Lawsuit Against Cable Companies For Not Offering A La Carte Channels Dismissed

from the choose-your-own-reason-why dept

Thu, Oct 29th 2009 4:44am — Mike Masnick

Two years ago, a class action lawsuit was filed against the cable companies for not offering a la carte channels. This is an issue that gets people up in arms -- even as studies have suggested that mandated a la carte would cost consumers more (though, others dispute those findings). On the whole, I think that a la carte offerings that let people choose their own channels would certainly make consumers much happier (a good thing), but I have trouble believing that it should be mandated by the government.

So does the district court where the lawsuit was filed. It's now been dismissed, with the court saying that the plaintiffs failed to show the harm to the market. Of course, the case will be appealed, so this is a long way from over.

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Filed Under: a la carte, cable

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MarksAngel (profile), 29 Oct 2009 @ 4:52am

gimme...
I would so pay for this, I don't need 50+ plus channels of the home shopping network, and whatever else they try to cram in my overpriced cable package.
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Anonymous Coward, 29 Oct 2009 @ 4:59am

"but I have trouble believing that it should be mandated by the government. "

Here is the thing. Cable companies pretty much have an unearned unethically stolen government granted monopoly on the infrastructure. So if they are going to have such a monopoly then the government should regulate the prices and the offerings to they can be reasonable. Otherwise the government should open the infrastructure to competition. But to grant an unregulated monopoly, which is what the government currently does, is not acceptable. It makes the quality of service suck and it makes the prices too expensive.
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R. Miles (profile), 29 Oct 2009 @ 5:38am

Wha??
with the court saying that the plaintiffs failed to show the harm to the market.
Maybe the lawyers should have used Indiana's Brighthouse as an example at "harm" to the market, when CBS was taken off the air for over 2 weeks because of contract disputes over a free network.

Or how about when Viacom nearly pulled all its stations for a larger cut of the cable subscriber's monthly fee which has now been applied to our cable bill?

After all, I certainly don't watch *any* Viacom stations, but I sure am being harmed by their "market".

So let's hear it for the consumers, who are constantly getting bent over so cable companies have easier access to our wallets. Ooh, now that feels just good.
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Anonymous Coward, 29 Oct 2009 @ 5:39am

The shopping networks pay the cable companies, so they lower your bill.

Or... would anyway if it mattered.
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vbacon, 29 Oct 2009 @ 5:46am

I don't often find myself defending television providers but in this case I must.

A la carte pricing means goodbye to those darling gems like the science channel or golf channel. If you were paying a la carte and not enough people picked up the channel it would disappear, which sounds great in terms of economical survival of the fittest. However, a lot of those channels have value. By paying a flat rate, cable providers can have predictable income and can distribute that to purchasing those lower viewership channels. A la carte pricing could actually drive costs up.

And honestly, I think its great that networks are looking at ways to use the internet to pull cable providers out of the equation. You can watch a fare amount of shows "a la carte" via some sort of web portal.
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Anonymous Coward, 29 Oct 2009 @ 5:51am

Re:
"If you were paying a la carte and not enough people picked up the channel it would disappear'

So that means that those that don't like a channel have to subsidize those that do.
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Anonymous Coward, 29 Oct 2009 @ 5:52am

Re: Re:
That is, in order to watch the channels they do like.
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Anonymous Coward, 29 Oct 2009 @ 5:55am

The problem is that people think "I get 500 channels. I only watch 10 of them. So my bill should be 2% of what it is now." It doesn't work this way. If the cable companies had to do this, then every channel would be $10 and the people who only watch 10 channels would pay the same or more than they're paying now.

This actually happened to me. I wanted to only get a few premium channels (which they have to provide a la carte), and the cost of each channel that I wanted made it more expensive than if I got a package that included more than what I wanted.

The reason we have a la carte pricing for premium channels is that the cable companies used to say "If you want HBO you have to take this expensive package of normal cable channels." Some people just wanted the local networks and HBO. A la carte pricing allows them that choice.
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Jon B., 29 Oct 2009 @ 5:55am

Forcing cable companies to offer a la carte channels makes about as much sense as "forcing" ISPs to offer tiered bandwidth caps.
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Anonymous Coward, 29 Oct 2009 @ 6:20am

Re:
restricting competition on the cableco/telco infrastructure and restricting who can build new infrastructure makes about as much sense as giving pharmaceutical corporations a monopoly on water because water is an innovative method of curing dehydration.
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Anonymous Coward, 29 Oct 2009 @ 6:25am

Yes bundles make each channel cheaper but if you only want less than 75% of the channels in a bundle it would be cheaper to just pay for the channels you actually want.

IE:
You have 3 channels; X, Y, & Z. If you bundle them they cost $25 for the set of three. If you buy them individually (A La Carte) they would cost: X @ $10, Y @ $10 & Z @ $10. But since you only want X & Y it cost $20 in total... Cheaper for you as you did not care about Z. So the Foreign Under water basket weaving channel, I mean Channel Z, is no longer being supported and eventually goes off the air. One less crappy channel and a few dozen more to go (but you see that would reduce the total sales of your cable provider and in turn reduce their profit margin (as they are most likely paying a nickle to get channel Z in the first place)).
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John Duncan Yoyo (profile), 29 Oct 2009 @ 6:33am

Re: gimme...
The home shopping channels pay to be on your cable service. They should come to you either cost free or subsidizing some of your current package.

The problem is the math works out that you would end up paying more for a few individual channels than the pile of channels you get now. Your cable sells your eyes to the advertisers as well as selling you the service.
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John Duncan Yoyo (profile), 29 Oct 2009 @ 6:36am

Re: Re: Re:
But if you like a little channel that may not get many subscribers it would go away. We would never have gotten a Food Channel, Sci-Fi channel or six discovery channels without ala carte pricing and package deals.
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John Duncan Yoyo (profile), 29 Oct 2009 @ 6:40am

Re:
Nah they would charge you $15 each for channels X & Y or $25 for the package of X, Y and Z.
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Rob, 29 Oct 2009 @ 6:52am

A La Carte Channels
On the whole, I think that a la carte offerings that let people choose their own channels would certainly make consumers much happier (a good thing), but I have trouble believing that it should be mandated by the government.

Well then there now . . . who is this "government" of which you speak? Isn't it the consumers of America? Used to call 'em "citizens."

Now I don't want excessive "guvmint" regulations where they aren't warranted, but this is a canard w.r.t. a utility monopoly, like cable TeeVee. See, the "guvmint" already tells us consumers that we gotta let the cable company run through our yards, and we can't go and dig up their cables or cut down our poles just because we want to express our free-market, laissez faire, survival or the fittest ideals that way. See, if you say all regulation on private business is bad, then I'd say back that all "regulation", i.e. rights-of-way, etc., on consumers is also bad. If you want no interference in business world, then give me no interference in my yard-world, OK?

Also worth noting, it's not like there are competing cable companies most places. We call it a monopoly for a reason. What about Satellite? Same problem, no a-la-carte there either. So why can't we consumers of the United States of Merca collectively say: "Guess what cable and satellite Teevees? You give us a-la-carte pricing."?

For now, I will do as Jesus (or Reagan or somebody) told us and "Vote with my Wallet!(tm)" I do not get cable TV, we gotta make our own fun. Scrabble, anyone?
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Glenn, 29 Oct 2009 @ 7:07am

Appropriate
People shouldn't have to pay for something that they don't want to buy, don't want to use; but that doesn't make bundling an "antitrust" issue. Wrong and economically unsound? yes. Antitrust? no.

Stop buying it and the cable/telco TV companies will stop selling it that way. Vote with your wallet... hit 'em where it hurts.
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Michael (profile), 29 Oct 2009 @ 7:19am

market opportunity?
If the people who are pushing this feel so strongly about it, why aren't they entering the market and offering the a la carte channels themselves? Seems like investing funds in a start up would be better spent than on attorneys and lawsuits.
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Anonymous Coward, 29 Oct 2009 @ 7:34am

TV is for jerks. Stop watching TV.
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Anonymous Coward, 29 Oct 2009 @ 7:37am

Re: Re: Re: Re:
Come on, advertising brought those channels, it's the crap like o, we, cspan2, spanish, mid east, etc that nobody will pay advertising on, but that the liberals that own the cable companies want on, but don't want to pay for are paid for by bundles.
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Anonymous Coward, 29 Oct 2009 @ 7:50am

The current tiered system of cable offerings sucks. I pay for something like 180 channels. I watch maybe 10% of said channels, 50% of them are shopping or religious which interest only a small segment of society. There are 1-2 channels I would like on a higher tier but I am not paying an additional $20 a month for those channels.

Al a cart is simple to make work ($$ wise). You set a minimum monthly charge of say $30 then each channel (I would guess a tiered system) costs $xx and the consumer selects those channels they want. If they only select $20 worth of channels they still have to pay the minimum price. The subscribers can still subsidize those boutique channels while being happier because they can select the channels they want.

As long as the gov't is going to enforce a monopoly that protects the cable providers they should also do something to protect the consumer.
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batch, 29 Oct 2009 @ 7:59am

Why not have both systems?
It seems easily possible with these current cable boxes, how channels that you don't pay for can be blocked, or using the original system of putting physical filters on the cable itself, that a la carte could be offered alongside the current packages. Seems pretty democratic, to me, anyway, allowing the customer to decide what option works best for them. Plenty of people would still buy a bundle, while others who might not otherwise get cable can pickup the few channels they do want.

The same could be done for broadband, offer metered billing alongside the current unlimited offerings. Unfortunately that idea is probably too rational and not wildly profitable enough.

Cellphone companies already do this. The pay as you go, the pre pay, and the contracts with blocks of minutes. They're doing just fine.
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JLen, 29 Oct 2009 @ 8:00am

Re:
I would think that anyone could submit a request at city hall requesting right of way in their neighborhood, buy into the telephone poles in their town, run the coax or fiber and pay the broadcasting companies how ever much they want to feed TV to their house.

I don't really see where the government is having anything to do with that.

It's an expensive business to get into any way you slice it and that is what keeps the competition low.

Cost of entry = $$$$$

Plus, you didn't think that the broadcasting companies give this stuff away did you? Why they have to pay the studios for the content who have to pay the actors and directors and set designers and so on. In fact, you could look at it that asking to pay less is un-American because it takes the money out of the pocket of the guy who found the props for your favorite show. Why, if anything, the government should be telling Americans to buy bigger cable packages!
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Anonymous Coward, 29 Oct 2009 @ 9:52am

Re: Appropriate
"People shouldn't have to pay for something that they don't want to buy, don't want to use; but that doesn't make bundling an "antitrust" issue. Wrong and economically unsound? yes. Antitrust? no."

It wouldn't be an anti trust issue if the government allowed others to either compete on the same infrastructure or to build new infrastructure. Monopolies are bad for society and the monopolist will always set the price that maximizes profits and that prices will almost always be higher than the price offered in a competitive market. The fact that people don't have to buy cable is no justification for the government granting a monopoly.
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Anonymous Coward, 29 Oct 2009 @ 9:54am

Re: market opportunity?
You fail to realize that the government prevents this because they regulate who can and can't use the existing infrastructure or who can and can't build new infrastructure and they have long allowed a monopoly on many infrastructures due to the lobbying efforts of cableco/telco companies.
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Anonymous Coward, 29 Oct 2009 @ 10:04am

Re: Re:
"I would think that anyone could submit a request at city hall requesting right of way in their neighborhood, buy into the telephone poles in their town, run the coax or fiber and pay the broadcasting companies how ever much they want to feed TV to their house."

It's much easier to think such a thing than to actually do it. Yes, requesting such a thing maybe easy but actually getting permission is not. The whole alleged justification behind granting them a monopoly over the infrastructure is that it's a "natural" monopoly and hence it makes more sense for the government to regulate the monopoly than to open up the infrastructure to competition.

"Nearly every community in the United States allows only a single cable company to operate within its borders. Since the Boulder decision [4] in which the U.S. Supreme Court held that municipalities may be subject to antitrust liability for anticompetitive acts, most cable franchises have been nominally nonexclusive but in fact do operate to preclude all competitors. The legal rationale for municipal regulation is that cable uses city-owned streets and rights-of-way; the economic rationale is the assumption that cable is a "natural monopoly." "

http://www.cato.org/pubs/pas/pa034.html

The fact that you "think" it's that simple does not make it so. You can imagine it to be simple but it's not, the laws in place do not allow for competitors.
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Anonymous Coward, 29 Oct 2009 @ 10:08am

Re: Re:
"I would think that anyone could submit a request at city hall requesting right of way in their neighborhood"

So basically before you start coming over here and making things up out of nowhere why don't you actually familiarize yourself with the law and the legal environment that exists.

"It's an expensive business to get into any way you slice it and that is what keeps the competition low. "

No, that's just something you made up. I don't see how you can think that something you made up is true. Just because you can make things up does not make what you made up true. The limitations to getting in the business are political limitations, they're not economic in nature. Stop making things up.
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TheStupidOne, 29 Oct 2009 @ 10:17am

No TV
I have high speed internet without tv service. I bought a high quality antenna and get free HD broadcast channels for most of the big network shows. I have hulu and netflix for other shows and movies i want to watch. Sports bars satisfy my sports need. If there is anything else i want to watch and isn't available to me I have no moral qualms about finding an alternative distribution channel that doesn't provide them revenue. I see no reason to pay at least $60 per month for the 2-3 shows I would watch that I can't see through any other method.
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Steve R. (profile), 29 Oct 2009 @ 10:42am

Social Good Relativism
The topic appeared a while back on the Technology Liberation Front. What really astounded me was how the term "social good" was relativistically thrown around.

When it came to the issue of the government subsidizing cable to rural areas for the "social good", it was something to be stamped out as a vile imposition of government control. Furthermore, the free market argument was made that if the service could not pay for itself, then it should not be provided.

Magically, when a cable company restricts consumer choice thorough fixed packages that include some services that may be considered uneconomic; all of a sudden those not previously concerned with the "social good" have developed a moral conscious and now are lovey dovey with the concept of the "social good"??????? Total hypocrisy.
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Anonymous Coward, 29 Oct 2009 @ 10:56am

I also found this interesting

"In the dense areas of the US the lines are just over saturated instead of upgraded. I live in Japan for part of each year and I have had an 100mbs connection in every place I have lived and the performance did not degrade anytime during the day. In small towns you still usually get faster and more consistent service than the best services in the US."

http://news.cnet.com/8301-13578_3-10317118-38.html

With those internet speeds who needs cable.

In my area cable used to be $30 a month or so until time Warner came and bought our local cable company. Now it's more like $60. Also, I remember someone on techdirt explain how they don't live in America and pay a lot less for cable.

Also found this interesting

Read the sentence that starts with "at the provincial and local network levels" ...
http://www.corning.com/WorkArea/downloadasset.aspx?id=8631
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stymie222 (profile), 29 Oct 2009 @ 10:04pm

Paying for garbage
I have watched the cable and satellite companies take entertainment to a new low.
I cannot trust them to be competitive when there are only a few.
Over time they have crammed as much advertising as they could into their programming. Commercials/paid programming, have increased over 20%. Loud, Blaring commercials force me to keep the remote in my hand.
We do not have any voice in the matter. Why?
This is probably the biggest rip-off of the consumer in history. Any monopoly has always been.
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jack b, 30 Oct 2009 @ 12:53pm

wrong legal application
The problem is they are going after the wrong legal basis. Its about monolopies, anti-trust, and regulation - NOT what they offer.
Our government has slowley but surely sold us out to the highest bidder (is this for lobby $$$'s??). Water, cable, electric, the DTV transition, etc.. have all been sold (initially ) as better for the consumer. Then we are bent over a barrel with little choice. remeber the de-regulation of cable was billed as "good for consumers"?? My bill went from $39/mo to over $100. One of the largest cable companies has used the DTV transition to cover their scheme to require every TV to have a rental box - at 23,000,000 users and an average of $20 - 30 extra a month (2.5 TV's per subscriber) its BIG monthly numbers!! try $690 mil /month!!! No wonder that a cable company has bullet proof glasss when you local bank does not!!

the only thing you can do to change this is refuse their seervice - most of you won't so let it be and feel the pain.
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Anonymous Coward, 1 Nov 2009 @ 12:31pm

We have saying in the cable tv business "If you charge a customer and that customer has money left over, you are not charging him or her enough".
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Anonymous Coward, 1 Nov 2009 @ 12:48pm

This cable tv a la carte is a horrible idea! My cable tv business pays about $0.50 per channel, except for ESPN which charges us $3.00 for their channel. We charge our customers $80 a month. Studies show most people only want 15 channels.

15 channels x $0.50 = $7.50 a month

If a la carte existed how am I suppose to make a profit when people are only paying $7.50 a month? No one is going to want to pay us $80 a month for our basic package. I will have to pay goodbye to our current $50 per customer profit. Boycott a la carte!!!!!!
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F. Mickens, 14 Dec 2009 @ 1:34pm

ala carte cable
Personally I think that the cable companies will tell any lie, to continue doing business their way. At the same time, what about the arrangement of the networks? Why is it that I cannot say what I want, instead of having to buy four or five other networks to get one? Three to four other networks in which I have no interest. It is said that the average cable consumer only watches 1/3 of the networks offered on their cable system. So why must I pay for what I do not use?
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Steve, 28 Jan 2010 @ 11:56am

Why have the government mandate it? Why not just have someone start a company that only offers ala carte channels? Whoever does that will be a millionaire quickly. In fact....why am I sharing this secret with the world? I should get right on this. I'm done typing now. Now - on to rule the world
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what?, 11 Feb 2011 @ 7:04pm

look at time warner cable TWC compared to the S&P500 over the last 5 years...

It says it all...
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Michael, 13 May 2011 @ 11:34am

Cable rips you off.
The whole argument of the cable companies losing money is completely unfounded. They may lose and over all net profit, but really in the long run a la cart means less exec money is pocketed. That is why they fight it.

People will pay for channels they want. I don't pay for cable because if I did for the channels I want, I would have to pay $120 a month to get them. However, most basic tiers cost $60 and offer 15-20 channels.

Here is a thought cable companies... Charge $60 (which I am willing to pay monthly) for 15-20 channels I want and keep the premium channel line ups at $5 per channel.

This would make so many people happy, and you will make money. That is the key. People will pay if you give them freedom. Yes, some channels will die... We do not need 20 channels of QVC out there. However, cable will emerge stronger then ever if you adopt my model.
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Anonymous Coward, 28 Jul 2011 @ 9:40am

So what if the smallcnannels that noone watches will be hurt. What happened to the theory of supply and demand. Iam trying to pare down my cable bill and finding it an impossible task. I pay 100$ amonth for mostly unused garbage. Sign me up for the appeal and I think more people are getting mad enough to make it happen this time. All the comapnies are interested in is the revenue gained from these puny stations and then they charge us also. This is the worst case of double dipping.
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Anonymous Coward, 28 Jul 2011 @ 9:42am

Re:
Ido not appreciate your anonymous coward name. I just donot want anymore junk mail from anyone.
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