Friday, October 12, 2007

Cable TV a la carte

Q: What is the most feared phrase at both the wire services and the cable companies?
A: A la carte.

OK, we can't do much about the wires but watch that potential economic train wreck -- and it's insider baseball anyhow.

But check out this site about cable:
It's set up to allow you to deselect the channels you don't want from a long list and then tell you what your bill savings purportedly would be. Of course, it assumes that either the cost savings would be passed along penny for penny, or that other fees wouldn't be raised.

Both are simplistic, since the company will charge you for the capacity, whether it is used or not. (Although there should be some savings.)

More useful to the consumer would be a push to require cable companies to structure bills as public utilities must -- with a base capacity charge and then the programming charges on top of that (even better, of course, would be to break out those programming charges by channel, but the base+programming might be more politically possible initially).

That way, customers would begin to get the idea of the true cost. Then watch the fun begin.

" is run by the Parents' Television Council and does require you to enter personal information to actually "vote." But you can get the estimate without that.



At 10/14/07, 9:58 AM, Anonymous Anonymous said...

I was reading a column a few weeks ago and I think you'll find it interesting. It's about the SPEED Network and makes the point that if we had 'a la carte' pricing the amount of diverse programming would be seriously diminished. It makes a good argument and is something worth considering. Anyway, here's the link. It's from the Charlotte Observer. 296544.html

At 10/14/07, 4:04 PM, Blogger Doug Fisher said...

Unfortunately, that link truncated and I can't find the story on their site (McClatchy having inherited from the K-R papers the unhealthy trend of making things difficul to find after seven days). But the argument, as you outline it, is the basic utility model argument for monopoly and monopoly regulation: Certain services would not be economically viable without cross-subsidies.

This model makes some assumptions, however:
-- There are no effective alternatives.
-- It is socially desirable to have whatever service or product is to be protected.

This was the case with phones and electricity (and still is with electricity), where the cost of serving far-flung customers clashed with the desire for universal service. It certainly was a plausable reason at cable TV's beginning to encourage getting all the cable strung.

The rationale has to be continually monitored and questioned, however, and at some point it may be that the costs to consumers outweigh the benefits. It's essentially the break point where individual interests (think the cost to you of your cable bill) outweigh the community interest (in this case diversity). Sometimes an equilibrium can be found, but most often there is churn, as there has been with telephone dereg.

Is it that time in the cable industry? Maybe not, but I think it is closing in.


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