Friday, December 02, 2005

 

What the Fuss?

I just don't get what all the fuss is about a la carte cable pricing.

While cable companies, no matter what sort of "competition" is introduced, will always form a de facto oligopoly if not a de facto monopoly, and thus the conclusions of free market theory don't apply (if they ever do ...), you would think that if it were reasonably cost effective and if there were actually enough of a demand for it, cable companies would just offer a la carte channels in order to keep customers who might otherwise eschew cable altogether.

On the other hand, what would the cost be to offer channels a la carte? It isn't as if people would reasonably expect the same sort of deals for a la carte channels as for a package. When I go to a fancier restaurant (which is not often, with my budget), I have a choice between ordering from the prix fix menu or options a la carte. If I order a la carte, I understand that I will have to pay more. Is this even fair, considering I have food allergies that usually rule out ordering from the prix fix menu? No. So would it be perhaps unfair that you force people "allergic" to MTV to either pay for it or pay additional costs per station to get only the channels they want? Perhaps not, but this is how a la carte works -- and the people pushing for it will have to understand that little economic fact of life.

In the case of cable channels -- so the cable companies offer stations a la carte. They charge $X per station a month. For a package of 50 channels you have to pay only 10*$X a month. So people wanting only a few specific stations will order them a la carte and everyone else will order a package, even if they don't really want many of the channels in the package. I would think with a price structure like this (which is quite reasonable), many people would order packages, thus obviating the concern (presumably faked -- I doubt that the "reverend" Marion Robertson really cares about programming diversity other than people buying his own programming) of big media that if everyone orders a la carte, there will go diversity of cable stations as nobody will pay for the fancy new station (as if the cable companies couldn't offer it for real cheap until it catches on -- as if that isn't how products are introduced in every other market). It isn't as if the cable companies would be restricted from offering packages (would they? now that would be stupid).

So what is all the fuss about? What would be so bad about cable companies having to offer channels (at some higher cost per channel) a la carte? Then again, why don't they just do that already without the government having to step in?

I guess this says all we need to know about the initiative of private industry, don't it?

Comments:
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