New FCC report advocates a la carte TV pricing

[Y-ASK]

Did a search for this title and found nothing. So don't kill me if someone already posted this .

http://news.com.com/New+FCC+report+a...59.html?tag=nl


I would love to see this happen. I'm tired of paying for channels that I never watch. I'd probably be bummed if DTV did not carry a channel that I currently watch regularly but I'm sure something else would come along. I also think that DTV would be able to offer a much larger selection of channels than the cable company. But then who knows, the whole pricing structure might have to change. I mean cable companies would have to change all of the their contracts with the providers and I'm sure some shows will receive less cash since they would have less subs.

Y-ASK

[JimSpence]

For those that want to read more about this, go here.
http://www.avsforum.com/avs-vb/showthread.php?t=610066

[smark]

Actually they just want a family friendly tier. And any costs say that ESPN will pass onto the cable company since they usually discount it to carry ESPN2 etc will be passed on to the consumer. That means those who want to watch ESPN will be paying around probably $3-4 dollars.

[ZeoTiVo]

interestingly enough last year under Michael Powell the FCC did a study that came to the opposite conclusion that this would utlimately hurt consumers.

A year changes everything at the FCC.

If I could point to channels to drop from my lineup and pay less, I would think that was great. But I wonder what channels like the History channel would have to do to "sell" themselves on their own.

edit - oh yah, the article in the paper said a little about the family friendly tier as well. My kids have that on the upstairs TiVo as I just deselect channels they should not watch and go over with them what their TiVo will record.

and lets face it, if you went to picking each channel, the family friendly stuff would take the hit while things like skinemax are already doing just fine.

[smark]

What people don't understand is that:

1. Less viewed channels will die as they will not have the penetration they get from being on basic cable for example since they are supported by ads which inturn are governed by how many viewers they are available to/ratings. Say SCIFI or Bravo could have an issue and it would be harder for new channels to be able to survive as well.

2. You won't be paying less in general.

[Y-ASK]

Originally Posted by smark

2. You won't be paying less in general.

Well that's the deal breaker for me. If I'm paying the same monthly fee for fewer channels then what's the point, other than it might be good for a family that can't control their kid and expects the Govt. to do everything for them...?

But consider this, why can't ESPN offer you the discount rate if you choose to get both ESPN and ESPN2 and even ESPN-Classic. If it cost me $5 now and I choose to get all three for $5 instead of ESPN for $3 or ESPN2 for $2 or ESPN-Classic for $2 that would work out wouldn't it. So what if Lifetime channel goes away. Or the Hallmark channel (I'm pretty sure my wife would keep that one).

If the big providers can offer the cable or sat folks a deal, they can also offer the consumer a deal too.

Y-ASK

[lajohn27]

Here in Canada from what I can tell.. the cableco gets to decide what they want to put on the basic tier (ie: channels like ESPN/ESPN 2 etc).. and what they want to put on a digital tier (Space Channel / History Channel etc)

In the digital tier there are 'packages' and you can also do packages of 5, 10, 15 or 20 channels.. or you can take 'all' channels in a package at a reasonable discount.

So basically you can pick and choose from the digital tier packages as you like within the structure noted above...

And some channels may appear in the basic tier of one cable system but not the basic tier of another.. its entirely up to each cableco.

This has resulted in an explosion of specialty channels on the digital tier. It's likely that some of them won't survive in the long run.. but.. that's life eh?

[ZeoTiVo]

Originally Posted by Y-ASK

what's the point, other than it might be good for a family that can't control their kid and expects the Govt. to do everything for them...?

that is a classic line.

[classicsat]

It will work, it kinda does in Canada. Channels are organized in mini packages of 5-10 channels, with an individual price, something like $4.99 (on top of a base tier, and better deals with groups of packages. Newer channels are individually purchasable, on top of the base tier. or a package group. This aplies to my satellite provider, Starchoice.

[Y-ASK]

Originally Posted by ZeoTiVo

that is a classic line.

Thanks for noticing ! The History Channel is one of my favorite and would be near the top of my list along with The Discovery Ch, Military Ch, Sci Ch, I would be happy to go with a very basic subscription list and then add channels in 5 increments. I bet you'd find that most of the channels would not go away and the ones that did were just taking up valuable space and bandwidth that could be used for something else.

Y-ASK

[Gregor]

Originally Posted by smark

What people don't understand is that:

1. Less viewed channels will die as they will not have the penetration they get from being on basic cable for example since they are supported by ads which inturn are governed by how many viewers they are available to/ratings. Say SCIFI or Bravo could have an issue and it would be harder for new channels to be able to survive as well.

2. You won't be paying less in general.

1&2 reflect the cable industry's opinions as well.

We'll have to wait and see what the market will bear, just because a channel dies isn't necessarily a bad thing. Venture capitalists will be more careful about funding a new channel without guaranteed carriage.

Personally, I'd like to see exactly what I am paying for. I resent the fact that I'm paying for Disney and Nickelodeon for example and I never watch those channels.

[jlb]

Originally Posted by ZeoTiVo

edit - oh yah, the article in the paper said a little about the family friendly tier as well. My kids have that on the upstairs TiVo as I just deselect channels they should not watch and go over with them what their TiVo will record.

Be careful......all that does is prevent TiVO from recording on those channels, displaying guide data for those channels, and showing those channels if you are surfing/channel up/down. However, I believe one could still manually enter a channel number to view it in the live buffer. As kids get older, they will figure these things out.

[timr_42]

I think a lot of channels would die. Personally, I could remove over 50% of the channels I get and never miss them. If everyone is like that, channels would dropped. I think that could be bad, as some channels that I might like, might not be liked by most and be dropped.

[Atomike]

it might be good for a family that can't control their kid and expects the Govt. to do everything for them...?

I don't think you understand parenting. Kids are naturally curious - even with proper upbringing. Good parents don't expect the government to do things for them - they just wish the government and cable companies wouldn't pander to the perverts out there. Rather the goverment should help families. Good families shouldn't have to tolerate the near-porn on some channels just because many losers like it and choose to objectify women for selfish reasons. True men don't do that - so why do the rest of us have to jump through hoops to get quality programming?

[ZeoTiVo]

Originally Posted by jlb

Be careful......all that does is prevent TiVO from recording on those channels, displaying guide data for those channels, and showing those channels if you are surfing/channel up/down. However, I believe one could still manually enter a channel number to view it in the live buffer. As kids get older, they will figure these things out.

I use an SD H400 for them with controls on the front and have put the remote away. mostly so they do not lose it as they are not exploring much anyway but it keeps them from changing channles as well.

there is no cable hooked to their TV.

as for jumping through hoops - there are parental controls and v-chips in most devides now adays. It is very easy to block out channels, you can even jump a samll hoop and do as I did above. I reject going to individual channels solely as a means to censor things. What is next? two seperate internets ?

[dswallow]

Originally Posted by Y-ASK

I would love to see this happen. I'm tired of paying for channels that I never watch. I'd probably be bummed if DTV did not carry a channel that I currently watch regularly but I'm sure something else would come along. I also think that DTV would be able to offer a much larger selection of channels than the cable company. But then who knows, the whole pricing structure might have to change. I mean cable companies would have to change all of the their contracts with the providers and I'm sure some shows will receive less cash since they would have less subs.

It's that other people pay for the channels you want to watch, whether they want to or not, that keeps the price you'd have to pay for them down to something minimal. Once you stop paying for channels you don't want to watch, so do others. And then you'll be paying a lot more for the channels you want to watch... not the $0.10 or $0.12 per month each you might hear about, but 10 or 20 times that each.

[TerpBE]

Let's say the average person watches 5 channels (just a number I pulled out of the air). I'm sure the "a la carte" would be priced so that to get 5 channels it would cost at least as much as the current "basic cable", so the company doesn't lose money. If you watch 1-2 channels, great, but if you watch more than 5, you're going to be paying more money than you do right now.

[interactiveTV]

Originally Posted by Atomike

I don't think you understand parenting. Kids are naturally curious - even with proper upbringing. Good parents don't expect the government to do things for them - they just wish the government and cable companies wouldn't pander to the perverts out there. Rather the goverment should help families. Good families shouldn't have to tolerate the near-porn on some channels just because many losers like it and choose to objectify women for selfish reasons. True men don't do that - so why do the rest of us have to jump through hoops to get quality programming?

Called a V Chip. It's amazing how many parents don't bother to use it.

"losers" like near porn? I love when I see the breakdown for shows like Desperate Housewives and the "Bible Belt" comes in nice and strong. You went there, I didn't...

But really, the Government GAVE you an option. It's the V Chip in your TV. If you can't read the manual and figure it out, perhaps the Government should invest in literacy campaigns and not censorship.

For the record, I like TV, porn, and God and sometimes the Government. What they all have to do with one another is another matter...

http://www.fcc.gov/vchip/

Read, THEN tell me why we need MORE control than that.

_ITV

[jsmeeker]

Great. Higher prices. The apartment complex is moving to Comcast in the middle of next month. To getthe exact same service (i.e. the same channels via TiVo friendly analog cable) will cost almost DOUBLE!! $21.65 per month to $40 per month. Rather shocking. And they tell us we are gettting a DISCOUNT from Comcast. :rollyes:

Is this what people are paying for analog, expanded basic? It seems so high to me. Going ala-carte would mean even higher prices to get the same thing. Even if I wanted to dump channels I didn't want to watch, it would STILL cost more.

[JimSpence]

I'm not totally convinced that a-la-carte will work well.

What DirecTV needs to do to attract more subscribers is to reinstitute, and advertise, the old Select Choice package. I guess it's called Total Select now, or something like that. But, it isn't advertised. Then they need to create at least two other tiers besides the premium ones.

And, they need to allow us without locals to be able to order WB and UPN.

[HDTiVo]

Originally Posted by dswallow

It's that other people pay for the channels you want to watch, whether they want to or not, that keeps the price you'd have to pay for them down to something minimal. Once you stop paying for channels you don't want to watch, so do others. And then you'll be paying a lot more for the channels you want to watch... not the $0.10 or $0.12 per month each you might hear about, but 10 or 20 times that each.

You mean I'll have to pay for the programs I don't watch on the channels I do watch? No, I just want to pay for the programs I watch, and in some cases just the parts that I watch of programs I watch.


PPPV - Pay Per Part Viewed

[Y-ASK]

Originally Posted by Atomike

I don't think you understand parenting. Kids are naturally curious - even with proper upbringing. Good parents don't expect the government to do things for them - they just wish the government and cable companies wouldn't pander to the perverts out there. Rather the goverment should help families. Good families shouldn't have to tolerate the near-porn on some channels just because many losers like it and choose to objectify women for selfish reasons. True men don't do that - so why do the rest of us have to jump through hoops to get quality programming?

Edit for reason's that I'm too busy to start a bunch of BS with another forum member who obviously wants to tell everyone how they should live their life.


Y-ASK

[bryan314]

I think this is a great idea. I'm sick of paying for channels I don't want. In effect I'm forced to subsidize channels I don't like or want. If a network proves to be unpopular enough that it can't stay in business then so be it. Let it die. If it has any popular programs they'll be picked up by other stations. Increasing the popularity of those other stations, which means more viewers, thus further lowering the cost of those other stations. For example say SciFi went out, (which I doubt since it's a popular station) Battlestar Galactica would be able to find a new home with no effort. Their horrible made for tv movies would die a much deserved death. Another argument; say you're paying $10 for 10 stations. Thats the cost for running all the stations. If chosen separately individually market forces would raise or lower individual prices but the net cost would be the same. So if I choose 4 station I may be paying $7 dollars. More per stations but still a lower total cost.

[dswallow]

Originally Posted by bryan314

[...] say you're paying $10 for 10 stations. Thats the cost for running all the stations. If chosen separately individually market forces would raise or lower individual prices but the net cost would be the same. So if I choose 4 station I may be paying $7 dollars. More per stations but still a lower total cost.

I think there's some seriously bad guesswork going on with how prices might fall in a true a la carte system.

Either there'll still be a level of bundling, much like is done in Canada with Star Choice or ExpressVu, or you'll see pricing skyrocket per channel... the advertiser supported stations need potential viewers but also often can't support themselves just on advertising revenue. They can entice you to watch a program if you get their channel, but if you don't get their channel, there's a lot less chance they can get you to watch any program on it. A channel that might be costing $0.05 - $0.10 per subscriber when it's included on a base tier could end up costing $3-$4 per subscriber if they have to try to survive on such revenue alone. If they get bundled ina mini-bundle with 5 or 6 other channels, at least some of which are highly popular, maybe that could go down as low as $0.40-$0.50 per subscriber.

[Gregor]

Originally Posted by TerpBE

Let's say the average person watches 5 channels (just a number I pulled out of the air). I'm sure the "a la carte" would be priced so that to get 5 channels it would cost at least as much as the current "basic cable", so the company doesn't lose money. If you watch 1-2 channels, great, but if you watch more than 5, you're going to be paying more money than you do right now.

How can you say that? Some channels the cable companies get paid to carry.

According to this source, the average is 17.

http://www.twincities.com/mld/twinci...y/13287500.htm

[HDTiVo]

The staff is now finalizing a report that concludes that the earlier report relied on problematic assumptions and presented incorrect and incomplete analysis.

What will the next report conclude?

On the face of it, a la carte ought to create competition between channels and lower prices on a macro level. On the micro level, some people would pay more and others less.

On the other hand, how would the pricing power change between the buyer and seller? The buyer would change to the individual, not the cable company. The cable company has an incentive in many cases to fight for lower price on a collective basis (like a labor union) so rates aren't so high; because there is some competition with satellites, free broadcast and others; because it leaves more money for the provision of service charges; because it makes the local franchise issuing authority happier; etc. One big bargaining chip a cable co. has that the individual does not is the threat of dropping the channel entirely - taking thousands or millions of subs off in one shot.

Suppose cable channels were unbundled from cable service itself - like electricity is from generation and transmission. The cable co. becomes a utility which charges for the use of its plant. With 1000+ possible channels on the wire, there could be a must carry like requirement by law, giving all cable channels access to all cable systems.

Now the channels decide what they want to charge and people select from the menu. What will happen to price? Maybe much higher, so you only save money if you take few channels. Maybe much lower out of desperation to keep everybody subed to you channel and ad revenues up. Probably both strategies will be used.

What about several channels owned by the same company? Bundle pricing there? Bundle joint ventures between companies with complementary offerings?

What about prices on channels owned by the cable co that services you? What about channels owned by multiple cable cos. even sometimes combined with ownership by other parties?

Economic theory is limited. The practical reality of the complex relationships within the industry is very important. What are the details of the methodologies used in the studies and how did they consider the dynamics of the circumstances; and how might those circumstances change once a la carte was implemented (mergers, JVs, etc.)

Perhaps in the end the most effective way to bring down prices will be to have multiple TV services providers for individuals to choose from and let those service providers each bargain hard with the channels.

[ack_thbbft]

*cough* V-Chip! *cough*

That's what it's there for. Use it.

'Nuff said.

[Gregor]

Originally Posted by HDTiVo

<snip>

Suppose cable channels were unbundled from cable service itself - like electricity is from generation and transmission. The cable co. becomes a utility which charges for the use of its plant. With 1000+ possible channels on the wire, there could be a must carry like requirement by law, giving all cable channels access to all cable systems.
<snip>

Must carry already exists for local broadcast stations, no?

[mike3775]

Its funny. TV's have had the V chip for years and people still do not know how to use it?

All 5 of my kids and 3 step kids TV's in their rooms have V chips, and nothing that is rated above TV-G is allowed to be seen. I have it set not only on the TV, but also the cable boxes. And my oldest has tried to get around to changing the settings, but unless he figures out what my 5 number password is, he can't do it. And its not a simple number that is obvious either.

[smark]

Originally Posted by HDTiVo

What will the next report conclude?

On the face of it, a la carte ought to create competition between channels and lower prices on a macro level. On the micro level, some people would pay more and others less.

On the other hand, how would the pricing power change between the buyer and seller? The buyer would change to the individual, not the cable company. The cable company has an incentive in many cases to fight for lower price on a collective basis (like a labor union) so rates aren't so high; because there is some competition with satellites, free broadcast and others; because it leaves more money for the provision of service charges; because it makes the local franchise issuing authority happier; etc. One big bargaining chip a cable co. has that the individual does not is the threat of dropping the channel entirely - taking thousands or millions of subs off in one shot.

Suppose cable channels were unbundled from cable service itself - like electricity is from generation and transmission. The cable co. becomes a utility which charges for the use of its plant. With 1000+ possible channels on the wire, there could be a must carry like requirement by law, giving all cable channels access to all cable systems.

Now the channels decide what they want to charge and people select from the menu. What will happen to price? Maybe much higher, so you only save money if you take few channels. Maybe much lower out of desperation to keep everybody subed to you channel and ad revenues up. Probably both strategies will be used.

What about several channels owned by the same company? Bundle pricing there? Bundle joint ventures between companies with complementary offerings?

What about prices on channels owned by the cable co that services you? What about channels owned by multiple cable cos. even sometimes combined with ownership by other parties?

Economic theory is limited. The practical reality of the complex relationships within the industry is very important. What are the details of the methodologies used in the studies and how did they consider the dynamics of the circumstances; and how might those circumstances change once a la carte was implemented (mergers, JVs, etc.)

Perhaps in the end the most effective way to bring down prices will be to have multiple TV services providers for individuals to choose from and let those service providers each bargain hard with the channels.

For the billionth time, in most areas companies are free to overbuild our network much like Verizon is (plus sat competition). We built our network with our own money and so should anyone else who wants to serve customers. It is just expensive.