A-La Carte Cable More Expensive?
I got a comment on my blog from someone from CableTechTalk, which is a blog of sorts set up by the National Cable and Television Association (NCTA). Clearly, this is a lobbying firm for the cable MSOs in the United States.
The post they linked to my blog dissects the A-La Carte pricing and why it is ultimately bad for consumers. However, instead of going through that post, I will dissect their talking points on a-la carte programming and why mandating it is bad for consumers.
Prices Will Go Up Because Of The Need For Set Top Boxes
They mention lots of points here, but what it boils down to is that in order to implement a-la carte pricing, you need a set-top box. Many people–myself included–don’t have a cable TV set-top box. They estimate it will drive up the cost of basic cable by $11.41, which in my case would nearly double the cost of cable.
Don’t you need a set-top box for anything beyond basic cable anyway? If I want the right to choose other channels, fine, let me bear that cost, either by leasing the cable box or buying it outright. Leasing set top boxes, cable modems, etc, is a scam in my point of view.
Reduced Diversity Of Programs
They say that less popular channels are bundled with more popular channels, in a sense creating a subsidy effect. Advertising on many of these cable networks are sold based on the number of potential viewers, not necessarily the number of people actually viewing the channel. If everything goes a-la carte, then the ad revenue of these networks goes way down, causing some channels to fold.
How is this a bad thing, seriously? I get overwhelmed when I go to anyone’s house but my own. There are too many channels to keep track of, what’s on where, when, etc.
It Will Change The Way People Enjoy Television
And this is a bad thing how, exactly? Oh yes, I can’t “channel surf” and “discover new programs” in the way you would have me do it.
Guess what, Tivo and it’s bretheren did the same thing. Instead of being held hostage by TV schedules and figuring out how to program a VCR, you just tell Tivo what you want to watch, it records it. It also records stuff you might be interested in, based on your previous viewing habits.
As far as discovering new shows? I have friends that I socialize with. We occasionally talk about what we saw on the Internet or on TV. I’d much rather find programs that way than surf 500 channels to find what I want to watch. Takes much less time and, generally, is far more enjoyable.
Studies Other People Did Agree With NCTA’s Views
They list things like the FCC report, a report by Bear Stearns, General Accounting Office, Kagan Research, Sanford Bernstein and others say the same thing: it hurts programming choice and raises prices.
I think forcing everyone to a-la carte is not what the FCC has in mind here. What they want to do is mandate that cable companies offer a-la carte, not require everyone to have it.
If people want to buy 500 channels of crap, let them do it. However, don’t make that the only way people can buy television. Not everyone wants to do it that way.
Of course, what I suspect would happen is that the cable companies would intentionally make the prices ridiculously high so that very few people would go a-la carte and they’d maintain their existing business model. Seems like a self-fulfilling prophecy waiting to happen.
Regardless of the FCC getting involved, more and more consumers are finding alternate ways to watch video entertainment. The Internet has many, many great programs that quite simply aren’t on conventional TV. And guess what? The conventional television networks are enabling it. The cable companies only serve as bit delivers in this scenario.
The TV networks like it when you view programs over the Internet. Why? Because not only can they essentially force you to watch the commercial, they have a much better idea that you actually did watch it, too. Can cable companies say that about the ads they air on the various cable TV networks? Will companies pay more to know their ads has been seen?
It’s a little too soon to see how this will play out, though my money is on the cable companies becoming little more than bit shufflers unless they get much smarter about how they package and sell TV content.
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Tags: cable companies, mso, ncta Fnord
Comment by CableTechTalk
The point about set-top boxes is rooted in the fact that technology is required to deliver a la carte services. That will change over time as technology continues to develop, so I’m not sure if this is such a key point as it once was. But if you think leasing cable boxes is a scam, you’re also upset that DIRECTV, DISH, FiOS, and U-verse - competitors to cable - all require set-top boxes, right?
How is reduced diversity a bad thing? Well, you’re theory seems to be that programming should be a survival of the fittest. Let all the networks fight it out and only the strong survive. What if your favorite channels are the ones to fall and the ones that survive are the ones you hate. Are you better off? In an a la carte world, advertising revenue plummets, affiliate revenue goes down, and networks now have to spend marketing dollars on promoting each channel more heavily. That means the SCI FI Channel has less money to invest in shows like Battlestar Galatica.
As for TiVo’s ability to let you discover new programming, that only works because TiVo can sort through all the available channels. In an a la carte world TiVo only has access to the channels you already subscribe to. And when your friends tell you about a hot new show, you won’t be able to check it out without subscribing to the whole channel.
As for the Internet, it’s already having an effect on TV viewing and advertising, but it’s very early in the game and it remains to be seen how it will play out.
Comment by PhoneBoy
Yes, I consider all set-top boxes that I am charged monthly for scams, regardless of the service provider or the technology used. If I could buy a standard, off-the-shelf cable box and use it on any cable system in the country, it’d be a little different.
By saying a-la carte channels, you are completely missing the point. I don’t want to buy channels. I want to buy programs.
Cable companies could make it easy to, say, get the first episode of any program for free, a-la the occasional “free episode” on iTunes. Want more? Buy a season pass.
Comment by JimAtJaxtr
I think your point about programs is well-made because people watch programs, not channels. If itunes has taught us anything, it’s that people increasingly want more control over the type of content that they view,listen to, and so forth. And on a more humorous note, stumbleupon’s video section has taken over the role of channel surfing in my life.
Comment by PhoneBoy
StumbleUpon is kind of fun that way.
Comment by cribbagegeek
Additionally, the cable companies lose revenue with a la carte programming, because they would then have a harder time ensuring that THEIR OWN advertisers (cable companies insert their own commercials over the content providers’ commercials, seemingly at whim - still can’t figure out how that is legal/allowed) will get adequate coverage. They would have to maintain far larger sets of pricings for the breadth of popularities that would exist.
Comment by Eric
The problem with all systems is that it still allows the cable provider to set the price, and in doing so they will do so to make a-la carte as expensive as possible to make the tiered service more appealing. They will require set-top boxes and probably require long term contracts as well. Anything to improve the EPS.
Comment by PhoneBoy
I wouldn’t expect the cable operators to charge a fair price a-la carte. I’m a bit cynical, like you are, Eric