A La Carte Cable TV Channels?

ryantate writes "I was reading TV Tattle and came across an interesting story in the Washington Post about people who spend less than $30 per month on cable buying a la carte. To do this you need a huge C-band dish, but Sen. John McCain wants to require a la carte pricing on digital cable. Content companies like Viacom are fighting it -- they don't want people to be able opt out of their less established channels. And at least one economist type, this guy in the Financial Times, seems to think we'll end up paying just as much under a la carte pricing. EchoStar is game but says Viacom and others are refusing to go along. "

Goodbye

[pholower]

Of course this would be a good thing for the consumers, up to a certain point. There are some nieche channels out there. The Golf Channel, The Catholic something or another channel, Hell, even TechTV. These types of channels would slowly start to fade away because of fewer and fewer viewers. I like the idea of a la carte, but I don't want some of the better, more nieche channels disappearing.

Who needs cable? HDTV!!!

[telemonster]

Okay, CATV was established as Community Antenna Television. An antenna on top of the mountain fed the people in the valley, or some such.

People bought cable mainly to rid themselves of the hassles of an antenna, you know, the Archer Space Command thing on every chimney, rusting away with TWINAX to the back of yo' Zenith.

Cable eliminate that, and gave you a few extra channels. But the prices kept going up, and up, and up. Premium channels like HBO offer movies, and appear to have no commercials. Actually, the 30 minute documentaries about movies and indeed commercials, but that is besides the point.

Along has come HDTV. HDTV is digital, and should deliver a picture that is exactly as good as the cable delivered station. So assuming more content providers show up in town providing channels, then the need for cable should be reduced.

In my market (Virginia Beach, VA) you can receive MTV2 on UHF broadcast, but can't get it on cable until your spending $60+ dollars for Cox TV + Cox Cable. MTV2 broadcast seems to be filled with DirecTV ads. I don't get it, DirecTV delivers the same digital cable quality programming for analog cable pricing.

I know people that routinely spend $80 a month for Cable, Digtial cable and premium channels. If you think about it, that is quite a bit of money considering the majority of the channels are getting paid for your viewership. Your subscription demands them higher dollars for advertising. Not to mention half the channels go infomercial at 10pm it seems.

The financial times author is correct...

[deanc]

... but mostly because of consumer stupidity. Basically, people pay the $50/month for basic cable for the 2 or 3 channels they're interested in. Over the past 25 years, enough channels have become available that almost everyone has their 2 or 3 favorite channels that they want to watch and are willing to pay $50 for.

A la carte pricing would have the effect that people would simply buy the 2 or 3 channels they want, pay the same $50 they always did -- because that's what they were always willing to pay -- and any additional channels, which they now get for free, they'd have to pay extra for if they wanted to watch. This pricing scheme would have made send 15-20 years ago when there was still an untapped market for cable television, but in this day and age, cable TV subscribers are so ubiquitous that there's no untapped market that would be willing to subscribe to cable TV because it costs less. Everyone who would subscribe has subscribed and is already ready and willing to pay $50/month for television, and that is what they will continue to pay, even if government regulations change.

Pay just as much... but to whom?

[LostCluster]

The economic types may be exactly right when they say in an a la carte TV world we'd be paying about the same total per month. However, would we end up getting better value in exchange for that same money?

Unbundling channels would be a death blow to to the mega companies. Who-asked-for-that-anyway channels such as VH1 Classics and Nicktoons would simply die because nobody's going to part with pennies just to get that one channel. They wouldn't be able to say "We're giving you 10% more channels, now give us 10% more money!" anymore, which would knock their pricing back into shape.

Furthermore, new players who don't have the resources to launch dozens channels can now just launch one and be on the same competitive playing field. That'd open up the door for "indie" TV companies to come back into play. Right now, a one-network operation such as TechTV really has the deck stacked against it, which was part of the reason why they are being sold to Comcast.

Right now, it's the content makers forcing the "basic cable" model. They're the ones insisting that in order to get their popular networks, you have to take their unpopular ones too, and put them all into the same level of service as they're perscribed for. Wait a second... isn't that the kind of thing anti-trust laws usually stop?

Like A La Carte Phone Services

[towerdave]

I have a phone services package with SBC that includes a few things I need, and a few things I don't. I called about getting just the things I needed, and dropping the stuff I don't.

"That will be $10 more per month"

I'll stick with the package.

TowerDave

Ala cart

[Balthisar]

I'm a little ambivilent -- I'd have never watched HGTV if I didn't have a package. I used to have it programmed out of the bedroom TV. But one time TiVo recorded something, and now I find myself flipping to it every once in a while.

But here's why I'm ambivilent -- I have TiVo -- there's PLENTY to watch on the 10 or so channels that we "always" watch. The old promise of "500 channels!" isn't practical, and who needs it? I effectively pay $50 a month for HBOs, Telemundo, and Comedy Central. I (can) get the networks free. Of that $50, $10 is specifically for HBO, so let's see -- that $20 for Telemundo! I guess I should die of embarassment. :-)

Would we really pay the same?

[Guildencrantz]

And at least one economist type, this guy in the Financial Times, seems to think we'll end up paying just as much under a la carte pricing.

The problem with this theory is that we don't know. Ala cart will have a few effects. Firstly, it will change the payment schemes that people use. Some people will drop out of their big plans. Others will start ordering TV when they currently only use over the air (myself included). So we need to see how that balances out in terms of revenue flow to the media giants.

Another thing to think about, though, is advertising. If you are ordering a la carte are you going to watch more advertising? If you don't have as many channels to flip through are you more likely to stick through the comercial breaks? Will this change advertising schemes?

I think this is a bigger change than most people have given credit to.

~~Guildencrantz

I want REAL a la carte.

[raygundan]

I want to pay only for SHOWS I want to watch. I don't want any more channels-- why should I pay for 24 hours a day of the Discovery channel? 8 of their daily hours are infomercials. And I only watch an hour or two of the remainder, anyway.

I want TV and movies released on DVD the SAME DAY they come out on TV or in the theatre. I'll just pick up what i want to watch at the store, or download it from iShows, or whatever Apple or somebody else comes up with to sell us video.

This could do away with many shopping channels

[Eric Smith]

Shopping channels get a disproportionate share of cable and satellite bandwidth to the number of actual viewers because the carrier gets a cut of the sales. In an a la carte pricing model, this would be fixed because the revenue from providing a channel that many subscribers want would exceed the revenue they get from a shopping channel.

Re:this would be good...

[alen]

HBO also costs me $17 a month on Time Warner Cable. How many people would pay $17 a channel to watch TV? Even $5 a channel would be a lot.

I smell bullshit!

[Lord Kano]

EchoStar is game but says Viacom and others are refusing to go along.

I used to work for Echostar, they HAD a la carte programming once, it was called Dish Picks. They discontinued the service because of cheapskates who'd call in several times per day to add/remove channels as the shows that they liked came on.

I suspect that they are now getting in line with the idea knowing full well that it won't ever happen. I believe that they're trying to get some congressmen to think that they're good guys so there will be less opposition to them buying DirecTV. The last time they tried, the sale was blocked.

There was a rumor floating around the call center when I was there, it was a rumor and I can't vouch for the veracity of the claim so take this with a HUGE grain of salt; but the rumor was that before the last time they tried to buy DirecTV Charlie Ergan (the president of the company) had John McCain over to his house to "watch a football game", the game was blacked out in the area due to NFL restrictions, but Charlie had them override the NFL blackout and SHVIA restrictions and put the game on at his house. If this really happened and they got caught the company would have been subject to a $10k fine, I'm sure that Charlie would have paid it out of pocket but that's not the point. Once again, if this really happened, I think I have a good idea of what they talked about.

Finally as a CMA, I'd like to say again that this was just an office rumor and I can't personally vouch for its veracity. The fact that there was a rumor is 100% fact, but the contents of that rumor are not known to me as being factual.

I never looked, so I couldn't tell you if Charlie Ergan actually had a DishNetwork system at his house. If I did know about it, I would be prohibited from discussing it with anyone outside of EchoStar.

But, you'd be surprised at what porno certain celebrities order.(I can't be any more specific than that)

LK

Choice = more efficient marketplace

[StateOfTheUnion]

I had a friend in Clear Lake TX whose Cable bill went up by ~$10 a couple of years ago and he called to complain . . . they said that the price hike was approved because he was now getting 4 "Great new channels" . . . Golf, something like a soap opera network and 2 shopping networks.

Because he was locked into a cable plan, he couldn't easily "vote" for the channels that he liked with his dollars . . . so he was stuck paying the extra for four lousy (in his opinion) channels that he would never watch.

I agree with the economists that say that we will pay the same for TV, but if can vote with our dollars, we establish more competitition and a more efficient marketplace. If no one likes the channel, it will be dropped in favor of something else . . .

When I move to Richmond VA in 1995, they didn't have comedy central and didn't get it for another 2 years or so . . . if people could pick and choose . . . we might have gotten it a lot sooner through an efficient marketplace that reflects true customer demand.

Re:An idea

[homer_ca]

Netflix or your local video store is a better deal than paying extra for movie channels, but there are few alternatives to the basic cable/satellite channels if you want to watch sports and cable only shows like South Park or The Shield. What else can you do? They're all pretty inconvenient compared to cable.
- You can find some popular TV shows on BT.
- Some official sports websites like motogp.com and mlb.com have live streaming video for pay.
- You can go to a friend's house to watch a favorite show.

Unfortunately

[dj245]

Unfortunately it isn't going to be all cookies and milk like people will hope. Maybe it will work for a while, but just like legal music purchases, the people in charge will eventually want to crank up the price. The parrallels are shocking.

Record industry: So, you don't want to buy the whole CD because 85% of the album is shit? Fine, we will sell you songs at $1 each online. You can get your 15% of good songs off the album for maybe $2.50. A year later, they want to jack the price to around $2.50 a song. Your $2.50 of good songs per album is now $8 or $9. Might as well buy the whole album at wal-mart and get the physical, non-DRM goods.

Sattelite guys: So, you don't want 500 channels of crap when you only watch 30 of them regularly? Fine we will sell you them at $1 each. A year later, though, maybe they want $1.50. Your cheap $30/month roll-your-own package is now $45, yikes!

It will happen. Big media companies are greedy hoarding bastards.

Re:I sort of agree with Viacom

[DAldredge]

No, this will screw over the most expensive non-movie channel, ESPN. It costs the cable co's a fortune.

Re:An idea

[Kiryat Malachi]

A lot of shows worth watching come out on DVD. If you don't mind waiting a bit, you can watch them through Netflix.

Currently working my way through Oz and the Sopranos via Netflix, I'm sure I'll find something after them.

Re:I sort of agree with Viacom

[dj245]

during commercials she is going to flip through channels. The show that they are watching will very often catch the eye of the 'surfer' and next thing you know, you have a customer.

The problem with this is that people creat favorites lists with a very limited amount of channels on them. Customers have been flipping channels, but only seeing the ones on their favorites lists. Direct TV collects statistics on their customers, and apparently notices this trend. What they have been doing lately to combat this is removing all the channels from the "master list" and then adding them all back on again. This effectively adds all the channels to all the favorites lists. Its a dastardly little trick that makes favorites lists completely pointless. I might as well memorize channel numbers. Its been happening about once a week lately. Its like DirectTV wants to put us all back in the 1980's when the favorites list hadn't been invented yet.

If I wanted to watch channels other than the ones on my favorites list, I would go looking for them. I don't need help finding new stuff to watch. And I don't need help screwing up my favorites list. The cat can do it all by itself.

Re:How will it be imlpemented?

[Life2Short]

As per the article, a-la-carte is already working for C-Band dish owners, and it has been for the last 20 years. Before the advent of the mini-dish and the digital signal, all dish owners had BUDs (Big Ugly Dish - C-Band analog signal). It's not like you call up every month and completely change your order. You know what you want and what you don't, and you tend to stick with those choices year round, only occassionally making adjustments. One other advantage of C-Band analog signals, it is relatively easy to descramble the video (much more difficult with the audio). Thus if there is any visually oriented programming where picture is more important to you than sound (use your imagination) it isn't too hard to pirate channels. Of course, HBO led the drive to digital signals on C-Band, and those are not so easy to pirate. I haven't had access to a BUD for a few years now, so I don't know if there are many channels still using the analog signal.

Re:Pre packaged isn't that bad

[bechthros]

I personally think that the potential audience for the "high-brow" channels (discovery, history, et al) is much larger than anybody gives it credit for being. Of everybody I know that has cable, we all watch the same ten channels (Discovery, History, TLC, Comedy Central, DisWings, Science Channel, TechTV, Spike/TNN, VH1, MTV2). Of course, that could be my excellent taste in friends...

My prediction is that once ala carte cable is available, we will have proof that, Neilsen ratings be damned, nobody likes Friends, or crappy lowest-common-denominator shows like that anyway. I think ala carte cable and TiVo will be dealing the Neilsen system some serious blows in the future (I mean, could it *be* any more outmoded?).

In response to people fearing for the demise of lesser-subscribed to channels... they won't go away, they'll just cost more. And to me it would be worth it. You pay $3.99/month for USA or PAX, you get... $3.99 worth of programming. You pay $12.95 for the Science Channel, you get considerably more. Especially since Science is one of the few channels that don't go to all informercials, all the time, after 10PM.

Besides, my final prediction is that most cable providers will take the initial step of still having bundles of channels, they'll just make more sense (ie all discovery channels in one package, $12.95 a month) Seems like a reasonable comprimise, and not an unlikely outcome. This will give some added security for the channels nobody watches by way of the main, "flagship" channel in the bundle.

But I am fed up with having to surf past channels I absolutely HATE to see the 5-10 channels I want to watch.

Canada already does ala cart

[MagikSlinger]

For specialty digital channels. $2/channel (some are more expensive). They provide package discounts (buy 5 for $1.50/channel) too. You just need some political backbone.

<Insert political joke here>

Re:Promotional Weekends

[Life2Short]

Wouldn't you also have to say though that the QUALITY of programming on the Disney Channel has declined dramatically since the days when it was a premium channel? They used to roll a lot of their movies out of the vaults, and they included old Disney Shows. They showed this content largely commercial free. Now it's all new programming (Lilo and Stitch, Kim Possible, Lizzie McGuire). Maybe it appeals to kids (obviously the target demographic, so I'll gladly shut up), but I think it sucks! Whenever I tune in they seem to have a strong message for young girls - try to dress and look like a Barbie Doll, and you will be cool!

Re:I want REAL a la carte.

[raygundan]

Yeah, I know it does. Screw the middlemen-- that's what we have the internet for. What do the channels do for us now that we have alternate means of distribution (internet, DVD) that we can pay for directly without ads? Nothing. All they do is drown us in ads and produce content of questionable quality that is supported by their handful of successful shows. While simultaneously forcing us to buy hours and hours of programming we don't watch on dozens of bundled channels we have no interest in, to get the few hours a week of TV we do watch.

I say cut 'em out. I'll pay Groening's team directly for more Futurama.

Re:Potentially a Good Idea, But Suceptible To Abus

[bechthros]

Not to be too off-topic but... My last experience buying cable (not even TV, just roadrunner) will probably be my last. It took SIX VISITS from different techs to get the damn thing to work. Script for visits 1-5 follows:

Me: So you're here to hook up our roadrunner?
Tech: Yes. I've just got to go out to the box and do some stuff...
[thirty minutes pass]
Me: So, is our roadrunner working yet?
Tech: No. Your house is too big and has too many Digital Cable Receivers on too many splitters. There's no way this will work.
Me: can't you just bring another feed into the attic, since I'm a renter and that's where I live?
Tech: No, we can only have one feed per house.
Me: But the person on the phone said many people on our block have the same service. They're charging us right now for the service you are saying your company can't provide.
Tech: This won't work and I'm leaving now.

As you can imagine, the people on the phone were in a different country than the techs were (guess which one! go on, guess!) and apparently didn't read from the same script... I had a seven day weekend and spend six of those days waiting for time warner's bitch asses... After complaining to the point where they gave us free stuff on top of free stuff, they finally sent a team out to rewire the entire house for free, at which point they found that the problem was... ...the house was too big and there was no way this could work. Oh wait, actually the *real* problem turned out to be that the feed to our house was behind a bunch of splitters INSIDE THE BOX ON THE POLE!!!

Never, ever, again... They can put ten million commercials on TV advertising roadrnuner and ondemand and all these high-speed services that they simply don't have the infrastructure to provide, and have no intention of having the infrastructure to provide. You know, I can remember a time when shit like this was fucking illegal. Let's hear it for deregulation, friend of the consumer!

Bastards.

Re:Another Idea (OT)

[Bastian]

1. Newspapers. Duh. (Granted, from an environmental standpoint I much prefer the idea of electronic news sources, which can be superior to either one depending on your attention span.)

2. A lot of news is completely useless if you don't have an understanding of what it means. TV generally fails on this - there's only so much information you can provide when you have to cram each story into a minute or two time slot. Some magazine programs on TV and radio do a better job, but books are really the only forum that allows enough space to really explore all of the subtleties that are involved in current events.

Granted, whether or not that matters really depends on if you're interested in being current for the sake of voyeurism or if you're trying to keep up in the world for the sake of making informed political decisions.

If it's for the former, Fox News, The Register, etc. are fine and dandy. If it's for the latter, you darn well better have a basic understanding of, say, modern economic theory (and hopefully some alternative economic ideas) before you start trying to make opinions on anything pertaining to economic policy.

Re:Good luck writing this law

[Rob Parkhill]

In parts of Ontario and Quebec, you can get your TV signal from a company called LOOK. Full digital broadcast, but you have to have line-of-sight to their microwave tower.

For something like $18/month, you got the "basic" package, which includes all the typical networks and other stuff that basic cable has. That was a selling point right there, easily the cheapest TV package going.

Then, you could start adding additional channels for around $2/month each, or any 10 channels you wanted for $10. Of course, half had to be Canadian channels (stupid CRTC rules.)

My monthly bill was under $40/month, and that's in Canadian funds. Pretty cheap considering that to get the same channels from the local cable company, it was closer to $65/month.

It looks like they have moved to a tier-based system now, though. You get everything except the movie channels for $38/month. Still, that's less than half of what the average american cable bill is.

Sure, al-a-carte was nice, but when you can get -every- channel for the same price as just the ones you want, then you just block the channels you never watch and pretend that you have al-a-carte.

I moved a few years back to a province without LOOK [www.look.ca], and I have missed them ever since...

K Band fun

[MajorDick]

A few years ago Roadway the trucking company had a store here in Akron where they are based it was called Rex salvage, Roadway was self insured so if something got damaged lost etc it ended up for sale there. I bought a whole K band dish (about 6 ft accross) tuner and all that jazz. Wow was it cool I had cable too but at the time K Band was used mostly for live feeds etc generally high quality and unencrypted. I am a news junkie so I loved I I saw stuff way before the general public and generally unedited. show were sparse and feed on them were wild but I could never helo feeling like a redneck with the dish in the backyard.

it's about time.

[unclefungus]

for years I have been willing to pay more for telev ision where I don't have to watch commercials or even the golf channel. BET has to be a bad one also. I am even willing to pay for basic cable plus 1$ per channel that I want, just to not recieve the channels I don't want. I hope this trend continues.

a bigger problem

[simishag]

...perhaps, is the fact that MANY of these bundled stations run "paid programming" for 4 to 8 hours a day. So we're all paying for air time that has already been paid for. I'd be more inclined to give the cable companies a pass if they made an honest effort to utilize all of the monopoly power they've been given. But when 25% of my stations are showing infomercials at any given time, I get pretty pissed about my cable bill. Why bother with 200 stations when all the real programming could fit in 100 or so?

Re:An idea

[cemaco]

When you live in a building that has been wired for cable TV, You quickly notice that those old rabbit ears don't work so well anymore. I don't know what the deal is, but there seems to be some interference from the cable line. Been in several buildings here in New York City before and after they were wired for cable and noticed this happen. The result was that practically everyone in said buildings was forced to switch to cable to get any TV at all.

Re:A La Carte == Bad Idea

[Dolohov]

If channel X is geared toward a majority group, and is not popular, fine. But the definition of "minority" involves there not being very many of them. That means that a channel popular with a minority (and let's face it, geeks are a minority) is going to be considered "unpopular" and probably axed. The cost of the programming does not go up -- but nor does it go down, and in order to support the channel, whose expense is orthogonal to its viewership, then that smaller number of viewers would bear an increased share of the burden, simply by virtue of being a minority with minority interests.

In the US, our society has repeatedly made the decision that a little extra expense and annoyance is worth it for the sake of maintaining diversity and protecting the rights and comfort of minority groups. Cable bundling is not only just about the least of those expenses, it is the one that you and your friends are most likely to benefit from.

Re:Convergence

[cabra771]

You bring up something that got some wheels turning in my head. Ala carte internet access. Some point in the future you can choose certain internet access "packages" or choose which major sites you would like to have access to for a flat monthly fee. Say you wanted the news package. You'd pay 9.95 a month for access to 50 or so major news websites. Or you could just go through a catalog of websites and choose which ones you want for like 50 cents each a month. Part of the payment would go to the website, most to the ISPs. Kind of like ordering a subscription.

Just thinking out loud. I like my internet access just the way it is (but could be much faster).

Re:A La Carte == Bad Idea

[evilviper]

Channels like Cartoon Network, Sci-Fi, etc. will just crash and burn.

There's a simple way out. Don't charge companies to carry your channel! Cable TV has more advertising than free, broadcast TV anyhow, so the $4/month that they are charging is out of line, and unnecessary. Then, people may only pay to get Fox News, but they'll still get Cartoon Network, SciFi, etc., because there is no additional cost to them. Alternatively, they could just make their price much lower than the competition, so now Disney and Nick may be forced to compete on content and price. That's the much more consumer friendly way to do it.

The fact is, there are no good options. People want a way to tell companies that they aren't going to put up with the crap they broadcast, and this is a way to do it.

The fact that cable TV prices are on the rise is an issue as well. People are getting sick and tired of paying for 50 channels that they NEVER watch (and you do pay for them).

If you've got a better way to address these issues, speak up. Saying our current system is just fine, flies in the face of reality. Saying that we should be forced to watch channels we don't want is also something few would agree with.

People have been able to form their own reality for a long time now. Reading only the books they like, getting information from only the news papers they want, staying within the social circles they prefer, etc. Forcing somebody to have CNN on their channel lineup doesn't make society any better. If someone is that diluted, they can maintain their own reality in the face of anything.

Marginal Revolution

[madro]

This probably comes too late to the discussion, but I haven't seen anyone mention the analysis [marginalrevolution.com] from the econ blog Marginal Revolution.

Why are consumers forced to buy a bundle? Cable companies claim that choice would require expensive boxes, but few observers believe this claim.

More plausibly, price discrimination is at work. Consider a simple example with two individuals. John values Disney at $100 a year and FoxNews at $10 a year; Sally has the reverse valuations. Without bundling, the cable company will offer each channel for about $99, and sell a channel to each consumer, reaping $198 in revenue (N.B.: I am assuming that the cable company has a good idea of demand in general, although it cannot identify which consumer is willing to pay how much for what.)

In lieu of this set up, sell the bundle for $109 to each consumer, reaping a greater revenue of $218. The company makes greater profit.

More importantly, aggregate welfare is higher. In this case each consumer receives two channels instead of one.

Monopolies, regulated or otherwise, tend to bundle commodities when demands are scattered and the marginal cost of additional service is low. In this context, once the program is made, you can sell it cheaply to additional customers. So why not try to get the entire package into everyone's hands?

You can spin your own numbers, with varying results, but the overall lesson is clear. While there is a general problem with monopoly in the cable market, bundling can make that problem better rather than worse. So don't complain next time you have to "click-remote" through those Farsi and exercise channels.