December 5, 2005 4:00 AM PST
A la carte TV
- Related Stories
-
New FCC report advocates a la carte TV pricing
November 29, 2005 -
The Internet and the future of TV
October 31, 2005 -
Verizon's TV dreams
October 13, 2005 -
Can Howard Stern now relax?
January 24, 2005
(continued from previous page)
AT&T's network, which will deliver video service via Internet protocol (IPTV), will be well suited to offer a la carte service because its IPTV system is inherently more flexible than the traditional broadcast networks used by cable and satellite TV providers. Traditional broadcast networks transmit programming for all channels at the same time. Viewers watch a particular channel by tuning into that channel.
IPTV networks operate differently. Instead of broadcasting TV shows across the entire network all the time, an IP network can deliver a requested program, or package of programs, to a specific Internet address. These shows could be delivered on demand or as part of a set schedule, but they would be pushed out only to the subscribers requesting them rather than to all subscribers.
AT&T has said it plans to begin offering its TV service in 2005 or early 2006. So far, it hasn't announced details of the service, nor has it announced any deals with programmers. But Dave Pacholczyk, a spokesman for AT&T, said the company is in talks with content providers to offer customers an a la carte option to its TV service.
"As we enter the video market, it is our goal to deliver more choices to our customers when they want it, in the way they want it," he said. "If consumers want a la carte programming, we will be happy to offer it so long as we are able to obtain access to the programming in that manner."
Verizon Communications, which is now offering TV service in two cities, said that it would also offer a la carte programming. But in order for that to happen, the industry must change how it sells and licenses content.
"If the industry wants to go in this direction, we can do it from a technology perspective," said Eric Rabe, a spokesman for Verizon. "But the way the industry is structured today, it requires us to make certain programming available in tiers. That's the way the content is sold to us."
And here is where the problem seems to lie. Content providers like ESPN, which is owned by the Walt Disney Company, say that a la carte pricing ultimately costs consumers more because it reduces the reach of certain channels, which decreases advertising revenue. It also increases marketing costs, which result in higher prices that have to be passed on to consumers. Even though the FCC's report supposedly refutes these concerns, ESPN and the NCTA stand behind their claims.
"We haven't seen the report to comment specifically," said an ESPN spokesman. "But we don't support the premise."
ESPN is a good example of how bundled programming works. Its main channel is one of the most popular in most basic cable packages, and one of the most expensive. To help justify the price it often throws a few less-popular channels, such as ESPN2, into the bundle. If Disney sold each of its channels separately, it would likely sell more subscriptions to the flagship ESPN channel and fewer subscriptions to the lesser known channels. With fewer viewers, advertising revenue on those less-popular channels would likely go down as well. As a result, ESPN would have to charge more for the more-popular channel to offset losses on the less-popular channels.
But consumer advocates say that a free market will eventually work in consumers' favor. Not only will prices be forced to fall to attract viewers, but programming will likely get better because content providers will compete more aggressively for viewers.
"When cable providers add more channels, it doesn't change how much TV people watch," said Consumers Union advocate DeGraff. "No one watches a lot of those extra channels. They just go into the ether. If a channel deserves to exist, people will pay for it, and if it's too expensive, they won't."
DeGraff added that he isn't advocating that cable companies and content providers get rid of bundles entirely.
"Bundles aren't bad," he said. "But they only work when people can opt out of the bundle. We just think consumers should have more choices."
See more CNET content tagged:
Cablevision Systems Corp., cable company, channel, TV company, programming
49 comments
Join the conversation! Add your comment (Log in or register)
Ronald Lewis
Founder and CTA
Riverscape
www.riverscapecorp.com
commercial free shows to watch on your computer or ipod and
hook either or both to your TV.
How many people on here only watch 10% of the channels they pay for & watch less than 25% of the programs on those channels. I don't even use my VCR anymore - there's nothing on which I care neough about to record.
When IPTV offers microcharge PPV - how many people will continue to pay cable, for expensive costume dramas, that they don't watch - if they can get the shows they DO watch, separately on IPTV ?
In the Neilsen top-50 shows, I regularly 2 - Monday night football & the Simpsons. I also watch top-50 movies & some other top-rated sports events. So maybe I watch 10% of te top-rated shows. I don't care about Survivor, Desparate Housewives, the OC, House and a bunch of other shows that cost a great deal to make - So if I can get what I want (and only what I want on IPTV, cheaper than cable - kiss cable goodbye.
I get around 65 channels in my package, give or take a couple. I watch Fox (Simpsons), ABS (Alias), WB (Smallville), Cartoon Network (Fairly Oddparents, Danny Phantom), Nickelodeon, Comedy Central (Southpark) and Scifi (Stargates).
With the new price increase very recently announced, my cable bill will break $50/month. And I really don't think it's worth that much. Sorry Comcast, but as soon as I quit being lazy I'm going to install that satellite kit I've got laying around. They sound cheaper the way things are now.
Ala Carte has potential to make things fair. Let me pay a fair price for the few channels I actually use. Problem is, will the ala carte pricing per channel actually be fair? We'll find out if it ever happens.
And I don't understand the comment about requiring all TVs to have set tops. I don't need a box for the bare-bones basic service, and I don't need a box for the expanded service. How does my TV know the difference there which service I have or not? Do bare-bones basic subscribers without expanded service require cable boxes to prevent them from accidentally watching Cartoon Network or any other expanded service channel??
Wait for the math:
15 channels/$90 of say, 200 channels is a waste since it's $6/channel of valuable content in your mind...
How much do you really think each channel will cost? It's not gonna be pennies, Compare it to call waiting, another scam... $6/month but they will 'bundle it' for $30 with a bunch of crap you barely need. I see the cable industry going this way. they will price the individual channels at a point where it will be slightly more expensive than buying a bundle so that its not mainstream to pick and choose...
15 channels at $7/mo each for $105... making the 90 bundle look like a good deal.
People who have philosophical issues with paying for stuff they don't need will pay more to prove a point, but the mainstream public will stick with what they know.
-C
Big Cable is clutching desperately to a monopoly that does not serve its customers well at all.
<a class="jive-link-external" href="http://channelchanger.typepad.com/" target="_newWindow">http://channelchanger.typepad.com/</a>
>government pay-per-channel regulation would be
>likely to hurt consumers by increasing prices,
>decreasing choice and reducing diversity in
>programming, and it would do so in a way that
>violates the First Amendment.
Huh? What does free speech have to do with this? Forcing the consumer to pay for what they don't want in order to get what they *do* want ("bundling") is classic monopolistic bahavior. Correcting the longstanding abuse its role as a pseudo-utility is certainly outweighted by any tenuous application of First Amendment rights.
When Microsoft used similar tricks with selling Windows to Dell and other OEM's, the Department of Justice came down on them like a ton of bricks. But when the FCC wants to apply the same principle of not having to pay for stuff you don't want, this guy invokes the First Amendment? Please! Give us some credit, Kyle. Maybe it wasn't until you read your own words in the article that you realized how lame that excuse sounded.
Those 6 people think they're going to put channels like Comedy Central out of business by refusing to pay for them, but a more likely scenario is the channels with lower ratings that these people enjoy, like perhaps the Hallmark Channel, will have a lot of trouble staying in business.
And every set will need to have a cable box now, for those that don't already.
> for those that don't already.
Why? It'll probably take a while for this to happen if some law passes it as a required option. By then we may be into the digital TV age where no analog signals are allowed anymore. We'll all either have TVs with cablecards built into them, or we'll need boxes to convert digital signals to our old analog TVs anyway. Moot point.
But for now, they could always use the analog filter method of blocking unpaid channels to the subscribers' homes. I don't need a box if I were to downgrade from expanded service to basic service. How does my TV know not to display the expanded channels if I would do that?
A 20 inch TV costs about $120. These prices have never been lower.
Basic cable (20 channels) costs about $20/month.
operators. I never watch any sports.
Adelphia is my cable company.
I hope that when it is taken over by ATT & Comcast that they will
enable subscribers to pay for the channels thet want.
Likewise, extended cable costs $40 for about 60 channels. Only about 15-20 of those channels give me value.
I would like to subscribe to only the channels I want, yet have the option of PPV for shows on all the other channels.
I do think that the argument against pay per show or pay per channel pricing is valid. If that becomes the case, every channel will only run 10 am - 1 am. Do you really not want to ever be able to have anything to watch in the middle of the night (as an insomniac, I sure appreciate it)
Moving to a "Metered-Service" model almost always ends-up costing the consumer more then a "Flat-Rate" model.
This has been proven, both mathematically, and statistically (this really is just Basic-Economics).
Besides, why else do you think that this "marketing idea" is suddenly being promoted so heavily? The answer is simply that "business" DOES expect to make more profit, this way.
Unfortunately, for consumers, this method of generating higher-profits, MUST inevitably mean higher-charges, for less product, ...NOT, better service or more choice.
People are just incredibly lazy.
Imagine if we had to buy food that we didn't want at the grocery store because it all came bundled in predetermined packages. We wouldn't stand for it. Ridiculous. But that is exactly what we do when we purchase cable TV. Most Americans hate their local cable monopoly and for good reason.
The cable monopolies don't like ala carte because they would prefer to sell more goods--even goods that the customer doesn't want--at a slightly lower per unit profit margin, because more goods sold ultimately means more profit. Don't try to use that false line that we should all be happy with the one-size-fits all garbage that the cable companies have been feeding us about their ridiculous programming offerings.
Cable monopolies will have to ultimately adapt or go extinct. Perhaps ATT and others will force the cable monopolies to adapt by offering consumers more choice. Then suddenly the cable companies will magically start offering ala carte programming. The satellite companies have already forced cable companies to offer a better array of programming.
In the end, businesses that give consumers what they want at a fair price will prevail. More choice in TV is coming.
The second issue is that whether this particular product is going to reach small town in the country like india
about cable (too many different systems) but DirecTV should be
able to program your receiver with the shows you want. After all,
you can do that already from your end of the system.
But then, comes the pricing question. Each channel would have
to have a price, if you wanted individual channel selection. You
just add up the costs for what you watch, add in the overhead
costs, and there's your bill. Or you buy bundles of channels at a
discount, like you do now.
As in every other business, a la carte choices are more expensive
than the bundled costs. You pay more, but you get exactly what
you want. And it will work for cable and satellite TV.
But, since I can select the channels I want now, and still get the
economy of bundling, I just can't get interested in the a la carte
concept. Someone is going to have to create a very credible cost
analysis proving the a la carte approach is noticeably cheaper
before it can become a real idea.
The current model evolved the way it did in a more-or-less open and competitive system. (I know about must carry and local franchises, different topic.)
As usual, what we need is less regulation. Let providers fight for customers with the best model. If the current bundle system is so bad for consumers, don't look to the FCC for a solution. It will be iTunes, NetFlix or maybe Verizon that draws the customers and puts cable under.
Consider this, would you pay less for Internet access if you choose only this sites you visited?
their business models - raises operating costs - but if there
really is a serious demand among the viewing audience for some
sort of a la carte selections, it will show up. So far, there seems
to be little serious interest.
As your article says, AT&T (ex-SBC) and Verizon (ex-managers),
among others, are considering the idea. I'd suggest that you sit
back and see what the market creates. That's the only way it's
going to happen.
wonder if his older brother knows that Andy is messing with the
computer again????
channels underwrite the smaller ones and pay their way - and
it allows cable to offer "bundles" to the ad buyers as well: We'll
sell you this, and we'll throw-in this and that channel for "free."
It drives up costs to the viewer (cable bill) and to the sponsers
who then raises the price of the product. We (as consumers) get
hit twice. (and no one sees the ads)
In fact, all this probably supports many of the professional
sports teams. How else can they pay these people, since many of
the seats are empty at the pro games.
A LA CARTE TV will never happen. It robs too many people of the
moola at the trough.