What Would A La Carte Look Like?
from the not-what-you-think dept
In all the recent debates over a la carte programming people always write a comment saying how they think a la carte would be great, because they'd just be able to pick the five channels they want, and pay a tiny fraction of what they're paying now. As has been explained repeatedly, there's a huge fallacy in that assumption: the costs of offering a la carte programming by traditional cable operators makes it impossible. First, cable operators would have to make a lot of changes to their system, and the costs would be passed on to customers. Second, the ongoing maintenance of having so many different customers, each with a completely different package would increase the overhead costs significantly -- and (once again) would get passed on to customers. Tim Lee has been thinking about this debate and thinks a couple steps out to figure out what a la carte programming would really look like, and realizes it's pretty much what we see right now. First, he points out that most of your cable fee isn't for content, but for infrastructure. So, any a la carte offering is going to start with a base fee anyway, and would then let you add channels at some additional fee. However, they might add in some less lucrative channels, like C-SPAN for "free." Already with the bundles that most people get, they end up with a "basic package" of channels, and then the premium channels are additional -- and Lee expects that "a la carte" would actually be quite similar. The big difference would just be that the core set of channels you get for free would be smaller (though, probably still cost a similar amount). So, in some sense, consider the bundle you get now as the base level, and then you get to choose some set of channels above and beyond that for an extra fee -- just like a la carte.
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Order by Number....
A La Carte will have its place, many years from now, when everything is 100% digital. And you, the customer, can sit down at your own computer, log onto www.yourcablecompany.com/youraccount and click on the channels you want. And instead of the cable company having to send a tech out to change your descramblers, all you'll have to do is click the 'submit' button. Your credit card will credit you back whatever balance is left from your previous configureation plus whatever you owe for your current configuration. Of course, I suspect that by then, the median cable package will be more than double what it is now anyway.
It is always more expensive (and profitable for a company) for people to order the enchilada than it is to get the whole entre. Back in my table waiting days, it always made me smile when somebody would balk at entre prices, then order everything A La Carte. Most of the time they would end up paying way more than if they would have ordered the entre. But like everything else, there are those who will learn to manage A La Carte, and it will be cheaper for them in the long run.
It seems like the same thing happens with cell phones. People buy the cheapest plans because they don't think they talk on the phone more than 100 minutes per month. So they get the smaller plan, then use up that 100 minutes in the first few days. They end up being way more profitable per minute for the cell phone company, but then turn around and scorn that company for its greed. Even though that same company's sales rep tried to sell them a plan that was more costly, but fit their phone useage lifestyle better.
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A la carte could promote better billing practices
I would estimate that atleast 1 out of every 2 months my wife calls Comcast to have a bill explained (usually resulting in an inadequate explanation). I'm not sure that I buy the argument that with a la carte comes move overhead because of all the non-standard packaging. I've heard these support employees fumble with the packages they offer now (and all the promos and added channel packages). I find it hard to believe it will only get worse if they pull up my account and have a list of channels I subscribe to, not a list of packages. Comcast (at the very least) has a LOT of room to improve in the billing area, which should reduce overhead required to constantly answer billing questions, freeing up valuable dollars to help offset a la carte programming.
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Re: A la carte could promote better billing practi
Digital cable is changing that, though only a percentage of the signal is actually digital. Once the system is 100% digital will A La Carte really make any since. However, to get the cable network to that point would require a HEFTY investment. I think the point that Techdirt is trying to make is that IF the FCC were to require by X date, everybody has to have A La Carte programming, the cable companies would be forced into completely redrawing their business models, upgrading their networks, and developing new software and applications to manage that network. Not to mention the fact that every contract they have with the thousdands of production studios would have to be renegotiated.
Do I think we will get A La Carte programming? Yes. Will it happen quickly? No. There are too many political and technical obsticals to be overcome.
And if the FCC gets involved by imposing its will on these companies, it will just make the whole project that much more costly for the consumer in the long run.
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Re: A la carte could promote better billing practi
The big problem with it all is that there isn't yet a good way that someone can casually consume all of it. It takes real effort to get to the right sites, and click etc. As soon as it is more standard, and someone builds a good interface to choose from all the options, presto.
At some point all cable is going to be good for is broadband internet and basic tv programming for those that don't want to use online services.
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Re: A la carte could promote better billing practi
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No Subject Given
This will be great for keeping the net as we know it today(net neutrality wouldnt be a congressional issue), as well as paying for what you want to watch and consume. P2P could become legal as monies from our monthly bills can be funneled to big media or to joe making media in his room!
Can not imagine this not happenning, especially with the Skype's of the world. Id say a wireless ISP will be the first to instill such a plan!
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Paying for cable
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Paying for cable (fixed typos was in a hurry hehe)
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Re: Order by Number....
I haven't had a visit from a Charter Communications tech to change my programming ni 5 years. Any time they've changed my program access (2-3 in the last 3 years alone) its been done remotely. Most cable companies that offer internet service have IP enabled boxes. There is no need to send a tech out unless there is a problem with the box....
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It can be done
With the current practice of paying for a suite of programs, I do not appreciate the fact that I am forced to subsidize programming that I do not want or like, the Home Shopping Channel for example. At least alacarte ordering offers the potential to deny revenue to those companies that you do not watch.
As one other poster pointed out, technology does allow the cable company to remotely control what you can receive. They can offer this service if they want, and that is the real question.
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Re: It can be done
And that's the whole point. A la carte is not just to give consumers more choices, it's to help regulate cable pricing by allowing the forces of competition to come into play.
How many customers do you think will drop ESPN when they find out that $5-6 dollars of their $40.00 basic extended bill goes to them? What will ESPN do when this ptactice spreads country wide? They will adjust their price ot get the business back. If HBO can do a commercial free network with major movies, excellent original programming, some major sports produciotns, etc. for $10-11 dollars a month, how can ESPN justify a commercial every 10 minutes and still charge $5-6/month?
Ohter cable networks will be similarly effected. Some may die completely and disappoint a lot of people, but so be competiton.
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