On November 18, 2004, the FCC issued a report (First Report) on the benefits of a la carte pricing for services offered by multichannel video programming distributers (MVPDs), including cable. It concluded that "a la carte regulation would increase operational expenses for MVPDs, increase the marketing costs and reduce the revenues of programming networks, and provide little economic benefit to consumers."
The underlying assumptions of the First Report were widely questioned, so the FCC undertook another study to address those questions and has published another report (Further Report) that points out the inaccuracies of the First Report and reverses their opinion on a la carte pricing for video services.
The First Report had relied heavily on a study prepared by Booz Allen Hamilton (Booz Allen) on behalf of an industry association. Booz Allen concluded that "consumers that purchase at least 9 networks would likely face an increase in their monthly bills" and predicted a rate increase of 14-30% for the average consumer. The Further Report pointed out significant inaccuracies in Booz Allen that overstated costs to MVPDs by as much as 50% and concluded instead that consumers could purchase up to 20 networks before seeing a cost increase (the average consumer watches 17 networks), that rate changes would range from a 13% decrease to a 4% increase, and that 75% of customers should not see an increase in cost.
As a result of the Further Report, the FCC has now concluded that a la carte pricing would be a benefit to consumers.
What were the odds that an industry association would submit a study with significant inaccuracies in their favor?
FCC News Release (4 pages): Word | Acrobat | Text
FCC Report (61 pages): Acrobat<P ID="signature">______________
Dave</P>
The underlying assumptions of the First Report were widely questioned, so the FCC undertook another study to address those questions and has published another report (Further Report) that points out the inaccuracies of the First Report and reverses their opinion on a la carte pricing for video services.
The First Report had relied heavily on a study prepared by Booz Allen Hamilton (Booz Allen) on behalf of an industry association. Booz Allen concluded that "consumers that purchase at least 9 networks would likely face an increase in their monthly bills" and predicted a rate increase of 14-30% for the average consumer. The Further Report pointed out significant inaccuracies in Booz Allen that overstated costs to MVPDs by as much as 50% and concluded instead that consumers could purchase up to 20 networks before seeing a cost increase (the average consumer watches 17 networks), that rate changes would range from a 13% decrease to a 4% increase, and that 75% of customers should not see an increase in cost.
As a result of the Further Report, the FCC has now concluded that a la carte pricing would be a benefit to consumers.
What were the odds that an industry association would submit a study with significant inaccuracies in their favor?
FCC News Release (4 pages): Word | Acrobat | Text
FCC Report (61 pages): Acrobat<P ID="signature">______________
Dave</P>