February 12, 2006
More support for a la carte cable pricing

A la carte pricing for cable channels, which I've blogged about before, just got another push.

Most cable TV subscribers would save money if allowed to pay for only the channels they want, a Federal Communications Commission study said Thursday, reversing the agency's earlier finding that consumers wouldn't benefit.

The analysis by FCC staff provides new support for consumer groups and conservatives pushing for a pick-and-choose pricing system to replace the bundled services offered by the cable industry. Cable companies fear that would diminish their wide distribution.

The study gives added ammunition to lawmakers and regulators who see "a la carte" as a way to clean up raunchy television by giving parents more control over the channels their children watch.

"I am pleased that the commission has concluded that 'a la carte' offering could reduce consumers' cable bills by as much as 13 percent," said Sen. John McCain, R-Ariz., who plans to introduce a bill next week to create and promote use of "a la carte."

Senate Commerce Committee Chairman Ted Stevens, R-Alaska, said if a la carte won't cost consumers more, "I will support an effort to take such an approach, subject to discussions with providers on the downside of such a process."

This is just a guess on my part, but I suspect that the pricing models that cable companies will present for a la carte will only make it a really good deal for people who want a small number of channels. Above a certain number, you'll be better off with a standard basic tier package. There's no real incentive for them to do otherwise, especially now that much of their marketing is geared towards getting you to buy a cable/Internet/phone sevice package.

I also think that most people will wind up preferring the simplicity of a bundled service. As I said before, it's not like there are no options to keep the kiddies from tuning into whatever shows or channels you find objectionable. If all you really object to is MTV, for example, what's going to be easier - enabling the parental lock for that channel, or ordering every other channel but MTV? Even just calling the cable company to say "Switch me from your basic package to an a la carte plan that includes all the channels I currently get except for MTV" will take more time and effort and will probably cost more money, too. Who wants that? I guess it's somewhat a question of how easy the cable companies make it to pick and choose the channels you want. What do you think the odds of that will be?

I could be wrong. Maybe this idea will put downward pressure on cable prices. Maybe the concept will bring enough new business to the AOLTimeWarners of the world to make it worth their while to come up with a really attractive price structure for a la carte usage. I doubt it, but I guess we'll see.

Posted by Charles Kuffner on February 12, 2006 to Bidness | TrackBack

Is it wrong that, when I saw Ted Stevens' name in that article, I immediately began to wonder what's in it for him and Alaska?

Posted by: Sue on February 12, 2006 9:46 AM

It could limit choice. Right now ESPN, MTV, etc. probably subsidize us getting to see lesser watched stuff like BBC or the History Channel, one would think.

Posted by: Scott on February 12, 2006 10:25 AM

While I agree that the cable/sat companies will try to price the a la carte services to discourage a la carte usage, bringing children into the mix is a red herring. If parents REALLY cared that much about what their children watched, they would restrict television viewing altogether. Parents, being largely normal people, want to watch their own adult (not necessarily sex) content as well. The number of parents that want ONLY child appropriate programming is miniscule.

A larger group, and one that cable/sat companies are concerned about, is groups like myself, single adults who do not want the myriad of narrowly tailored channels with deplorable shows, such as shopping channels, reality channels, craft channels, male or female oriented channels, and religious channels. These channels are cheap to operate, yet provide another outlet for advertising. Many customers, given the chance, would dump everything but the news channels and sports.

If Congress wants to use families as the engine to give me the option of dumping trash TV, so be it. But, families already have the ability to limit what their children watch, and most do not use it.

Posted by: RedScare on February 12, 2006 10:26 AM