A la carte and Time Warner? Don’t hold your breath
December 4th, 2009, 3:26 am · 7 Comments · posted by Tamara Chuang, a.k.a. The Gadgetress
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Last month, I met with Time Warner Cable’s local leadership, Deborah “Debi” Picciolo, president of residential services for the West Region, and Clarence Caldwell, president of network operations/engineering for the West Region. I’ve finally had time to compile the question and answer post to help readers understand their cable company just a bit better. Those answers are HERE.
Now let me get to one of the bigger questions: When will Time Warner offer a la carte so customers can pay only for the channels they want to watch?
Answer: Don’t hold your breath. Time Warner is taking the National Cable & Telecommunications Association position. The organization is the cable industry’s trade group,which earlier this year detailed this stand: A la carte forces prices up.
That statement is up for serious debate. And here are a few groups who say baloney to the notion that channel choice means higher prices. The Consumer’s Union, which publishes Consumer Reports, says choice will encourage consumers to try paid TV services (this FCC filing points out the cable industry’s flaws in the argument).
But here are some reasons why the cable industry believes cable TV prices will increase if consumers paid only for the channels they wanted. Now, bear with me since I can already hear readers’ snarky responses:
- Unpopular channels would go out of business, which not only decreases the variety of channels available to consumers but the potential revenue to cable companies. To make up for losses, cable companies would charge even more per channel.
- Since cable companies charge advertisers based on number of eyeballs, a decline in some channels means less advertising revenue. Again, prices would go up to make up the difference.
- Consumers pay more for less. NCTA’s example is that if two eggs cost the same as a dozen, wouldn’t you rather have a dozen?
- A la carte is inflexible. Consumers would have to lock in their TV channel choices in advance and there would be no ability to explore new shows on other networks.
In other words, cable companies will raise prices if they have to offer each channel piecemeal.
Beyond the usual suspects of paid-TV providers and TV channels, several non-TV groups support the NCTA’s position. These include the many ethnic minority groups like the NAACP, conservatives like Americans for Tax Reform, religious groups including The Christian Broadcasting Network, and others, such as National Organization for Women and Planned Parenthood. A complete list of supporters is HERE.
It’s not an answer most readers want, but it is an answer.
As cable companies fight the onslaught of new ways consumers are watching TV — from the free-for-now Hulu.com to paid alternatives of Verizon FiOS and AT&T U-verse — the interesting thing is that cable companies are already being forced to change.
Time Warner has been losing basic cable subscribers all year. And earlier this year, Time Warner announced “TV Everywhere,” an online service to offer paying cable customers TV shows online. Trials are already underway. And yesterday, cable provider Comcast announced it would buy NBC, which co-founded Hulu.
Times are changing and apparently, so must Time Warner.
More a la carte reports, documents:
- Report On the Packaging and Sale of Video Programming Services To the Public — FCC’s 2004 report concluding a la carte wouldn’t be cheaper. In essence, the average household watches 17 channels, moving to a la carte would raise the monthly bill between 14 to 30 percent. (Nov. 19, 2004)
- Further Report On the Packaging and Sale of Video Programming Services To the Public — FCC’s 2006 report called the previous report from 2004 “incorrect and biased.” This time, the FCC said a la carte “could be in consumers’ best interest.”
- Why a la carte cable TV is a nutty idea (Fortune, Feb. 2006)
- Consumers Union: Benefits of competition of cable a la carte (August 2004)
More answers are coming. Check back. I’ll post the related posts below.
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Here's a list of TV/mobile companies helping consumers one tweet at a time. 
The fact is that a la carte CAN be offered but the cable companies are obstructing.
Secondly, how about a library of every movie every made that can be accessed through your TV at any time for a nominal fee, or a few bucks.
Guess I can only dream.
Cable companies need no excuse to raise rates. It is a guarentee. Here are two things Time Warner could do to ease pressure for a la carte TV and maintain its subscribers: Provide good service at reasonable prices. Most of us know that we humans will put up with a lot before we make a change. Time Warner constantly probes those limits and has gotten really good at pushing people away from its products with horrible customer service and hostile overall pricing. I am not saying other companies don’t do the same. I am just saying TW is the best at it.
In North OC Time Warner says you must rent a set top box with basic cr@p cable service effective 1/1/10 or lose a few channels.This after raising basic five bucks a month this year.
I hate paying for TV. I have no choice, how else am I going to get reception? Sometimes I watch TV shows and Movies over the internet for free. I hope this kills cable, hopefully with even more competition it will drive down the prices.
Man do their arguments infuriate me!
“Unpopular channels would go out of business, which not only decreases the variety of channels available to consumers but the potential revenue to cable companies. To make up for losses, cable companies would charge even more per channel.”
How does this work? If the cable companies don’t have to pay these out of business channels anymore, how are they losing money? Is this supposedly for a lack of advertising revenue? How much can they charge a company to advertise on a channel that is already unpopular? Who is buying ads if no one is seeing them?
“Since cable companies charge advertisers based on number of eyeballs, a decline in some channels means less advertising revenue. Again, prices would go up to make up the difference. ”
So increase the cost of advertising, not the cost to customers. Why should customers pay more money so that the cable company can have more advertisements? Let the advertisers pay an increased fee to be on these more popular channels and have a larger share of viewers watching their commercials.
“Consumers pay more for less. NCTA’s example is that if two eggs cost the same as a dozen, wouldn’t you rather have a dozen?”
This is a really, really stupid analogy. I would much rather pay $60 for 6 fresh eggs and no raw eggs than $100 for a dozen eggs when only 6 of them are edible.
“A la carte is inflexible. Consumers would have to lock in their TV channel choices in advance and there would be no ability to explore new shows on other networks.”
This is the biggest bull-hockey of them all. They already have ala carte services. They’re called HBO and Showtime. When you want to add them to your service, all you have to do is call the cable co. With the internet, this could all be done automatically via the computer or even the remote control! When HBO or Showtime want to add subscribers, they just do a free preview weekend. So could the other stations. Also with the internet, networks could give free previews of their shows on their websites to entice new subscribers.
I wonder what the broadcasters think about ala carte pricing. Do you think you could get a representative from, say the Food Network or The Disney Channel on their views?
All of this just makes me want to can Time Warner more. In fact, I probably will as soon as hockey season is over. As soon as someone else offers ala carte service I will happily subscribe.
If I had some money I would get going on a web-based ala carte service. I’d make a fortune. Maybe this is how Hulu could make some money! Carry cable channels for a subscription fee.
Finally!!! Someone is asking the million-dollar question! If it were up to Time Warner Cable… they would NOT offer this pricing structure in a million years. It’s obvious that people would rather pay for only what they use. Why offer people the ability to purchase only the channels they watch, when you sell the same channel bundled with package of crap at 10 times the cost instead? SO WHAT if the unpopular channels go out of business…! Only channels producing content that people actually WANT TO WATCH are the ones that should stay in business! Yes, I understand that the remaining channels might individually increase in price, but the total net cost to the average a-la-carte cable subscriber should be LESS. There is nothing to stop TWC from offering “build your own bundle” pricing, which might allow people to pick and choose groups of channels at a package discount. Why aren’t any of these options being offered? Simple… TWC and other cable companies would rather enforce the status quo. As long as consumers are willing to pay hundreds of $$$ each month for pre-packaged crap channels, the cable companies will do everything in their power to protect that revenue stream. That means “don’t hold your breath” for a-la-carte pricing…
I’m just about ready to pull my old Short Wave receiver out the closet
String a wire inside the apartment and go back to listing to foreign and nation wide broadcast!
Crap can TWC!
I would like to try the VIOS but the phone lines are only good for analog phone (56k)
Have not been replaced since the 40’s