12 comments

• 

  Anonymous

  2 years ago

  "That is, of course, absurd. It would be great for consumers if it were possible, but the problem is that the cable companies would go bankrupt. It costs a lot more than $1 to deliver that one channel to the customer's home. That's why, if forced to adopt a "pure" a la carte model, channels would have to set the per-channel cost much higher than $1�probably more like $5-10 per channel. It should be obvious that consumers wouldn't benefit from that."
  
  Why should consumers care how much it costs the Cable companies to produce shows--that's their (the cable companies) problem. There is now competition, in the form of downloadable programs, which could be selling for as little a a buck or two for a show, given that most people only watch a few shows, they will come out ahead. A la carte will be forced on the cable companies by competition.
  
  It would not be wrong though to push for a la carte when they are a monopoly--in my mind if a company gets a monopoly, they have to accept the regulation.
• 

  Tim

  2 years ago

  In the first place, cable is not a monopoly. Almost every consumer in the country has satellite as an alternative, and as you point out, additional competition is on the way.
  
  In the second place, how is the consumer going to download those shows off the Internet? That's right--they'll need a broadband pipe. Who are they going to get it from? Probably the cable company. And guess what? Cable companies charge about as much for a broadband pipe ($30-50) as they do for cable TV service. So you're making my point--in the future there will probably be "hybrid" a la carte, where you pay for a basic bundle (which might be labeled "broadband Internet" in the future) and then have the option of buying additional content a la carte. That's different from "pure" a la carte, in which you only pay a per-channel fee for the channels you decide to take.
• 

  Joseph Dixon

  2 years ago

  "Why should consumers care how much it costs the Cable companies to produce shows--that's their (the cable companies) problem."

  
  

  This statement highlights the misunderstanding that the general public has about cable companies. Most cable companies do not produce their own programming. They purchase channels from third party companies and rebroadcast it on their system. The same companies that the satellite companies are buying their programming from. There is not a seperate Discovery Channel for satellite and in many cases the programing that you are downloading for "a buck or two" on the internet is produced by the same third party companies. The reason they can afford to do this on the internet is because of the fees that they are already receiving from the cable and satellite companies.

  
  

  Also, the cost of producing this programming is not irrelevant to the consumer. If a cable company is spending more in content than they receive from subscribers they will not stay in business. To which you might reply, good I don't like them anyway. But keep in mind, without cable companies helping to support the production companies that make the programming, you wouldn't have much to download. (except maybe some of the independent shows, which I admit are getting better. But that would be like only having PBS and Public Access to watch).

  
  

  (...and don't say that there is content produced by broadcast channels that is supported by advertising and not the cable industry because Tivo and the like are slowly eating away at the advertising revenue that support those options. and the cable companies pay fees to them as well)
• 

  Karl

  2 years ago

  "What's going on is that your monthly cable bill is actually paying for two things: the programming and the infrastrcture necessary to deliver the programming. What people don't seem to understand is that the infrastructure is by far the largest fraction of the bill."
  
  So if people don't understand this, then break down for us what exactly that rate, raised 5-10% yearly, is being used for. Hint: most of it isn't going toward already laid infrastructure. It's going to\ executive bonuses and grinning investors.
  
  Also keep in mind people are paying between $45-$60 for a broadband pipe as well, and many of these customers have been paying the cable company for decades. It's not as if infrasturcture cost is straining their profit margins.
  
  That said yes, some basic bundle would probably have to exist. But why is it we're not even at the point where sports programming is a package, if ESPN is the most expensive channel?
• 

  James Gattuso

  2 years ago

  Good points. I think you may be right that the final result may be a hybrid, with some flat fee and some per channel price. There are more variations possible too -- most likely much more of what is now called pay per view, sort of a la carte on steroids.
  
  That said, I don't think that a flat fee is necessarily required in order to cover fixed costs. Every industry has fixed costs to one degree or another. E.g., I can see a movie in a theater simply by plunking down the ticket price, even though the theater operator has fixed costs. No fixed monthly fee is required. The ultimate structure of fees depends upon a huge number of variables. The only thing we can safely assume is that if government regulators try to predict what the structure SHOULD be, they will get it wrong.
• 

  Tim

  2 years ago

  Right, I think we're in total agreement about the policy conclusion: the government shouldn't mandate any particular price structure. So far, the market hasn't delivered any "pure" a la carte video services, which makes me think that they probably aren't commercially viable. But who knows, maybe the march of technology will change that!
• 

  chaser7016

  2 years ago

  The solution is to have an ISP come along that offers broadband service that mirrors current cell phone bills. You'll have a certain amount of monthly bandwidth and anything over you'll be charged for.
  
  This will be great for keeping the net as we know it today(net neutrality wouldnt be a congressional issue), as well as paying for what you want to watch and consume. P2P could become legal as monies from our monthly bills can be funneled to big media or to joe making media in his room!
  
  Can not imagine this not happenning, especially with the Skype's of the world. Id say a wireless ISP will be the first to instill such a plan!
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  Walter E. Wallis

  2 years ago

  Outlaw exclusive cable franchises - no reason you can't run half a dozen fiber optic cables on a pole.
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  Tim

  2 years ago

  Walter,
  
  An excellent suggestion! In fact, it's an idea I've written about in the past.
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  James Gattuso

  2 years ago

  Actually, exclusive franchises are already prohibited under the 92 cable act, and the FCC is looking at whether localities have violated that ban by unreasonably denying franchises to competitors. Maybe the question should be whether franchising itself should be done away with.
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  David P

  2 years ago

  To Tim's point "In the first place, cable is not a monopoly. Almost every consumer in the country has satellite as an alternative, "
  
  Not true. There are many of my friends at work who live in apartments who cannot install sat dish. They get cable provided by the cable companies or (worse) by the apt. building directly.
  
  One infact bought at HDTV only to find that apt building does not not transmit the HD channels....and can give no expected date for HD.
  
  I'd prefer to get away from channel concept completely and simply select the shows I want to watch. I want to watch UK version of The Office followed by US version of The Office followed by Miami Local news followed by my wifes Chicago local news.
• 

  Insider?

  1 year ago

  25 cents a channel isn't a good figure, becuase ESPN charges a huge amount ($3 per person per month) compared to something like CNN (50 cents per person per month)...and all those "annoying" shopping channels you think you're paying for? you're not...they can actually LOWER your bill, and you might even qualify for a 25 cent credit for adding 10 shopping channels "a la carte"
  
  and that's with special deals where ESPN comes "bundled" ..it would probably be $4 or $5 to the cable co if "a la carte"...add a mere $15 per month base rate, and you're already up to $20 for ONE MEASELY CHANNEL.
  
  Since some companies have a package of FIFTY channels for that price...where exactly is the savings?