The election of Barack Obama as president will bring new leadership to the Federal Communications Commission. With that housecleaning, we hope the movement to switch the cable television industry to channel-by-channel pricing falls by the wayside.
Current FCC Chairman Kevin Martin seemed always to hold the threat of a la carte pricing for cable channels as a bludgeon to either push for lower cable rates (which, we must admit, pinch us each month when we open the bill) or as leverage to have cable networks clean up some of the R-rated (or worse) material they carry.
Any consumer can get behind lower cable rates. But the best cure for that will come in the form of competition from satellite services and the spread of fiber-optic TV from the telecommunications companies. And of course, the FCC lacks jurisdiction over the content transmitted via cable operators’ lines. So in the end, Mr. Martin’s flirtations with a la carte were destined to come to naught.
But his imminent departure hasn’t kept some self-styled consumer advocates from rallying to the a la carte cause. So it’s time once again to dissect the reasons that channel-by-channel pricing is a terrible idea that simply won’t work, given the economics of cable television.
The worst fallout of a move to a la carte would come in the form of the disappearance of less popular channels. We favor free markets. But the fact is that only the networks at the upper end of the curve in terms of audience would survive in an a la carte universe.
Advocates point to the availability of video-on-demand as an alternative for that programming that might be too niche to survive in competition against the USA Networks, Fox News Channels and Disney Channels of the world. But the math just doesn’t work: It’s highly unlikely that a network could afford to produce quality programming as a VOD-only entity.
A cold-hearted free-market advocate might say, “So be it.” We’d rather preserve a wide choice of programming and create an environment that fosters emergent networks that might some day reach the critical mass to break into the top tier of channels.
The goal of a la carte is to lower cable bills. We couldn’t agree more with that sentiment. But channel-by-channel pricing is the wrong route for consumers and it’s the wrong route for the television industry. Competition from other technologies is the answer.