Government-imposed à la carte pricing would inflate cable bills, drive niche networks out of business and force set-tops into the homes of unwilling customers, Time Warner Cable chairman and CEO Glenn Britt said here last Wednesday.
Some consumer advocates and small cable companies have turned to Congress, advocating an à la carte pricing model as a means of addressing rising cable bills. Britt warned that such a plan would backfire, with consumers paying the same or more for a fewer number of channels.
'Neat ... and wrong'
"Journalist H.L. Mencken put it best a half century ago, when he said: 'There is always an easy solution to every human problem. Neat, plausible and wrong,' " Britt said in a speech to the Washington Metropolitan Cable Club.
Per-channel prices would rise, Britt said, because programmers would need to make up for lost subscriber and advertising revenue. New networks would fold because they couldn't establish an audience base. Consumers would rebel because à la carte options would require one or more set-tops, depending on the number of sets in the home.
"In order to turn all of these channels on and off, we would have to force set-tops in all these homes. That's not only a cost, but a lot of people just wouldn't want the set-top box," Britt said, noting that 50% of cable homes do not have set-tops.
À la carte pricing would also impose burdens on cable companies. Britt said he was in doubt about the business model for MSOs: Would they mark up each channel, or charge a broad access fee?
And there are back-office issues. "None of us have billing systems that can actually bill each channel individually," said Britt. "We have very inexpensive, simple billing systems that can bill from packages, so we would have to rewrite all that software."
Matt Polka, president of the small-operator American Cable Association and an à la carte advocate, said Britt's speech showed that industry giants were out of touch with consumers' wishes.
"Obviously, I disagree. Consumers know that they are paying for services they don't want to watch and shouldn't have to pay for," said Polka, whose group has fought The Walt Disney Co. for years in a losing effort to distribute ESPN, the most expensive basic network, as a stand-alone channel.
Sen. John McCain (R-Ariz.), chairman of the Commerce Committee, supports greater à la carte options, arguing that bundling programming into tiers forces consumers to pay for programming they don't want in order to receive their favorite channels. McCain's staff is reportedly drafting legislation on the issue. A spokeswoman said the senator is awaiting a requested Government Accounting Office report on cable pricing before deciding which remedies to pursue.
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