Articles of Interest

Sunday, April 16, 2006

Why Can't I Have Just the Cable Channels I Want? - New York Times

Why Can't I Have Just the Cable Channels I Want? - New York Times
April 16, 2006
Media Frenzy
Why Can't I Have Just the Cable Channels I Want?

By RICHARD SIKLOS
AT the National Cable and Telecommunications Association convention in Atlanta last week, the cable guys were at it again. They were kvetching that the Federal Communications Commission had gotten it terribly wrong in pushing to loosen the way that cable television channels were packaged and sold. Essentially, the cable contingent says that its current practice of selling a package of 75 or so broadcast and cable channels is better for consumers and the public good than letting people pick and choose the 10 or 20 stations they actually watch.

The average price of extended basic cable — the type of channel package to which most of the nation's 73 million cable-watching households subscribe — is $41 a month, according to Kagan Research. Plenty of other premium channels and services are available, but the only cheaper option is truly basic: a package of mostly local stations with none of the popular cable channels (ESPN, MTV and CNN, to name but a few). At my house in Connecticut, for instance, basic cable runs me $13 a month.

The cable operators say that forcing them to give people more latitude over the channels they buy would constitute rank government interference, the equivalent of forcing restaurants to sell burgers and buns separately. The à la carte model favored by some regulators would lead to much higher rates for individual channels, executives argue. Whereas that same $41 might get you only 10 hand-picked channels, the bundle model both pays for the infrastructure — all those pipes and set-top boxes and servers and repair trucks — and preserves the smorgasbord of big and small channels to suit all demographics and tastes.

Without bundling, programmers like Disney and Viacom might no longer be able to afford shows with smaller but loyal followings. Under the current system, they can produce niche channels like ESPN Classic because they are bundled with ESPN and other channels, the programmers say.

For the most part, the F.C.C. rolls its watchdog eyes and notes that the price of expanded basic has increased well beyond other goods and services over the past few years. It and the cable association have drawers full of studies disputing the other's studies about their studies. Kevin J. Martin, the F.C.C. chairman, showed up briefly in Atlanta to reiterate that he was not giving up the fight, even after recently cajoling cable companies to agree to put together a new, smaller tier of family-oriented channels that was a few dollars less than extended basic. "Putting more control in the hands of consumers is always good," he said.

Alas, the legislative year is rapidly winding to a close in Washington, making it unlikely that Congress will pass any à la carte legislation this time around. Still, even a few renegade television providers are finding it difficult not to side with Mr. Martin. Cablevision Systems in New York and the satellite service EchoStar have done so, though they remain a clear minority. Comcast, Time Warner, the News Corporation, Walt Disney and others are lined up to harrumph at Mr. Martin.

The great paradox of this debate is that it comes as the number of media options is exploding and the way they are being priced is all over the map. The much-maligned bundle will most probably prevail as the most popular business model for media, although it, too, is likely going to need an extreme makeover.

Just look at the big picture: At one end of the spectrum is the push to sell more and more programming on a per-show or per-viewing basis, via video-on-demand or some kind of download service. Whether it is iTunes from Apple Computer, the new video services from Google and Yahoo, or the newest iterations of nascent mobile telephone services through Verizon, Sprint and others, it's clear that we are approaching a future where there will be no chance that a favorite show can be missed.

Last week, Disney pushed the ball forward by announcing a trial to show four of its popular television shows free on www.abc.com, with commercial sponsors. And Fox said it had worked out a deal with affiliate stations that would let it join the other big networks in making popular shows available in new digital and online formats.

All this is happening not so much because content makers sense gigantic riches in these new ventures, but out of fear that if they don't make their programming more freely available, younger audiences will grow up accustomed to getting their favorite shows free via illegal file-sharing services and DVD's burned by their pals.

At the other end of the spectrum from selling individual shows is the equally au courant concept of überbundling — selling digital cable services combined with high-speed Internet and telephone service, and maybe throwing some wireless into the mix.

Ask cable industry executives, and most will argue that a majority of people still prefer buying the existing pre-ordained packages of cable. And the addition of new services like high-speed access gives viewers conveniences like a single bill and shared customer service. Yet a recent USA Today/CNN/Gallup poll found that 54 percent of television viewers said they would prefer to buy channels individually, while only 43 percent said they'd rather pay a flat fee for a fixed number of channels.

Strangely, these colliding views make sense. When asked whether they want total choice, especially from historically monopolistic quasi-utilities, it's no shock that most people say: heck, yes. Yet, as the author and psychology professor Barry Schwartz and two of his colleagues pointed out a few weeks ago in The New York Times Magazine, Americans have this funny habit of confusing freedom, which they cherish, with choice, which can give them headaches.

"We're definitely at an overwhelming number of options," Maribel D. Lopez, a media analyst at Forrester Research, told me. "It's frequently difficult to understand what you're buying. There's also different content that goes on different devices. We run the risk of consumers moving to indecision because they have a lot of choice."

Stephen B. Burke, the chief operating officer of Comcast, also contends that people are most comfortable paying for subscription services they can rely on at a set price, even if they don't consume every minute or inch of it — whether the subscription is to cable service or Time magazine.

Mr. Burke pointed out to me that well under 10 percent of subscribers bought pay-per-view or video-on-demand movies from Comcast. But as many as 70 percent of Comcast's customers avail themselves each month of the free video-on-demand programming that is part of its digital package.

Mr. Burke says part of the problem with buying individual shows is that, amazingly, more than 90 percent of Comcast's 22 million customers still pay monthly cable bills by cash or check. That kind of customer isn't ideal for impulse digital purchases.

And Ms. Lopez says that one reason new mobile services may be slow to take off is that even tech-savvy consumers in the United States are not as culturally attuned to prepaying for communications services as those in Europe and elsewhere.

There are examples to the contrary that suggest that consumers are more than keen to buy products by the bite — but they are fewer than you'd expect. Ring tones, music downloads and pornography come immediately to mind, but, needless to say, these models don't translate across all media.

Rather than unfettered choice, maybe what most people yearn for is more, better choice. Video providers in Britain, Hong Kong and Canada have figured out how to offer a much wider variety of ways for their audiences to pay for TV without invoking video Armageddon.

The cable operators are indisputably right about one thing: they shouldn't need Mr. Martin to tell them to do the right thing.

Ken Belson contributed reporting for this article.

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