Cable a la Carte
 

I don't know about this...


FCC May Endorse
Cable à la Carte,
In a Policy Shift

By AMY SCHATZ in Washington and JOE FLINT in New York
Staff Reporters of THE WALL STREET JOURNAL
November 29, 2005; Page A3

Federal regulators are on the verge of suggesting that cable companies could best serve consumers by letting them subscribe to individual channels instead of offering only prepackaged bundles.

Federal Communications Commission Chairman Kevin Martin is expected to announce today at a Senate forum on indecency that the FCC will soon reissue its review of cable industry "à la carte" pricing with a wholly different conclusion. While the original report concluded that consumers would pay more for individual channels, the new one concludes they could pay less.

"This report will conclude that à la carte could be in the best interest of consumers," said an FCC official familiar with the revised report's contents. The report also finds that "themed tiers" of channels could be "economically feasible," the official said.

This is of concern for the cable industry, partly because it opens a new front in the government's efforts to impose indecency standards on cable and satellite providers. Until now, the cable industry has resisted suggestions from Mr. Martin and some lawmakers to voluntarily offer à la carte choices or set up a "family-friendly tier" of channels suitable for children. By suggesting that consumers won't necessarily pay more for individual channels, the report calls into question the cable industry's revenue model.

While the FCC can't force the cable industry to change its business model, its voice will add considerable weight to the debate and could embolden lawmakers eager to give consumers, particularly parents, more control over which television programming enters their homes.

Aside from the technical challenge of offering hundreds of channels on an individual basis, cable programmers and operators say such a switch would raise costs and reduce choices for consumers. That's because, they say, pooling a group of channels into one cable package effectively lowers the cost of offering all of the channels.

Cable and satellite operators pay a monthly license fee to carry channels and pass along those costs to subscribers. The fees vary tremendously. Walt Disney Co.'s ESPN costs more than $2.50 a month per subscriber, while Time Warner Inc.'s Cartoon Network costs only about 15 cents.

WSJ's Gerald Seib3 discusses the FCC's recommendation that cable companies should begin "à la carte" pricing of channels.Many subscribers without children might drop such offerings as Viacom Inc.'s Nickelodeon and Cartoon Network. To make up that lost revenue, channels aimed at children could have higher subscriber fees. And since advertising dollars depend on potential viewership, the end result would be that many channels would have less money to spend on programming.

In large part, the high costs of sports channels have led regulators to push for à la carte. Even some cable operators have taken issue with ESPN's high price. But the fear is that if a separate tier for sports channels is created, then other channels soon could be put on tiers. Mr. Martin has in the past been an advocate of a so-called family-friendly tier that would package such fare as Nickelodeon and the Hallmark Channel.

Earlier this year, Mr. Martin expressed concerns about the earlier report and asked the FCC staff to review it. The staff concluded that the original report relied in part on faulty analysis of data, according to one FCC official.

A year ago, an initial report concluded that consumers would save money on an à la carte plan only if they subscribed to fewer than nine channels. The average cable subscriber watches 17 channels, the FCC staff found, suggesting a rate increase of anywhere from 14% to 30%.

A spokesman for the National Cable & Telecommunications Association said the cable-industry lobbying group would have no comment until it had time to review the new report.

Mr. Martin's testimony today will likely find a receptive audience on Capitol Hill, where lawmakers have expressed interest in expanding indecency regulations to cover the cable and satellite industries.

Over the summer, the cable industry floated a proposal acquiescing to the federal government's interest in imposing indecency regulations on cable and satellite programming. It was the first time the industry had opened the door to such regulation, but a caveat included in the proposal -- that the industry would agree to indecency legislation only if the law didn't take effect until after the courts ruled on its constitutionality -- bombed on Capitol Hill.

A committee aide for Senate Commerce Chairman Ted Stevens (R., Alaska) said he "doesn't feel a legislative solution predicated on a court decision is the way to go."

this is stoopid. let cable package it anyway they want.

I agree, let cable package it. If you take that away you will see cable channels go off the air (cable).

you'd rather be forced to pay for channels you don't watch than see those channels go off the air?

I hate paying for something I don't use/watch and that applies to cable/digital TV...

FM

I watch about 5 different cable channels, so it works for me

Yes! We need more government regulation!

Wait, aren't these supposed to be Republicans?

It would be funny though. Go over a guys house and all he's got is Playboy, Spice, ESPN and the Weather Channel.

Well I'm a little biased since I work for Time Warner Cable. :)

But if they did this and forced cable companies to do al la carte you would see the demise of a lot of TV channels. There would be less choice because of the change, not more.

As much as I complain about there being "nothing on," there's something to be said for flipping channels and coming across a show on a channel I've watched maybe twcie in 5 years. I'd like to have the opportunity to see what those channels offer at any given time, rather than just pick out the 25 most-watched channels in our house and have nothing else but that.

ahh, I see where you're coming from. Don't bite the hand that feeds ya ;)

As far as less choice, what good is more choice when it's not good quality? Simply thinking out loud...

FM

Yeah, I'd imagine that some channels like Fox Soccer Channel would be dead. I don't think that many would suscribe to it seperately. The fact that Fox owns it allows it to stay on the air, IMO.

There is a reference to "themed tiers" in the article, though - don't you think that niche sports channels - soccer, horse racing, OLN, etc. - could be packaged together? That would make the most sense to me. As a channel, I wouldn't want to see myself on a menu at $.03 anyway. I'd want to cast my lot with a number of other channels that the customer could buy for $1.50.

Good idea.

Just give me the channels I want.

You can take my ESPN 8, "the Ocho" when you pry it from my cold dead hands.

Seriously though. Just let phone companies offer TV over IP and let competition sort it out.

And there's likely to be more cost too, or maybe more likely, fewer channels for the same total cost to the consumer.

The combined individual pricing for the most frequently bought channels will somehow magically end up costing slightly more than the current typical package rate, you wait & see if it doesn't.

Yeah, no worries.

A lot of channels exist because of other channels. There probably wouldn't be an ESPN News of ESPN-U or whatever it's called if everything was al la carte. Like the guy says in the post under yours Fox Soccer Channel is on today because Fox owns it and packages it with their other sports channels. I see the draw to doing al la carte, because it probably would be cheaper at first. Untill the cable companies then have to start having more customer service people to field the requests for changes on accounts. And then the cable company will probably out-source because they can't afford to have so many local customer service people, so then the customers will complain because the customer service rep is from India or something like that. I just see this a long winding road that could prove to end up bad.

I work in the business internet support department so the TV world doesn't really affect me, but I was on that end before and I can see it happening.

Yup - even money says ESPN jumps from the $2 or so subscriber fee right now (JIMGA - that is correct, right ?) to about $6 or $7 - easy.

I think a la carte would work very well for me. I always prefer more options to fewer. And I'm sure Comcast (the local monopoly) would still bundle some of my favorites together such that there would be a considerable discount.

As for those cable channels that would go dark because of this, oh well. Free enterprise forever baby.

Considering these are the same people who currently charge me $53 a month for internet AND basic cable, but wanted to charge me $58 a month to drop basic cable and only pay for internet...I have no doubt this is true.

The article says that ESPN is "more than $2.50."

Except for a good percentage of all Hispanic and Irish households, the households of Latin American & European expats and of course all the bars that serve those demographics. ;)

We had this discussion a few months ago and I have to say I still don't see the problem for cable companies. If ESPN costs Time Warner $2.50/subscriber to "broadcast", simply charge the subscriber $3.00 and walk away with $0.50 profit. Do this for the rest of the channels.

That way we allow the free market to do its work. If no one watches the Sewing Channel, then it doesn't make any money and goes out of business.

I think the real issue here is that offering this a la Carte service would represent a technical challenge for the Cable companies, and they'd have to spend money implementing it which would have no really obvious Return On Investment. They may argue otherwise, but I'll bet you good money that's the real reason they're against it.

Anyone who thinks your cable bill will go down in any significant manner with these proposed changes is a fool. the cable companies won't allow it to happen, even if a la carte is offered it will be at such an inflated price per channel that you'll have the same bill and only 17-25 channels instead of 200.

It doesn't have to be that way. Order a la Carte should be as simple as ordering On Demand movies via your already-existing digital cable box. No need for huge support costs.

Yeah then they will call in and bitch like this.

"But I didn't order that! waaaaa I want credit! waaaaaaaa! waaaaaaaaa"

Or something like that. Customers are bad. :)

Shouldn't have fucked up their order.

Ever buy a single can of soda?

They ordered via their remote. How do we fuck it up? :)

yes they are, sadly they keep us all in business, heh... :)

FM

Or even better, a combo meal?

combo meals suck, they make you pay for the drink

Theoretically, advertisers would love something like this as it enables them to target an even narrower demographic even more specifically. So theoretically, the cost per channel should go down as advertisers pay more to reach specific audiences. But it's wishful thinking to imagine this revenue would get passed on to consumers via reduced cable costs in an a la carte system.

So they don't do this about On Demand?


mmmkay.... :p

Umm ... not really, since advertisers generally don't buy "systems", we buy "networks", be it at the national level or at the market-by-market level. There might be a minor uptick in viewers for, say, ESPN when News/U go away or for CNN when Headline/Fn goes away, etc. but it'd be pretty negibile (since the total audience for those is very small anyway).

If anything, there'll be some negative pressure on the vast majority of networks, who will lose all those "casual viewers" who aren't willing to pay for them ala carte. If ala carte is made mandatory & catches on for any length of time, it would be, in my estimation, the death of at least half the existing cable networks within two years; i.e. the ones who depend on casual viewers or loyal-to-one/two-program viewers. Very few operations with more than one network (not just ESPN, CNN, but stuff like History Channel, Discovery, etc.) will keep those niche networks around -- they'll need to try to drive all of that traffic to their primary brand in order to keep viewership up/ad rates
up. I don't believe that'll work, but they'll have no choice but to try.

The other elephant in the room would appear to be the loss of countless small cable systems in rural areas. The hardware/support costs of a place like my home county, with low population density, would drive ala carte costs through the roof compared to densely populated urban areas (remember, Comcast considers Jasper County/Monticello cable separately from Covington/Newton County cable, or Fulton County/Atlanta cable, etc).

So let's see here ... ala carte leads to:
1) Fewer channels for ultimately the same cost
2) "Blackout" areas for cable service altogether
3) Fewer channels, more homogenized programming

Damn, I've having a hard time finding a positive in this hare-brained notion for anyone except the broadcast networks who stand to benefit more than anyone from the whole scheme.

If Dangarion lived in Georgia, and therefore was able to get a specialized title, i would suggest "The Cable Guy"

But since he's not from GA, and has no chance of getting a special title, he can remain "learning the ropes."

How many of us really pay attention to what channels we are watching though? I wonder how many times last season Mizzou was on ESPN2 or TBS or Fox Sports or etc. I don't pay attention because I get all of these channels. I could see ESPN intentionally spreading out events like Big Monday or NFL Primetime so you have to order the a la carte ESPN2, EPSNU, etc.

Even with that said, I sort of like the idea. My directv guide is set right now to only list about 20 channels anyways and of those I regularly only watch maybe ten. My worry, that not many are posting about, is the reason for the change. Put an antenna on your roof and watch PBS if you are offended by cable, don't go crying to the fucking government because your kid turned on comedy central at 2 in the morning. The government's job is not to raise your kids and protect them from things you pay for! Is it the Post Office's fault if your kid opens your playboy magazine before you get home from work?

Why do I have to live in George? I used to have a cable guy poster on my wall years ago, this was before I ever worked at a cable company and we never had cable growing up. The first time I had cable was when the company installed it for me after I was hired. :)

Why didn't you have it before?

Because I lived at home and my parents thought it was too expensive. But after I moved out they kept the cable (be it just basic) because they had grown used to have the channels.

I like the idea in principle, although I can see that in the short term it would cause some chaos (some channels going broke, some cable bills going higher, advertisers being confused.)

There's nothing wrong with the principle of it, though.

Exactly, wasn't the "V-chip" supposed to resolve this?

Well, other than the whole "it's not going to do anything positive for the vast majority of cable users" thing. Minor detail I guess ;)

See, I don't even have the option of "basic" cable. It's 50 dollars for the whole shebang (3 shopping channels and 20 news channels included) or nothing. I've chosen nothing and sit home and watch Masterpiece Theatre on Sunday nights.

You know more about this than I do - but I doubt very much that *anybody* can state with definity what long-term impact this will have on the industry and consumers. Short term, yes - I agree that it will probably be bad for consumers. But long-term, who knows?

Well, now that the networks are starting to investigate the option of "buy the show you want to watch for streaming over the Internet", a-la-carte channel selection may be a thing of the past. I mean, if I could buy a "Season Pass" for Survivor for like $50, maybe Good Eats for $30, Sunday Ticket for $200, Dora the Explorer for $30, etc, I could drop satellite or cable entirely. I spend around $800/year on TV, and if I could get all the shows (rather than channels) I want for that price over the Internet, screw dealing with the cable OR satellite OR phone company.

The cable nets could probably make a fair deal of money by putting their shows on their website, and making you watch 10-15 mins of commercials to view them. But we'd all rather have the archaic system we got now.

There's no reason that some channel like ABC couldnt put the newest episode of lost on their site on Thursday morning, the only cost to watch would be to absorb the 16-18 minutes of ads. Instead i guess by default they would much rather you download it from bit torrent or watch it on your tivo, sans ads.

How about they let the advertisers pay for the programs, and you watch them for free with ads. Or a charge of at most a dollar an episode.

They're doing some of this now for like 99 cents for the episode. I haven't purchased one, so I'm not sure how many ads are included.

Because I hate ads, especially when they don't match the show (i.e. commercials for adult shows in family programming). But that's a whole other political discussion that belongs in other threads...

I believe that exists already ... they call it broadcast tv and cable tv.
;)