Cable "A la carte"

[MarkLaRoi]

Reading the thread about MTV's "TRL" being canceled reminded me of the cable a la carte issue. I am definitely hoping that we do someday very soon get to choose which channels we want to buy (at a reasonable price!!), but if memory serves wasn't MTV one of the biggest challengers to buying channels because after surveys it was revealed that very few people wanted MTV in their homes?

I can't remember the date of that study, but it was probably 3 years ago or so, and was also the last time I heard anything about freedom of channel choice in cable.

 

[landtuna]

... but if memory serves wasn't MTV one of the biggest challengers to buying channels because after surveys it was revealed that very few people wanted MTV in their homes?

IIRC this was one of John McCain's goals when he was involved in rewriting the Telecommunications Act. Obviously nothing came of it but probably because the programmers, as a group, oppose dumping the tier approach. The arguments I've heard (on behalf of the programmers) are of the opinion that their marginal channels will disappear if ala carte subscriptions are allowed. Funny, but it used to be the standard on C-band and didn't have that effect there.

In order to receive the 5 channels I want I have to subscribe to a package that includes over 200 channels of stuff I never watch and wouldn't subscribe to if I had a choice. It may come to me dumping the entire subscription if the amount and repetitiveness of their commercials keep increasing.

 

[KeithE4]

If cable/satellite went alacarte, all the channels would disappear. Not just the so-called "marginal" channels...all of them. I don't know of any of the majors that could survive on ad dollars alone. None of them have the viewership of the Big Four broadcast networks with the possible exception of ESPN, Fox News, and CNN.

Even ESPN, which is probably the closest thing to a viable stand-alone network, would never be able to afford the broadcast rights to the games they carry without that $2 or whatever it is per subscriber - even with Disney's big pockets. Maybe getting carriage on OTA digital subchannels instead of restricting themselves to cable/satellite would work. As long as all local digital channels are must-carry, they would be included.

 

[formeraa]

John McCain didn't challenge the big bad cable companies? Oh my, I thought he was a maverick who had changed "Warshington". Oh that's right, he's not been for change for the past 27 years AND NOW HE IS!

Back to the topic, I have always had the same opinion about a la carte cable. I've always thought that there should be tiers of channels. Tier 1 would be the local channels (must buy). Tiers 2 through N would be similar types of channels grouped together for, say, $6 or $7 per tier. For example, the news tier might be CNN, MSNBC, Fox News, Bloomberg, CSPAN channels, CNBC, and Fox Business. The Family tier might be: ABC Family, Nick, Disney, Toon, Noggin, The N, etc. You could even make them more focused: News vs. Business vs. Children vs. Teens vs. Music vs. Lifestyle vs. Women's vs. Men's, etc.

 

[dhett]

Formeraa, if you're going to interject political opinion into the conversation, at least get your facts straight and stop letting them be colored by your political bias. McCain made a good-faith effort to get a la carte cable/satellite. But that's the funny thing about Congress and the Senate. You're only one voice out of many - in McCain's case - 100. You don't always get what you want.

 

[landtuna]

If cable/satellite went alacarte, all the channels would disappear. Not just the so-called "marginal" channels...all of them. I don't know of any of the majors that could survive on ad dollars alone.

The option to subscribe ala carte did not exclude a per-channel charge. It merely allowed a subscriber to choose which individual channels they wish to receive. The programmers have argued that if ala carte were enabled not only would "marginal" channels disappear but the overall cost of the subscription would go up.

Having been a long time subscriber to C-band in its heyday I can tell you that neither is true. There once were many programmers making a good living selling ala carte and the pizza dish has many more potential customers than the BUD ever had.

 

[KeithE4]

If cable/satellite went alacarte, all the channels would disappear. Not just the so-called "marginal" channels...all of them. I don't know of any of the majors that could survive on ad dollars alone.

The option to subscribe ala carte did not exclude a per-channel charge. It merely allowed a subscriber to choose which individual channels they wish to receive. The programmers have argued that if ala carte were enabled not only would "marginal" channels disappear but the overall cost of the subscription would go up.

But the monthly charge would be so high that few would bother. For example: ESPN charges around $2 per subscriber. There are around 100 million subscribers to cable and satellite TV. That's $200 million per month gross revenue, plus ad dollars. If they peak out at 10 million households for a big game, that's $20 a month they would have to charge to make up that revenue. As pay-cable sports channels found out in the '80s, few will do that.

Even if half did (and that's generous, I think), they'd lose half their income. They couldn't afford to buy the rights to the pro and college games that bring the viewers and ad dollars to ESPN in the first place. I couldn't see ESPN surviving that way. And, if they couldn't, then the others couldn't either.

 

[stationi]

But as a cable or satellite subscriber it shouldn't be our job to subsides programming that we don't care to watch. If ESPN over paid for the rights to football then the 90% of people that don't watch it should be penalized for ESPN's decision.

 

[landtuna]

I am an avid college football watcher but have to admit I probably wouldn't cough up an annual subscription fee to ESPN for that sport alone. All their other junk, such as poker tournaments, do not interest me. But you can bet someone would come up with an NCAA version of the NFL/NHL packages now offered.

 

[azumanga]

...you can bet someone would come up with an NCAA version of the NFL/NHL packages now offered.

Someone already did -- "ESPN's Game Plan".

 

[compubit]

Back to the topic, I have always had the same opinion about a la carte cable. I've always thought that there should be tiers of channels. Tier 1 would be the local channels (must buy). Tiers 2 through N would be similar types of channels grouped together for, say, $6 or $7 per tier. For example, the news tier might be CNN, MSNBC, Fox News, Bloomberg, CSPAN channels, CNBC, and Fox Business. The Family tier might be: ABC Family, Nick, Disney, Toon, Noggin, The N, etc. You could even make them more focused: News vs. Business vs. Children vs. Teens vs. Music vs. Lifestyle vs. Women's vs. Men's, etc.

Actually, that's how you purchase programming from Bell ExpressVu in Canada.

Basic Package includes locals (almost all from across the country) and some public interest channels and 1 (yes 1) shopping channel. Then if you want news, you order the "News & Learning 1" Package (CNN, CNBC, TLC, Discovery, BBC Canada, CTS, History Television. CP24. Business News Network, CNN Headline News, CLT, CJAD Montreal. 680 News) - there's also a News & Learning 2 Package with other channels (including FoxNews). If you want sports, then get the Sports 1, 2 and/or 3 package. There are also Lifestyle (HGTV, FoodTV, SexTV), Family (Family Channel, Teletoon, Discovery Kids), Variety (A&E, TV Land, Fine Living, Space), Movies, and French Packages. Each one costs $5, but you can bundle multiple for a bigger discount. There is some "sliding in" of what we'd call marginal channels into the packages (Miracle Channel with HGTV in Lifestyle 1 or Bold with TVLand in Variety 2). And even so, some of the marginal channels don't make it after a period of time...

Don't say it doesn't work, because it does in Canada (and has been for what, about 10 years?).

Jim

 

[landtuna]

...you can bet someone would come up with an NCAA version of the NFL/NHL packages now offered.

Someone already did -- "ESPN's Game Plan".

Yes, of course, but Game Plan is an ESPN offering as you point out. A previous poster said that ESPN couldn't survive if it were a standalone subscription entity as the subscription price would be too high for most people. So, assuming there was no ESPN (at least in its current form) I was speculating that the demand for college football would find a provider ala Center Ice or the like.

 

[Markxxx]

The problem with the current Tier system is you have to buy all the lower levels.

For instance when I had cable, I wanted TVLand and BBC America. But they were on the Silver Tier. If I had a choice I would've bought basic OTA plus the additional channels on the Silver Tier. But I couldn't just by that level with BBC America on it. I had to buy all the channels on Tiers below that level.

I can understand WHY cable does what it does, but I don't like it. Until you get real competition to cable, pricing won't change. Dishes are still not close enough to cable to provide effective competition cause not everyone can get a dish.

 

[arnoldevns]

This has been discussed here before. The bottom line is that a la carte would have worked if cable had been set up that way to begin with. If you try to implement it now, you will wind up with a fraction of the channels you have now and MUCH higher cable bills. Broadcasters would love it because the audience would almost have to start migrating back to their free programming.

I'm a free market guy. Keep the government out of this and we'll all be better off.

 

[jal41]

Reading the thread about MTV's "TRL" being canceled reminded me of the cable a la carte issue. I am definitely hoping that we do someday very soon get to choose which channels we want to buy (at a reasonable price!!), but if memory serves wasn't MTV one of the biggest challengers to buying channels because after surveys it was revealed that very few people wanted MTV in their homes?

I can't remember the date of that study, but it was probably 3 years ago or so, and was also the last time I heard anything about freedom of channel choice in cable.

This was in the early 90's, when MTV will filled with music that promoted sex and violence. There was a big outcry at the time for a la carte. Some cable companies even allowed MTV to be blocked (some dropped MTV altogether...with many complaints). Those who blocked it still had to pay for it. MTV has cleaned up big time since then (of course...they did away with music videos in addition to doing away the sex and violence).

Again, I am a supporter of a la carte because of consumer choice. However, once everything balances out, it might not look as good as it did on paper. One option is to make all channels that want to charge more than $1 per subscriber per month or so a la carte (mainly ESPN), and allow those that do not charge as much (most of these niche channels) to be on a mandatory tier.

 

[stationi]

In a slight continuation of what jal41 said, it is likely that the smaller channels would offer themselves up for free or nearly free like 10 cents a month. Right now, smaller cable channels don't have the opportunity to be in many households because they are squeezed out by the CNNs, ESPNs, and other large cable networks. A la carte would allow new voices and new niche channels to launch as long as they price themselves right.

 

[CrankyYankee]

Re: Mark's post "The problem with the current Tier system is you have to buy all the lower levels."
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It wasn't always that way. I worked for Time Warner Cable in the 90's and if you bought "basic"(the locals OTA package), you could skip over the "standards" section(USA/TNT/MTV/A&E etc.) and purchase HBO or Showtime or The Movie Channel. A filter would be put on the drop to your address to block that section of the cable. You needed a box to get those premium channels, but then you also would be able to order movies and specials as well. Granted, not too many people used that option, but I do recall some subs that did.

 

[TexasTom]

This has been discussed here before. The bottom line is that a la carte would have worked if cable had been set up that way to begin with. If you try to implement it now, you will wind up with a fraction of the channels you have now and MUCH higher cable bills. Broadcasters would love it because the audience would almost have to start migrating back to their free programming.

I'm a free market guy. Keep the government out of this and we'll all be better off.

I wouldn't describe the status quo as being much of a free market -- and this is an instance where government intervention could actually promote a freeer market than we currently have.

At this point in time, I would argue for something called "wholesale a la carte", which would prohibit the cable networks from forcing pay providers from buying channels that they don't want in order to get channels that they do want. I would also prohibit the contractual clauses that require that cable/satellite companies have to offer channels on the lowest "non-lifeline" tier. The final piece would be to require that networks be offered on a non-discriminatory basis to all providers.

What these regulations would do is to allow one or more providers to offer retail a la carte service, without mandating that everyone do so. In an environments where there is real competition (such as suburban locations where a viewer may choose between OTA reception, the local cable operator, DISH, DirecTV, and Fios or U-Verse), I suspect that we would soon see at least one of the providers offer an a la carte option to viewers -- and, at that point, we could see how a la carte goes over in the real world.

 

[MarkLaRoi]

I've lowered my package size with Comcast several times because they keep moving channels I like to higher level packages which I'm not going to buy in order to get one or two channels. I'm down to Extended Basic and for the price I'm paying (nearly $60) I'm considering going with Verizon's Fios package.

Either that or buy more DVDs and get my news online!

 

[Markxxx]

Well neither cable nor over the air TV is a free market. A free market does work best when there is true competition. This means anyone with the money needed can start up. Obviously there are only so many OTA channels per city and usually only one cable company to choose from.

So to prevent abuse some regulation is needed.

When I see Comcast in Chicago carrying channels which almost every program can be seen over the air in Chicago, I don't see any point of carrying that station that just duplicates content.

If ala carte meant fewer channels would that be such a bad thing, if the content on those channels is simply duplication. Perhaps three cable channels each running a third new programs and 2/3 old recycled stuff, could combine and have 24 hours of new programs (or something similar)