We haven’t heard about a la carte cable in quite a while, but this week we saw several items on the topic that we thought were of interest.

Alyssa Rosenberg, the new culture critic at ThinkProgress, wrote a piece earlier this week questioning the value of a cable subscription and calling for some kind of “à la carte” model. As a regular reader, this naturally caught my eye, since I have also blogged here in the past about the a la carte issue.

Her post seemed to have attracted some attention (Andrew Sullivan linked to it), prompting a response today from Megan McArdle, the business and economics editor for The Atlantic: Why Can’t We Unbundle Cable?

One highlight (although you should read the whole thing):

As James Surowiecki pointed out last year, most people actually like bundling — they don’t want to buy books by the chapter or newspapers by the article . . . or SyFy by the show.  What they dislike is paying so much for cable.  But they are mistaken in the belief that unbundling will bring their bills down; one recent estimate was that unbundling would lower prices by $0.35 a month.  Other studies indicate that the average consumer would pay more, to cover the transaction costs of an unbundled system.

Bundling is what happens in markets with a high fixed cost and a low marginal cost.  It costs a great deal to run cable to your house, and make or buy television shows to send down that pipe; it costs basically nothing for each show you actually watch.  In this environment, attempting to give people only the networks that they want simply adds costs and hassle for the company, which has to customize everyone’s feed and then deal with the inevitable errors.

Rosenberg then revisited the issue, nicely summarizing the problems with an a la carte approach, even if she seems to remain unconvinced.

The technological means of distributing programming are changing rapidly, not only through the popularity of services like Netflix, but also through the distribution to connected devices (as we recently wrote on this blog). Each of the new services is providing consumers many more ways to enjoy content, either as part of a bundle or on a pay-per-watch (a la carte) basis.

But the economics of program creation and distribution are pretty much unchanged so far. That’s why cable companies’ bundles of voice, video and data continue to provide a lot of value to their customers.

There’s a really interesting discussion to be had about the future of delivering video to the home. Which technology makes the most sense? How will content companies make money in the future? How do we best address digital rights issues?

Instead, I usually read some “kill your cable” rhetoric.

So, that’s why I return to the topic of cord-cutting: Because everybody else keeps writing about it, often in an oddly hostile fashion.

CNET’s Marguerite Reardon started off an Ask Maggie column on cord-cutting this way:

If you are like me, you cringe every month when you pay your cable bill. And you dream of the day you can cut your cable cord and stop paying that monthly bill.

It’s not that I don’t like to watch TV. I do. But I can’t stand that I pay $140 a month to watch a handful of shows on five or six channels.

First, that $140 probably covers more than just standard programming . I pay about $180 a month to Comcast, which includes video, Internet and phone, including HD, a DVR, premium channels, and so on.

When a reader writes in how to watch video online, Reardon answers, “Good for you for cutting the cable cord!”

There are certainly people who choose not to subscribe to multichannel video services. Nothing wrong with that. But if you want to watch the programming – cable’s original shows, news, sports – then that’s how you get it.

Aaron Barnhart of TV Barn helpfully points out that, for all the complaining, people are continuing to subscribe to multichannel video service in growing numbers. But, counterintuitively, Reardon love to recommend that people unhappy with cable service should turn to cord-cutting – which doesn’t allow you to access all you can get from cable programming.

It would probably be along the lines of suggesting that people unhappy with cable should try reading a book. Did you know that libraries loan them out for free?

Read the rest of this entry »

There are any number of issues that come up all the time in the cable business. And one of them is the pay-per-channel scheme known as “a la carte.” Sure, it sounds attractive. But when people describe what they think they will get under a mandatory a la carte plan, it doesn’t match reality.

It came up last week when NCTA’s Kyle McSlarrow was on a panel; it comes up all the time. Steve Jobs just gave his yearly Sermon on the Mount (a.k.a, his Macworld keynote) and he announced movie rentals on iTunes and an overhaul of Apple TV. This led to the Bad Luck City blog’s headline: Apple TV and iTunes video rental: Bye Bye Netflix and Cable.

What this means is that I may be able to cancel my Netflix account and rely on Apple for my movies on demand. Why send bits of data on a envelope through snail-mail when I can do it over my Internet connection?

As you know, I ditched cable for OTA television long ago, but now everyone else can do the same, at least until the cable industry offers programming a la carte.

Of course, Netflix already offers online movie viewing and they just lifted time restrictions, so that their customers can watch all they want. And cable customers get a lot more viewing options (especially if you’ve got digital cable with VOD) than someone getting DTV over-the-air.

Here’s another example in a blog post about the satellite radio business:

Sirius’ CEO Mel Karmazin has promised the FCC to allow a la carte programming for a cheaper price if the merger goes through. This way customers can pick and choose what they want to listen to. Chairman Martin of the FCC has tried to get the cable companies to allow a la carte programming, but to no avail, so he may see the Satrad merger as a precedent for a la carte options.

I’m going to keep referring people to this great column by the NY Times‘ Joe Nocera about why a la carte means fewer choices and higher prices. Maybe the message will get through.

UPDATE: And here’s another one. Diane Keaton drops an F-Bomb on Good Morning America and a Wednesday evening panel grapples with the effects. Tim Winter, President of the Parents Television Council, and Shawn Ryan, creator of FX’s The Shield, got into a tiff:

The evening’s hottest moment flared between Winter and Ryan over a PTC-supported proposal to offer consumers a la carte cable choices. Instead of having to buy multiple channels bundled in one package, the PTC supports legislation that would allow consumers to cherry-pick and pay for only the channels they want to watch.

“Why should I have to pay for FX when all I want is the Disney Channel?” argued Winter.

But Ryan, whose award-winning, gritty cop drama “The Shield” broke new ground for language and violence on basic cable, said that proposal would stifle creativity.

“I’d prefer you be honest about this,” Ryan said to Winter, whose nonprofit group originally referred to “The Shield” as “filthy trash” when it debuted. The a-la-carte proposal is a “backdoor way to censor shows and networks,” Ryan added.

On the one hand, you have mandatory a la carte leading to less diversity in programming, which could lead to fewer family-friendly viewing options. And on the other hand, cable has a better solution for content that you may be concerned about: parental controls. Everyone has different opinions about what they might block and cable’s controls let you decide. Check out our Control Your TV website or this report from PFF’s Adam Thierer.