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New FCC report advocates a la carte TV pricing
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That could change if the Federal Communications Commission and TV distributors Cablevision and AT&T have their way. Last week, FCC chairman Kevin Martin told a forum sponsored by the U.S. Senate Commerce Committee, which has been examining indecency on radio and television, that consumers could have more choice in what they view for cheaper prices if operators would sell content a la carte.
According to a new report from the FCC that has yet to be made public, a la carte pricing could actually reduce monthly cable bills for many consumers while also providing more control over what channels they watch at home.
News of the FCC report comes just as many large cable operators across the country announced that they are raising rates again for their service. Starting in January 2006, Comcast will bump up the price of its most popular cable package by 6 percent. Time Warner, the nation's second-largest cable operator, plans to raise its rates an average of 3 percent for its expanded package and 2 percent for its limited basic. And Cablevision will raise rates an average of 2 percent.
What's more, consumers--especially those with children--are becoming increasingly agitated by the amount of violence and sexual content that comes into their homes on channels they'd rather not receive as part of their subscription package.
"At the FCC, we used to receive indecency complaints by the hundreds," said Martin in front of the Senate committee. "Now they come in by the hundreds of thousands. Clearly, consumers--and particularly parents--are concerned and increasingly frustrated."
But content providers and most of the cable industry say that offering programming piecemeal will result in even higher prices and less choice for consumers. They argue that such a pricing structure would infuse enormous technical, marketing and transaction costs into the business. They claim that an a la carte model would require consumers to lease a separate set-top box for each TV.
They also claim that an a la carte pricing model would increase overall subscription rates and reduce diversity of programming, because many of the niche or special-interest channels today are bundled with more popular channels. If these less-popular channels are sold independently, they will become too expensive to offer. And if these channels go away, advertisers have fewer places to show their commercials. The losses in advertising would have to be offset by consumers paying more for their favorite channels.
"We can't comment on any new FCC a la carte report until it's released and we've had a chance to review it," said Kyle McSlarrow, president and CEO of the National Cable & Telecommunications Association (NCTA). "But previous and recent analyses were consistent in their findings that 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."
The bundle quandary
The way the cable packages are set up today, families who may want basic cable for channels such as Nickelodeon and the Cartoon Network are also forced to subscribe to channels such as MTV or Fox's FX, which often show programs that may be inappropriate for children.
Martin, as well as several consumer groups, say it's time that consumers have more choice in which channels they subscribe to. They believe this will not only help control costs, but it also would allow consumers to subscribe only to content they want to watch.
"People are not satisfied with what cable companies are offering them today," Kenneth DeGraff, a policy advocate at Consumers Union, the publisher of Consumer Reports. "Families are being told they have to subsidize content they find offensive. And the cable companies keep raising rates. They may throw in a few more channels, but no one ever asks consumers which channels they want."
The idea of allowing consumers to pick and choose which channels they want to subscribe to is nothing new. Cablevision, a cable operator in the Northeast, has been advocating the change for years. And just this week, the firm reiterated its support of the a la carte option for customers.
"We do not believe in the long term that selling programming a la carte will be detrimental to either programmers or cable operators," Charles F. Dolan, chairman of Cablevision's board of directors, said in a statement. "On the contrary, our experience indicates a la carte will result in a more affordable service for all with more programming options."
AT&T, formerly SBC Communications, has also thrown its support behind the a la carte option. The company is currently upgrading its broadband network and deploying more fiber optics to be able to offer a paid TV service.
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Ronald Lewis
Founder and CTA
Riverscape
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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.
http://channelchanger.typepad.com/
>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.
- It's still our choice.
- by boatseller December 6, 2005 10:52 AM PST
- Remember, no one is being compelled to subscribe to cable or satellite. We are electing to pay for services provided by a relatively unregulated industry (content, pricing, etc.).
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Showing 1 of 2 pages (48 Comments)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?