Legislators are busy crafting together a bill that will allow consumers to get ala carte cable – which is to say they can pick and choose what cable channels they want. Cynthia Brumfield has a good overview of the situation and points to two studies, one […]

Legislators are busy crafting together a bill that will allow consumers to get ala carte cable – which is to say they can pick and choose what cable channels they want. Cynthia Brumfield has a good overview of the situation and points to two studies, one by the NCTA (download pdf file) and one by Disney. I can try and decode the reports: these two parties with vested interests are saying, well FCC blew it, and the consumers don’t want anything to do with ala carte cable.

Ironically, these unbiased interests might actually be speaking the truth, though I bet that wasn’t their original intention. Leichtman Research Group, did a survey and found that 40% of consumers are initially very interested in being able to choose and pay only for individual channels from cable and satellite TV companies. However when told the whole truth – that is the total number of channels they are likely to get and the equipment requirements of the service – you know the fine print kinda stuff, the interest level dipped to 17%. (Read the research methodology and decide for yourself, if this makes sense.)

“When consumers are informed of the requirements and consequences of receiving a la carte, we find that about one out-of-six consumers are very interested in a la carte as it would appear in reality,” says Bruce Leichtman, the principal at the research firm. Why the dip? “They are in favor when it is asked in an incorrect (biased) fashion, and without the implications,” he wrote back in an email, when I asked him the question.

  1. In my area the cable companies would allow a la carte service. But they structured their pricing tiers to discourage it though.

    Movie Channel Package with HBO, HBO2, Stars, etc. : $9
    HBO only a la carte: $9

    See you could get it but why not go for the tier when you get more.

  2. If congress mandates a la carte then cable operators will price their product so that they are no worse off than they were before. What that means is that no one is going to be getting any dream deals (my favorite 5 channels for $10/month!). This is clearly not what congress wants, so in order for them to get their desired outcome they would have to specifically legislate lower prices, which is a slippery slope if I’ve ever seen one.

  3. It’s obvious. The cable companies are unhappy with change. The consumers (at least a vocal percentage of them) do not want certain channels in their home. Yes, we can block them; yes, we can choose not to go there; but the point is, we’re being force-fed things we don’t want. I know people who would be willing to pay more for less because they get their way. And in the end, the cost of changing hardware/software on the cable company’s end is just a one-time hit. Prices should go up and then they’ll go back down. The power behind the throne in this case is the channels themselves. MTV knows that they will face a huge drop in viewers if people have to choose their channel individually — and they’re not the only one. Oxygen vs. Lifetime — would people really choose both if they had to? The status quo is simply a payola scheme, where advertisers prop up worthless channels, which in turn pay the cable guys to force-feed customers channels they don’t want. Ever wonder why there are 300 channels and nothing to watch? Because the channels that are there are not facing true competition for your attention.

  4. The cable companies and networks are trying to scare people into thinking this will be bad for the consumers and cost more, when it would actually mean more competition. (Can you imagine if the networks had to improve the quality of their programming to get people to order adn watch their channels?)

    I would LOVE to get less channels, if they were the ones I actually WANTED to watch. Right now, I get hundreds of channels, but regularly watch maybe less than 20 of them (if that). And, I know there are channels that are not in my package that I would love to have. (I’m not talking premium channels here, either, just regular ones that for some reason are only in certain packages.)

  5. I don’t see how consumers are “force-fed” anything just because all cable channels are made available for us even though most of us only watch a handful of them.

    Like you said yourself, we can block certain channels and we can simply choose not to view them, so how is that force-feed? Does your local cable guy come to your house, point a gun at your head and make you watch channels you don’t want to? If yes then you have a whole different issue…

    In any case, a la carte cable is only good for consumers if we actually pay less but that won’t be the case as cable companies won’t simply give up their current income.

  6. I would love it, Cablevision basically forces you into a 65 US$ / month package if you want digital cable. I have to have separate set-top boxes for each TV anyway, so that is not an issue. I watch about 8 to 10% of the channels that I have. If I could pay 50% less for those channels I would be happy.

    But as noted by Google’s Andrew Mclaughlin, “The FCC sucks,” between them and our wonderful congress, we the consumer will end up with little or nothing. Competition is the only thing that will eliminate the inefficiencies in the market.

  7. In reality wouldn’t the cable companies love it if everyone had a set top box? That’s when they go all digital and use the bandwidth not being sucked up by analog to pump in more HD and on demand content.

    I read an arguement against a la carte the other day from a Latino cable exec. He said that a few channels in his sector would probably have to close down because they can’t survive without the revenue from people who go a la carte and won’t choose the spanish channels. If a network can’t survive based on its actual viewership, then it really should go away.

  8. Forget ala Carte cable, we’re close to ala Carte shows. No that lots of people have DVRs, we’re not interested in watching WHOLE CHANNELS. We only have enough time to watch what we want, everything else is a waste of time. The viewing public’s patience just got alot shorter.

  9. I worked in cable beginning with launching MTV. I served on the board of our state’s cable TV association. Beleive me, bundling and packaging are a crock. As a boss of mine said at the time, bundling/packaging without real options is like going into a grocery store for a loaf of bread and then being required to buy a bottle of ketchup in order to get the bread. This is not a complicated subject. Chuck Dolan of Cablevision Systems came up with the whole idea of packaging back in 1982-83. The idea, which after the success Dolan achieved was copied by all of the MSO’s was to raise prices, lock subscribers into packages that were impossible to split out or reduce and in the end, have a high revenue per subscriber yield. There has not been one new cable network launched in the past 20 years that did not have to give up major equity stakes to the MSO’s for coverage. “Unrestricked Marketing support” or slotting fees are common-place with the MSO’s. The Disney’s of the world know that their revenue would plummet if consumers were allowed to opt out of channels they had no interest in. The extra equipment arguement is also a joke. All cable systems today are addressable with channel delivery done with the click of a mouse button.

  10. Dean Johnson Friday, March 17, 2006

    As I understand it, a large part of the non-premium channel bundle cost is in the sports channels. That makes sense to me because the TV deals seem to be a big chunk of the ever more greedy sports teams revenue. I would be happy with unbundling because I could get rid of all the useless ESPN variants. In fact, they are even manually taken off the Tivo channel list and haven’t been missed, like the shopping channels. I’m not interested in indirectly subsidizing those ungrateful bastards.


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