Wednesday, December 14, 2005

a la carte and family values (cont.)

As I mentioned the other day, the cable industry suddenly finds itself under government pressure to offer some kind of a la carte basic cable service, all in the name of "family values". And big cable MSOs (Multiple System Operators) such as Time Warner and Comcast find themselves having to scramble to head off any possible regulatory moves. Maybe they are so quick to cave because they know their business model exploits consumers. Suddenly the MSOs are talking about "family tiers" that subscribers can add to their basic cable package -- not exactly what consumers have in mind. And any moves of this kind almost certainly wouldn't save subscribers any money, and may even end up costing them more. But then again, nothing in this so-called debate really addresses the needs and concerns of the average consumer. Some evidence for this comes from Broadcasting & Cable, which notes another interesting twist in this debate: It's been done before, with negligible impact.
    For several years, the DBS service [DirectTV] offered a Family Pack of channels deemed inoffensive, such as VH1 Classic, Hallmark Channel and a pair of splinters of Discovery Channel.

    Hardly anyone was interested. SEC filings indicate that Family Pack accounted for fewer than 1 million of DirecTV's 10 million subscribers in 2001. In 2002, Hallmark was so eager to escape the family-tier pigeonhole that it paid DirecTV $80 million in stock, or $11 per subscriber, to escape and get onto its more widely distributed Total Choice package.

It makes you wonder just who's pushing this agenda, and why. It's certainly not the broad mainstream of consumers. In fact, it seems, there are no "good guys" out there, looking out for the regular guy/gal who just wants to save some money and avoid having to pay for all these channels s/he never watches.

Lastly, it's interesting to see how this debate mixes up the ideological debate over free choice, consumer rights, regulation/deregulation, and the public interest. Those on both the left and the right seem to be divided over whether a la carte - and government moves to mandate and regulate a move to a la carte - would be a good thing. The more interesting debate, if only because it involves the people who are actually in charge of everything these days, is within the right - between, on the one hand, social-cultural conservatives operating from an indeceny-morality frame, and on the other, economic conservatives who favor leaving the market alone. The latter position is summed up by the Wall Street Journal's Holman Jenkins (thanks to a faculty colleague for pointing me to this), who notes in a WSJ commentary piece (taken from the Benton Foundation Comm Policy listserv - original requires subscription):
    What about this "à la carte" debate? Supporters prattle about consumer rights, but consumers don't have a right to anything except that which somebody is willing to sell to them (without force or fraud). And everything we buy is really a package deal. Buy a garden hose at Wal-Mart and you're purchasing both a manufactured good and a service (Wal-Mart's logistics chain). Don't listen to any ninny who tells you that, because you're entitled to buy ketchup without buying mayonnaise, you should be entitled to buy ESPN without buying CNN. You can buy ketchup without mayonnaise because somebody is willing to sell it to you. In turn, you've demonstrated a willingness to make it worth his while. Today's basic cable package represents a complex set of bargains involving not just cable providers and subscribers, but two other parties: advertisers (who help pay your cable bill) and programming suppliers (who use the bargaining clout of their popular networks to get their niche networks on the air too). It's a solution that works: Everybody pays the same basic rate for channels they mostly don't watch, which is no different from saying they pay the same basic rate for the few channels they do watch -- but a lot more tastes are satisfied.

As I say, this is an interesting wrinkle on the traditional left-right bun fight over free choice, consumer rights, etc. The "solution that works" referred to above sounds surprisingly communitarian to me (at least insofar as it dovetails with commercial interests). But it doesn't help individual consumers who are paying over the odds for basic cable. In any contest between what individual consumers and groups want and need, and what big business wants, it's clear where Jenkins' loyalties lie. But there is one thing that Jenkins says that is likely to find more general agreement: "Technology is likely to render the whole issue moot. The concept of a 'channel' is an eroding one. Internet TV will be more akin to a library, in which you order up for instant viewing the fare you care to receive."

And wait till you see how much the MSOs want to charge you for that!


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