during the show.

    Which reminds me. I need to send one nasty letter to the idiots at TBS and let them know I'll never watch their station again.

     

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      Hulser, Jun 4th, 2008 @ 11:08am

      Re: Cable and satellite are in need of changes.

      This means CSPAN will cost less per month than Lifetime and this is NOT an ala carte structure we will want. We'll all be paying more for popular stations while lackluster stations are virtually free.

      So, you're using an example of the basic principle of supply and demand to disprove the idea that the majority of the cable costs come from content? Firstly, of course people should pay more for popular stations. That's how the free market systems works. Secondly, what's this have to do with content vs delivery?

       

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      Chronno S. Trigger, Jun 4th, 2008 @ 12:37pm

      Re: Cable and satellite are in need of changes.

      "The simple fact is cable can now offer ala carte programming. Most cable systems are now set up such that an operator can flip a switch and disable/enable specific stations."

      I have Internet and basic cable. I didn't pay my bill for 55 days, the Internet got cut off. I asked why the Internet didn't work but the TV did and the support person told me that a tech has to go on site to disconnect the cable. Same with basic cable vs. standard. They have to come on site to install a blocker so I don't get channels 22-99.

      This argument douse point to most of the cable bill price going to the stations and not maintenance, since all the channels are being broadcast threw all the wires all the time. And it also helps the argument that ala carte pricing would lower our bills, if the cable companies don't artificially inflate prices to make up for the difference.

      I was watching Mythbusters on the Discovery channel, that episode where they revisit the rocket car myth. At the end, after the car blows up on the ramp, Adam says "I think someone owes me $10,000". That made me start thinking. If the Discovery channel can blow $10,000 on a rocket that was expressly ordered to wreck a car, why the hell do I have to pay so much for cable and DVDs? Then I look at other shows on that channel and others and think "Damn, advertisements must pay a fortune."

       

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    Michael Brost, Jun 4th, 2008 @ 4:52am

    pricing may be fixed, but its still a monopoly and service sux

    Delivery of content to the house might be fixed price but given I want to watch only 4 or 5 shows and the first 2 are in tier 1, the next is in 'enhanced', the next is part of the sports pack and the final one requires the premium purchase, I must purchase everything just to watch a my 4-5 favorites.

    Nothing is "free" there is no such thing as a "free good" or "free service" despite the analyzes and statements to the contrary.

    Somebody must pay for the infrastructure to carry free. Somebody must film, edit, market and sell the "free product." The fact it is being carried by my local government-approved monopoly provider means there is a cost involved. Now that cost might be small or nearly nonexistant, but its still there and I don't want to pay it.

    I don't want to watch the spanish channels, the sports channels, the cooking channels, the public access channels, the green channel nor any of the other funeral channels. I don't want to have to purchase 4-6 different tiers of service to get the 3-4 channels I want to regularly watch.

    A la carte might give me the opportunity to purchase my choices without having to subsidize the others.

     

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    Fungo Knubb, Jun 4th, 2008 @ 5:18am

    I finally threw up my hands and canceled cable TV. All of the Discovery channels started advertising over (On top of) the actual program content in addition to the normal commercials in-between the program content. I asked the cable company if I could opt out of all of the Discovery channels and lower my cable TV bill. They said "NO", in which case I said that I would then cancel those channels myself, and promptly shut the cable off. I'm finding all sorts of alternate entertainment options besides cable TV. If enough of us do just that, it will indeed change things. The cable companies will either force the channel suppliers into A La Cart or go out of business. As for me, I find that I have quite a bit more money at the end of the month now.

     

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    jedipunk (profile), Jun 4th, 2008 @ 5:32am

    I have said before that unbundling channels for cable (going a la carte) will make channels more expensive. Instead I look for the cheapest bundle with the channels we like.

    It isn't that people hate bundles it is the fact that something that has become nearly a commodity is being priced out of the commodity market and they blame bundles.

    I however disagree with some of the arguments made throughout the article. Popular channels will remind cheap. Niche channels will skyrocket. I believe the bundles are about subsidizing.

     

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    Carl, Jun 4th, 2008 @ 6:16am

    Just plain wrong.

    >throwing in additional channels increases the value of the
    >cable service without imposing any extra costs on the
    >system

    Sorry, but you are completely, utterly, totally wrong. About as wrong as it's possible to be. I think you've let your enthusiasm for your thesis about infinite goods cloud your thinking.

    It's only an increase in value if it's a value to the customer. So throwing in BET, Univision, 6 religious channels, 8 home shopping networks and ESPN-U does NOT increase the value to me. At all. Maybe it's a value to somebody else... but that's an argument FOR a la carte pricing, not AGAINST it. And because you didn't factor that in, none of the rest of your argument works.

    Meanwhile, it DOES impose extra costs: at the very least, it imposes opportunity costs, because the capacity of cable is not infinite and the cost is not free. It costs somebody money to produce all that unwatched content; it costs Comcast money to buy it; and Comcast passes the cost on. Without all those channels, I could have more channels I do want to watch; or more of my channels in HD (not compressed to death...); or a lower price.

    Everything about your premises is totally flawed, I'm afraid.

     

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    OldYeller, Jun 4th, 2008 @ 8:11am

    Market econmics would settle this

    I'm squarely in the camp of responders who believe that the majority of the monthly cable charge os for the cost of content. I use Comcast in NJ, and part of my bill pays for the cost of delivering ESPN, SNY (for the Mets) and YES (for the Yankees) as part of my basic package, whether I watch them or not.

    With the flexibility operators have in selectively enabling or disabling channels on a customer-level basis, I'd like to see the following: Before a cable operator's license is renewed, they have to begin offering an a la carte option in addition the their current bundles. The a la carte plan would provide public access and broadcast channels for a low base price, and the cost for channels with commercials would be lower than for those without. The cost for channels like ESPN or YES that charge a premium to the cable-providers would be have to be renegotiated for a la carte use, but if it's too high, no one will watch.

    The content providers would lobby like hell against this, but in the end they have to recognize that technology is providing more and more alternatives for connecting people to the content they actually want to watch. If they're not competitive on a good content/price basis they're not going to last, period.

    Besides, some of the providers may be surprised at what they can charge and still maintain a good audience. Considering the cost of taking a family to a major-league baseball game, people may pay a decent price to watch the occasional game on a pay-per-view basis instead of subsidizing year-round programming for a dedicated channel.

     

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    hegemon13, Jun 4th, 2008 @ 11:41am

    Forced? I think not...

    I tire of everyone complaining about being "forced" to pay for extra cable channels. If you don't like it, don't subscrine to cable. I currently pick up 22 digital streams with a $19.00 VHF/UHF antenna, including all the local networks, 2 24-hour childrens' programming channels for my kids, and a pretty good 24-hour HD+DD5.1 concert channel. I don't pay a dime for any of it. Indeed, the low cost of digital over-the-air may be cable's biggest enemy, as more people discover what is available. All 22 streams are broadcast over only 9 actual broadcasts.

    Okay, I followed a tangent a bit there. The point is, TV is not food, gas, or electricity. It is entertainment, and you have plenty of options of where to spend your entertainment dollars. $70.00/mo can purchase a lot of TV shows on DVD in better quality with no commercials. So, quit saying the cable companies are forcing you to pay for this or that.

     

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      Hulser, Jun 4th, 2008 @ 12:43pm

      Re: Forced? I think not...

      And proponants of a la carte pricing tire of being mischaracterized as people who are being forced to pay for extra channels or cable. We know there are other options. But that doesn't mean we don't want to improve the system. Yes, there are other options, but most of these options don't yet have the infrastructure in place to deliver the amount or kind of content most people want. So, what's wrong with trying to improve the system?

       

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        hegemon13, Jun 10th, 2008 @ 6:28am

        Re: Re: Forced? I think not...

        There's nothing wrong with trying to improve it. I think it is a great idea, and I have no problem with people pushing for the availability of a la carte pricing, if that is what they want. I was just saying, don't use the argument that you are forced, because you're not. Obviously, that is not your argument.

         

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      Gary, Jun 4th, 2008 @ 2:25pm

      Re: Forced? I think not...

      That's alot of free TV. Where do you live?

       

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        hegemon13, Jun 10th, 2008 @ 6:32am

        Re: Re: Forced? I think not...

        Kansas City. Now, granted, the 22 channels include some tele-evangialism and foreign language channels, but so does cable. In fact, the ratio of watchable to unwatchable is much higher on the over-the-air channels that cable. There are at least 12 or so of the streams that we watch regularly (local networks, 24-hour kids, concert, 24-hour weather, PBS, etc), and that is plenty for me.

         

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    Tony, Jun 4th, 2008 @ 11:59am

    "introduction of market forces"

    A-la-carte will do absolutely nothing to introduce real "market forces" to the cable market as long as cable companies continue to operate in the current monopolistic environment. They'll charge whatever they want, and the customer will be forced to either pay it, or do without.

    If multiple providers could operate in a city, I'm sure that at least one would decide to try a-la-carte pricing. And then we would see the results of true market forces.

     

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      Hulser, Jun 4th, 2008 @ 12:32pm

      Re:

      True market forces? Almost certainly not. But a step in the right direction towards a more open "economy"? I think so. I don't think there are many proponants of a la carte cable channels that don't think the cable companies won't try to gouge the customers as much as they can. But what a la carte pricing would do is take away the cable company's current lame excuse that they're giving you extra content (whether you ask for it or not) so should have to pay for it. This seems completely illogical to me, but to some people -- like the author of the original article -- this excuse makes sense.

      This is the way that I'm thinking of it. Say someone is paying $100 a month for cable for access to 500 channels, including premium channels. A la carte goes into effect, they select their top 10 channels, and their bill falls to $50 in the first year. (Optimistic, I know.) Over the next five years, using the boil-the-frog-slowly technique, the per channel prices go up and the new bill is back to $100. They're paying the same, but getting less. That's bad, right? Well, here's the difference. Instead of there being this built in "we're giving you all of this content for free" excuse, people will know exactly what they're paying for. Before, there was a pretence that there was value in all of this extra (but mostly unwatched) content. But after, that pretense will be gone.

      Instead of having to go off the grid and drop cable altogether, if the total cable bill gets too high, people will just drop individual channels. And, class, what happens when demand drops? That's right, prices go down. That is, if you put a system in place that at least resembles a free market system.

       

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        another person, Jul 15th, 2008 @ 1:17pm

        Re: Re:

        Think about this: (best case senerio) a cable company goes a la carte = more viewers want it = more demand = more empoyees = more viewers with money = more money = more branches = more emplyees = more viewers = more money. It can be good for the economy. worst case senerio: people don't like = the idea dies = we get on with our life. CABLE DOESN'T MATTER THAT MUCH!!!!!!! CAN U WATCH IT AT WORK USUALLY NOT!!!!!!!! ARE YOU GOING TO WATCH IT WHEN YOU'RE DEAD NOOO!!!!!!! GET OVER IT!!!!!!!

         

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    4934110, Jun 4th, 2008 @ 12:48pm

    4966591

    This topic is repeatedly brought up on this (otherwise quite good) site. It fails utterly in the form of logic and reason. Rather than just randomly choosing numbers ($1, $8, 50, 49) here's some hard facts:

    I live in NYC. The local cable company is Time Warner. They offer these packages:
    http://www.timewarnercable.com/nynj/products/cable/packagesandpricing.html
    ( try zip 10001 )

    It is nothing short of obvious that their billing systems already wholly support a'la carte billing. The unit now is "a package" instead of "a channel" but I can still choose from 6 premium, 19 international, 6 sports, six "additional", or 9 on demand/PPV packages. There is no added cost for a system that can bill based on the selections an individual consumer makes. I'm already free to make 40 different mutually compatible selections.

    The cable companies make it very hard to find the most basic service level. (It would appear that it's to their financial advantage to encourage the consumer to buy a larger package.) The only links to a real basic cable service I could find is:
    $12.76 http://www.alamedapt.com/cabletv/
    $10.58 http://www.optimum.com/ratecard.jsp?searchby=corp&corp=07869&serviceType=io&z=10601

    T he base cost is low, and it's reasonable to assume it will continue to come with (as that example does) the "free" channels: local broadcast, PBS, and the like. From there we get the packages:

    Time Warner: Digital Starter Pak, 130 channels, $49.95
    ( link above )
    Cox: Limited Basic, 40 channels, $45.99
    ( http://www.cox.com/oklahoma/cable/prices.asp )
    Cablevision: Family Cable, 80 channels, $49.95
    ( "optimum" link above )

    Basic cable, the cost of setting up all the hardware to handle the connection from the cable co. to the house, is about $12. The next level package up from that, in the three examples above, cost about $50. Subtract the $12 for the (included) basic service, and the average is between $1 and $0.40 per channel.

    Your "$8 per channel" guess number is wild and FUDdy. It's clear that there would be a charge of about $10 to $15 for the basic service, and that non-premium channels could be had for under a dollar each on top of that. Some higher-demand channels (your ESPNs, HBOs, and so forth) which are in higher demand might draw a higher price. But the supposition that a'la carte must raise the overall price by its very nature is unfounded.

     

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      Anonymous Coward, Jun 5th, 2008 @ 2:14pm

      Re: 4966591

      There's just one thing wrong with your reasoning...

      I can dig, based on the numbers for the Warner, Cox and Cablevision amounts, that right now, it would less than a dollar for each channel on top of that.

      however there's 2 problems with that:

      1) you really think the companies wouldn't charge a little more than simply dividing the total amount the number of channels?

      but much more importantly:

      2) let's say they wouldn't do 1), what you say (less than a dollar per channel) would only happen if everyone would pick all the channels they get now in a bundle. Which they won't, so instead of "getting" $1 from 80.000.000 million people for channel X and channel y and channel z, they'd get money from 40.000.000 people for channel x, from 20.000.000 for channel y and 10.000.000 for channel z (numbers are arbitrary of course). Do you really think that they'll only charge $1 for channel z and get only 1/8 of what they got before for that channel? or do you think they'll charge something around $8 to compensate for that so they'd end up with about the same amount of money? Which means you are SOL too, because even though you can drop the $1 for channel x and the $1 for channel z, you'll be paying $4 for channel y...

      you might want to rethink your argument...

       

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    conserned viewer, Jul 15th, 2008 @ 1:02pm

    Think about it

    Ok you should take this into consideration. What if you had kids and they wanted the disney channel (thats a common one for kids to want) but to get it you need to get a whole lot of other questionable channels that you don't want your children to see. Yes i know about v-chip but kids have a lot of time on their hands. Right there that gets rid of getting the service at all. You can't take the good and the bad all the time.

     

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      a person, Jul 15th, 2008 @ 1:04pm

      Re: Think about it

      Thats to bad but kids don't need cable to survive

       

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        conserned viewer, Jul 15th, 2008 @ 1:06pm

        Re: Re: Think about it

        Yea but over the air TV can just as bad. You really want to walk in on your kids and see that they just found out how babies are made!!!!!!!!!!!!

         

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    fiscal person, Jul 15th, 2008 @ 1:21pm

    money mangment

    If this became a common and household idea, cable would get the point that someone is always cheeper. The more this becomes used the more it is common. As with everything the price would get pushed down. that simple

     

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    Johnny, Jul 16th, 2008 @ 10:00pm

    Check out:
    http://www.skyvision.com/programming/alacarte.html

    You can get Animal Planet, The Travel Channel, TLC, and the Discovery only $3.65 a month for 4 channels. That's cheap.

     

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    Sam, Jul 16th, 2008 @ 10:29pm

    ^ That's a $1.00 per channel. I think cable and satellite providers want to provide consumers with a selection of the channels consumers want. The problem is the content providers will not allow them to do that. The content providers make tons of money. They can take a popular channel and throw in 20 crap channels and force consumers to upgrade from the basic package to the basic plus package. Then the consumer gets 2 more popular channels they want and 20 more crap channels. If the content providers allowed the consumers of cable and satellite companies to pick the channels they want, the consumers would pick the popular channels and the content providers would not make any money selling crap channels.

    Me: What channels does you basic cable package include?

    Cable company: Discovery, CNN, TNT, 10 shopping networks, 15 spainsh/French/German channels, 3 movie trailer channels.

    Me: hmm...I think I will stick with over the air tv.

    Cable company: I can throw in 60 pay-per-view channels.

    Me: Ummm...Why should I buy channels where I would have to pay to watch content?

     

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    Eric, Jun 26th, 2009 @ 4:00pm

    ala carte cable or satellite

    If you were a nun would you accept having to buy a condom with your groceries? If you were reformed alcoholic, would you accept having to buy booze with your groceries? I would not. I want to buy less than 8 channels, even if it cost $60 monthly. I refuse to send any $ to Comedy Channel, CNN, HNN, Spike, any of the soft (wrestling) porn, Queer comedies, nasty stuff in general. 18 months now without satellite TV & without using my HD tuner on 18 local channels because I refuse to see or hear nasty commercials, telesex commercials & liberal lies presented as news. Cost is not a factor to me.

     

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    Walter H, Oct 28th, 2009 @ 11:55am

    A good point, but...

    Thing is, there is a bunch of hate out there, like FOX News, CBN, etc. Every month, part of my television bill goes to the likes of Pat Robertson -- you know, the man that blamed 9/11 on gays, lesbians, feminists, and abortion. I'm tired of paying money and have it go to these hateful businesses! I'm sure a conservative person would say the same thing about MSNBC.

     

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    Rick, Nov 22nd, 2010 @ 2:15pm

    paying for the content

    I could accept the argument that subscribers are paying for the content, even the "crap" channels, if it were not for the commercials on these channels. Who is paying for the channel -- the subscribers or the advertisers? Make it one or the other.

     

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