Is Ala Carte Cable really the answer?
There has been much talk about ala carte cable lately. If you are not familiar with the concept, it means that instead of the current system of only being able to buy cable tv in packages (how it is currently), you would be able to pick just the channels that you want, theoretically lowering your cable bill. You can check out the article from Yahoo at the link below for even more info, but a couple of key points that you need to consider in this issue. On paper at least, the ala carte theory does make sense. However, it ignores some realities. Ala carte cable would give you more choices, but the number of available channels would almost certainly drop, and the price per channel would be higher than it is now under the current system. Say what??
Let me explain. Many cable channels out there today are supported by other channels from the same company. I don't have exact figures on which channels, but there are quite a few channels that are only offered with other channels from the same company. The way this works is that (and this is just a hypothetical example) in order to carry ESPN, Disney might require a cable company to also carry the Disney Channel, or a similar channel. Or they will give them a much better price if they carry some of the companies weaker sister channels. The reason for this is that the second channel that is basically piggybacked with the popular channel might not survive on its own. Under an ala carte system, many of these second tier channels would likely disappear, meaning fewer choices. In order to recoup their money, the company that owns the stronger channel is going to try and raise prices to make up for the lost profits. If the channel is popular enough, people might pay more to keep it. As this runs prices on the popular channels up, you might end up paying more than you do know.
Don't get me wrong, I would like to pay less for cable tv as well, but the solution to high cable rates is probably not ala carte programming, but rather, competition between providers. In a sense, current cable prices is similar to how options are prices on many cars today, you don't always pick single options, but rather a package of options for a higher price. In many cases, some of these options are only available as part of a package. Phone service is often priced the same way. In regards to competition, I can give you a real world example from a community I lived in a few years back. That city had signed a non-exclusive franchise agreement with the local cable company. This cable company was the predominant cable company in most of the state, basically being a former part of a very large cable provider. This provider was not that great in terms of price, and the service in this area was terrible. Many areas did not even have digital cable, and some also had a very limited selection of channels. Would ala carte cable have helped here? It might have made it cheaper, although it would not have let to more channels being available, in fact it probably would have meant fewer channels being available. It would not have done a damn thing to fix the problem of poor service.
So what did fix the problem? The city I lived in, by virtue of having granted a non exclusive cable franchise to this cable company, had another company start offering cable tv. This other company was the local telephone company, and their new system was first rate. Their signal was all digital, and prices were decent, and being local meant great service in this case. One particular Saturday I had a problem not long after they installed my service, and someone showed up at my door to fix it in about 15 minutes. That is almost in heard of in this day and age. To say the least, when the telephone company started offering cable tv in this city, the response was overwhelming to say the least. There was almost a one month wait to get the service installed because demand was that great. The other cable service had to upgrade their service just to have a chance to stay competitive.
So the moral to the story here is that ala carte cable is no silver bullet that will kill the vampire that is high cable prices. It might make prices lower, but it might not. It almost certainly will reduce your programming choices in the process. Competition from another company will lower prices and maybe even increase your programming choices. Is government regulation the answer? Before you answer that, tell me what area with government regulation has really been an improvement compared to before them getting involved. Yeah, I thought so.
Here are the links, I added one to USA Today as well since they had a good story on cable pricing:
http://www.usatoday.com/tech/news/2006-03-01-family-tier-sidebar_x.htm
http://news.yahoo.com/s/usatoday/20060302/tc_usatoday/howwepayforcablemaybeabouttochange;_ylt=Am18osq9i3bkspNIAHFLbCxaCGYD;_ylu=X3oDMTA5aHJvMDdwBHNlYwN5bmNhdA--
Let me explain. Many cable channels out there today are supported by other channels from the same company. I don't have exact figures on which channels, but there are quite a few channels that are only offered with other channels from the same company. The way this works is that (and this is just a hypothetical example) in order to carry ESPN, Disney might require a cable company to also carry the Disney Channel, or a similar channel. Or they will give them a much better price if they carry some of the companies weaker sister channels. The reason for this is that the second channel that is basically piggybacked with the popular channel might not survive on its own. Under an ala carte system, many of these second tier channels would likely disappear, meaning fewer choices. In order to recoup their money, the company that owns the stronger channel is going to try and raise prices to make up for the lost profits. If the channel is popular enough, people might pay more to keep it. As this runs prices on the popular channels up, you might end up paying more than you do know.
Don't get me wrong, I would like to pay less for cable tv as well, but the solution to high cable rates is probably not ala carte programming, but rather, competition between providers. In a sense, current cable prices is similar to how options are prices on many cars today, you don't always pick single options, but rather a package of options for a higher price. In many cases, some of these options are only available as part of a package. Phone service is often priced the same way. In regards to competition, I can give you a real world example from a community I lived in a few years back. That city had signed a non-exclusive franchise agreement with the local cable company. This cable company was the predominant cable company in most of the state, basically being a former part of a very large cable provider. This provider was not that great in terms of price, and the service in this area was terrible. Many areas did not even have digital cable, and some also had a very limited selection of channels. Would ala carte cable have helped here? It might have made it cheaper, although it would not have let to more channels being available, in fact it probably would have meant fewer channels being available. It would not have done a damn thing to fix the problem of poor service.
So what did fix the problem? The city I lived in, by virtue of having granted a non exclusive cable franchise to this cable company, had another company start offering cable tv. This other company was the local telephone company, and their new system was first rate. Their signal was all digital, and prices were decent, and being local meant great service in this case. One particular Saturday I had a problem not long after they installed my service, and someone showed up at my door to fix it in about 15 minutes. That is almost in heard of in this day and age. To say the least, when the telephone company started offering cable tv in this city, the response was overwhelming to say the least. There was almost a one month wait to get the service installed because demand was that great. The other cable service had to upgrade their service just to have a chance to stay competitive.
So the moral to the story here is that ala carte cable is no silver bullet that will kill the vampire that is high cable prices. It might make prices lower, but it might not. It almost certainly will reduce your programming choices in the process. Competition from another company will lower prices and maybe even increase your programming choices. Is government regulation the answer? Before you answer that, tell me what area with government regulation has really been an improvement compared to before them getting involved. Yeah, I thought so.
Here are the links, I added one to USA Today as well since they had a good story on cable pricing:
http://www.usatoday.com/tech/news/2006-03-01-family-tier-sidebar_x.htm
http://news.yahoo.com/s/usatoday/20060302/tc_usatoday/howwepayforcablemaybeabouttochange;_ylt=Am18osq9i3bkspNIAHFLbCxaCGYD;_ylu=X3oDMTA5aHJvMDdwBHNlYwN5bmNhdA--
posted by bigalsbeans at 12:59 AM
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