Once again, the concept of a la carte pricing for cable television is in the news (see here and here for background). Pretty much everything you need to know about the debate is in the following paragraphs.
In a preemptive move in this regard, Time Warner and other cable companies recently introduced a "family friendly" tier of 16 G-rated channels.The tier contained no sports or movie networks, nor such offerings as History Channel or Cartoon Network, because there's no guarantee those channels won't cross the G-rated line. (Indeed, Cartoon Network offers adult programming during late-night hours.)
Cable companies also claim that they have made it possible for digital subscribers to set parental controls and have spent millions in advertising that capability. Still, fewer than 4 percent of their customers make use of it.
[Federal Communications Commission chairman Kevin] Martin said he has "legitimate concerns" about the "family friendly" tiers that were offered. He has the backing of the Parents Television Council and other conservative groups.
"We believe the family tier is a product that's designed to fail," said Dan Isett, PTC's director of corporate and government affairs. "It does nothing to solve the problem, which is that families are not free to decide for themselves what constitutes a family tier."
Which is a point in favor of the arguments put forward by the Parents Television Council. Let us make the choice, they say, and don't make us pay for anything we don't want.
Seems reasonable until you ask why cable providers are being forced by government intervention to modify their businesses in a way that they say will be unprofitable. Whatever happened to the free market? If the demand for family-friendly-only programming were truly there, what's to stop a Pat Robertson or a Rupert Murdoch from starting up a satellite company that would offer those services to PTCers? Why patronize Time Warner at all if they're not giving you what you want? If that's more damaging to their bottom line than the a la carte option that they're fighting, either they'll change their ways or a competitor will step in and take that market away from them. Isn't that how it's supposed to work?
Of course, future technology - near future, mind you - may obviate all of this.
"I don't think it's necessary to push a la carte because in various ways it's going to happen as we see many more ways of distributing video," says Michael Rogers.Rogers, former head of the Washington Post Company's new media division and currently a columnist on MSNBC.com, believes the proliferation of platforms - cell phones, iTunes and especially the Internet - has already made a la carte a nonissue.
But Time Warner's McMillan thinks the same issues will linger because of the cable industry's business structure.
"The next step is something called 'switch digital,' " he says of a plan that joins television and the Internet. "But even then I don't think we're going to be able to set aside the contracts we've got with all of our suppliers and say (to the consumer), 'You're going to be able to buy this a la carte.' You would have to renegotiate all those contracts.
"And if I own Speed Channel (an auto racing network), what do you think I'm going to ask for that programming on an a la carte basis versus a broadcast basis as part of a tier? They're going to ask for more money. The reason: They're going to be taking a bigger risk because that channel won't be grouped with other channels. (The smaller channels) believe, and I concur, this would hurt their ability to draw advertising."
And while all this may be bad news for niche channels under the current structure, who's to say they won't re-emerge as lower-cost online programmers? There's already some entertaining stuff out there. That old adage about closing doors and opening windows applies here. I'm not ready to weep for anyone just yet.
(For what it's worth, the brother-in-law of one of my best friends is a producer of that last site. Just in case anyone asks.)
Posted by Charles Kuffner on April 25, 2006 to Bidness | TrackBackI don't care much either way, especially if it was relatively easy to add and subtract channels instantly without paying additional fees. Like I would have wanted to add Showtime recently in order to watch that documentary Cowboy del Amor which I heard was fall on the floor laughing funny.
Perhaps a better model would be to have price tiers for the different channels and then packages where for a set price you get x-number of Tier 1 channels, y-number of Tier 2 channels and so on where you get to pick which ones you want.
One thing's for sure. A la carte will kill home shopping and religious channels. Whe the hell is going to pay for those? The evangelical broadcasters are shitting bricks over a la carte because they get most of their viewers through channel surfing. No one is going to pay to get them and the cable companies aren't going to waste bandwidth providing them for free.
I figure even if a la carte programming passes the cable companies and satellite providers will still provide basically the same packages as today as an alternative to a la carte for the majority of customers who don't want any changes and the package deals will probably be much cheaper than the equivalent a la carte selection because they'll want to steer people in that direction.
Posted by: Kent on April 25, 2006 12:20 PM" Whatever happened to the free market?"
The cable company is not an example of the free market. It's a government granted monopoly. What is difficult to understand about the concept that when the government grants a monopoly, it also has the right to regulate the commerce thereof?
Posted by: CG on May 3, 2006 3:20 PM