New at Reason

Tim Cavanaugh | December 8, 2005

How will the FCC's new plan to increase consumer cable choice end up reducing consumer cable choice? Let me count the channels.

Comments

|12.8.05 @ 8:21PM|#

> public forum to get sweaty over all the "bestiality" and "necrophilia" available on broadcast television in prime time (naturally without specifying where the average viewer might be able to see this kind of action).

Well, Buffy had sex with Angel and Spike, who were dead. And Willow had sex with Oz, but never during a full moon.

|12.8.05 @ 8:36PM|#

À la carte. At first glance, it sounds ok, but then I remember that I really, REALLY, LOATHE the cable box and the remote that comes with Cox, the Cable provider here in Las Vegas. My family and I currently have about half of the 75 or so basic cable channels on our sequence, and it's nice to be able to go up and DOWN on the selected channels list with the press of a single button. Also, $100/month is just too much to pay for all those channels. What à la carte will do for us is convince me to stop paying for Cable TV, and rent the shows I want to see when they come out on DVD.

|12.8.05 @ 8:57PM|#

it's still costing me more than $500 per month to reproduce what I'm now getting for $65. Whether I watch those channels frequently, rarely, or not at all, this can not be described as anything other than a drastic reduction in consumer choice.

The people subsidizing your wide variety of channels just so they can get the five or ten they actually watch might disagree with you.

Though it is nice to see you share my distaste for EWTN, though possibly for different reasons.

Pooh|12.8.05 @ 10:05PM|#

Because those people subsidizing my viewing of celebrity poker have no choice but to A) subscribe to B) cable.

|12.8.05 @ 10:37PM|#

This is the least of our worries. Mandatory closed captioning kicks in on Jan. 1. Many local productions, like Masses and area business shows will fold, as CCing is so damned expensive.

|12.9.05 @ 12:22AM|#

Tim, what is the FCC doing exactly:

a) relaxing regulations that forbid a la carte pricing, or

b) mandating an end to channel packages?

I get the feeling it is a), and if so, I must strongly disagree with your prediction of the outcome.

Just to frame the debate, I am not a utilitarian - so I favor and end to any and all FCC regulations and to hell with the consequences :-), thus the utilitarian arguments of costs vs. benefits will not sway me as far as what I will support. My quibble therefore is an academic exercise.

Now, let us assume that for the sake of argument the FCC and local municipalities will continue giving patents of moopoly to a few companies to provide televised entertainment. So, consumers will be faced with a choice of

1) No TV,
2) The handful of commercial stations permitted by the FCC to by located physically near each other (if in sufficiently populated region)
3) One or two satelite TV providers
4) A cable company.
5) TV over internet. (not available yet, but possibly coming soon) (required broadband connectivity) (pending regulatory approval)
6) Renting/purchasing favourite programs on DVD.

So let us look at what happens if the regulations on pricing are relaxed, but other regulations kept in place.

Initially, a lot of unprofitable channels would be dumped. This is good, a good or service that costs more than those who want it are willing to pay is a malinvestment - the sooner such investments are liquidated, the sooner the resources they consume can be diverted to producing things that are more in demand.

Let us assume, however, that the carriers are ROI maximizing grinches, and they arbitrarily announce that any channel with an ROI of less than 40% gets canceled, and so we lose the Science and History channels ( :( ), the Lifetime channel ( :) ), and all we are left with are TV channels like SPIKE, ESPN, CNN etc with a bunch of pay per view channels.

This creates an unmet need. Now generally people have access to three choices for mega-multi-channel entertainment: two satellite providers and a cable company granted a monopoly by the state. In urban areas they have access to broadband access to the Internet.

Now, let us assume that all the cable companies and the satellite providers are in collusion. They agree that nothing with an ROI

Well, such cartels have a poor history of succeeding. The reason being that whomever under-prices the cartel, especially if they can get away with secret pricing will make a killing by inducing people to switch from making purchases from the obedient members of the cartel.

Of course, in this case secret pricing is not possible, but there is another condition that is very advantageous to te cartel-breaker. People do not switch away from a provider unless there is a significant advantage to switching either because the new service is so much superior, or because their current service is absolutely unsatisfactory. Unless you are really bad in relation to the next guy, once you hook a customer, the custoemr tends to stay.

So, all it takes is for one carrier to announce that they will carry the profitable channels eschewed by the others, and they will be able to make significant inroads on the customer base of the other carriers. These people once shifted will be loath to shift back. Thus the first carrier to start enhancing their highly profitable core line-up with the option to subscribe to less but still profitable channels will immediately gain a long-term dependable revenue stream.

Now granted, some of the more obscure channels will be pricier, and the low-brow fare cheaper, so the high-brow customer might be worse off. But, thevast majority of people will be better off since they will be getting the entertainment that they desire at a lower price.

Now, it is possible that some unprofitable channels carry profitable shows. Perhaps the Fishing Channel has 9 unprofitable shows, and one show that is somewhat popular because of the antics of the host. In that case, the show can either convince another channel to carry it, or it can go into internet only mode, wherein subscribers can download it off the web.

Now, none of these arguments require any relaxing of other anti-competitive regulations. If we stopped permitting municipalities to impose monopolies, ended FCC licensing requirements, and treated contiguous regions of communications space (spatial locations coupled with frequency as a fourth dimension) as property rather than a common administered by the state, we would dramatically reduce the barriers to entry for those wishing to provide entertainment services to people in their homes. This would translate into better service at lower prices.

|12.9.05 @ 12:47AM|#

From Tim Cavanaugh's article:

Meanwhile, let the FCC get back to policing its shrinking area of communications media, and let Kevin Martin use the free time to get some sunshine and drink something that will put hair on his chest and whiskers on his disturbingly boyish chin.

It's Harry Potter!

|12.9.05 @ 1:24AM|#

Nip/Tuck had necrophilia on their Halloween episode this year. The bestiality, I still don't know.

|12.9.05 @ 1:59AM|#

Where I live, I already have several satellite & phone company options, in addition to cable. Aren't the satellite companies going to offer basically what most people want, which is presumably what they do now, at about the same price as they do now, regardless of what the cable companies are directed to do?
I don't see the big deal.

|12.9.05 @ 2:14AM|#

Would it be possible for a cable company to offer both an � la carte option and a package option (or whatever is currently offered)? Then (hopefully) the fundies can get rid of all the channels they don't want. Cable company could offer that at a higher price (justifiably because of the higher cost associated). Package option could remain for those of us who are too lazy to pick, or like having channels that are rarely watched.

Larry A|12.9.05 @ 3:11AM|#

Then (hopefully) the fundies can get rid of all the channels they don't want.

The fundies aren't out to get the channels off their TVs. They want to get them off yours.

If we stopped permitting municipalities to impose monopolies, ended FCC licensing requirements, and treated contiguous regions of communications space (spatial locations coupled with frequency as a fourth dimension) as property rather than a common administered by the state, we would dramatically reduce the barriers to entry for those wishing to provide entertainment services to people in their homes. This would translate into better service at lower prices.

Absolutely true. And absolutely not what the FCC is considering. The resulting changes will be more regulatory than the old ones. There is nothing in the testimony about offering consumers more choices. It's about "protecting" consumers from what the censors disapprove of.

grylliade|12.9.05 @ 4:15AM|#

Aren't the satellite companies going to offer basically what most people want, which is presumably what they do now, at about the same price as they do now, regardless of what the cable companies are directed to do?

Well, for maybe a year or two, until the cable companies start complaining about how unfair it is that they're burdened with these regulations and the satellite companies aren't. Instead of doing the sane thing and deregulating the cable companies, the satellite companies will get regulated, then webcasts, and then we'll have a perfect society because no one will ever have to see a naked boob (because everyone will have sex with the lights off once we aren't exposed to sex on TV anymore). That's my theory, and I'm sticking by it.

|12.9.05 @ 6:04AM|#

"From Tim Cavanaugh's article:

Meanwhile, let the FCC get back to policing its shrinking area of communications media, and let Kevin Martin use the free time to get some sunshine and drink something that will put hair on his chest and whiskers on his disturbingly boyish chin.

It's Harry Potter! "

Noo, we all know that Harry Potter is the Prime Minister of The Netherlands, Balkenende.
http://www.cda.nl/domains/cda/content/downloads/beeldbank/minstaat/balkenende.jpeg
Or:
http://www.tiscali.nl/images/7/6/harry_balkenende1.jpg
(the caption is "seek the differences")

|12.9.05 @ 6:21AM|#

Is there anything on TV that is actually worth having this conversation about?
(no):)

|12.9.05 @ 8:48AM|#

"In other words, the FCC proposes to get us back to a package that will deliver exactly four channels more than I used to get on a rabbit-ears TV when Gerald Ford was president."

No, they're not. They're proposing that you can put together whatever package you want.

"Whether I watch those channels frequently, rarely, or not at all, this can not be described as anything other than a drastic reduction in consumer choice." Because, of course, the choice not to get a channel isn't really a choice. Or something.

When looking at how a different package of products will effect the market, the most useful thing to do is to assume that each individual item's price will stay exactly the same. There you go.

I'm going to go out on a limb here, and ask if Cox and AT & T have dropped any twenties into the Reason bucket lately?

|12.9.05 @ 9:05AM|#

Because, of course, the choice not to get a channel isn't really a choice. Or something.

You can block any channel you want to. Or is the actual signal itself offensive?

But seriously, I like my TV. And while there may be a few channels that I visit more than others, there's not a single one that I haven't watched at one time or another.

It would make more sense to me to keep cable packages as they are and be able to remove unwanted channels from your bill. But something tells me that it won't be a $4 reduction.

I understand the theory that says some people could have the current packages, and some could go a la carte, but if people really wanted a la carte pricing wouldn't we have it already?

And as for other people "subsidizing" my TV...well, isn't cable a right yet in America? Fuck health care, Free TV for All!

|12.9.05 @ 9:14AM|#

Stretch,

Some people don't want to receive certain channels, because they don't want their kids to watch them. But hey, having your kid, who sets the timer on your VCR, also set up your channel blocker will work just fine.

You know what? Forget that last part - some people don't want certain channels, and it's none of your god damn business why they don't want them. Who are you to say they have to receive them?

Because you want a billion channels, we all get to pay for, and recieve, a product we don't want? Buy a billion channels. I'd rather not subsidize your Spike habit, thanks.

|12.9.05 @ 9:16AM|#

I shouldn't have to go through the effort of blocking a channel I don't want, because you are determined to make sure everyone gets that channel in their package.

Are there any other products you'd like to have delivered to people that don't want them, so that people who do want them can take advantage of economy of scale?

|12.9.05 @ 9:19AM|#

It seems likely that the decency folks are paving the way for a new sin tax on "mature" entertainment, like the porn tax proposed in Italy. Only you can bet that "mature" will have a very inclusive definition.

|12.9.05 @ 9:19AM|#

But does anyone disagree with Tim's suggestion that the plan to "unbundle indecency" is really a plan to free lobbying groups to set their sights on individual channels? I don't have a huge problem with an a la carte option as an alternative to bundling, but it seems pretty obvious that this will just allow the censors to pick on, say, FX for its violent content while leaving the History Channel alone. Now maybe some think that's a good thing, because it will bring matters to a head. I'm not so sure that would work out the way I'd like.

Anon

MP|12.9.05 @ 9:24AM|#

I shouldn't have to go through the effort of blocking a channel I don't want, because you are determined to make sure everyone gets that channel in their package.

That is not justification for a government regulatory scheme. I'm not advocating that cable companies should provide bundled packages, I'm arguing that there is no justification for forcing them to do otherwise. Your or my personal preferences are not justifications for FCC actions.

|12.9.05 @ 9:26AM|#

anon,

Actually, the case for censoring a channel becomes much, much weaker once nobody is required to receive it as a condition of having cable.

Warren|12.9.05 @ 9:28AM|#

PBS
CSPAN II
CSPAN
TLC
FOOD
A&E
DISCOVERY
COMEDY
HISTORY
CNN
CNBC
TNT
F/X
VH1
MTV

That accounts for 99.5% of my viewing. Take away the last five and I'm still at 90% I'd hate to lose that 10%. I'd even miss the 0.5% And I do worry that some of my top ten won't even be available. I don't know if I'd be better off a-la-carte, but what I do know is that competition is better. I just moved to the wee city of Evansville IN where there are two cable companies, and while I'm paying the same in rent, I'm paying half what I was for cable.

|12.9.05 @ 9:29AM|#

MP,

Maybe, but that's a whole 'nother kettle of fish.

Right now, cable exists as a regulated monopoly, like a utility. Maybe it will be liberated someday. Maybe not. Until that day, we have to make decisions based on real world conditions.

|12.9.05 @ 9:31AM|#

Imagine if McDonald's only offered Supesize Value Meals. Then they announce that they're going to sell items a la carte. Nick Gillespie's argument is, "Oh no, I'm going to pay more for my burger, fries, and coke!"

Somebody tell me why I should give a crap? I just want some fries!

|12.9.05 @ 9:40AM|#

I just got the latest issue of Reason in my mailbox. Half of the articles were pretty good; the other half totally sucked. Why was I forced to pay for an entire magazine's worth of articles when I only wanted to read half of them? If the editors of Reason do not voluntarily give their subscribers more choice then I shall have to complain to the government. Because as an American, I have the right to purchase various forms of media in the exact way I want to.

|12.9.05 @ 9:41AM|#

Or is it simply that, hey, a burger-coke-fries combo is better than just fries, and I can always choose not to eat the burger, so it's really not bad for me to pay for a receive a burger I don't like?

But hey, people who make that argument REALLY just want to ban cheeseburgers, so pay no attention to that actual merits.

|12.9.05 @ 9:42AM|#

I've wanted a la carte pricing for years now. But now that the FCC wants to use force to make it happen I'm extremely wary.

I will say this, though: anyone who simplistically believes that all additional channels will cost 4 - 5 bucks is dreaming. One of the great things about (market driven) a la carte pricing is that there would be price differentiation among channels. So all you folks who want to add the "Bannana Torture Channel" and the "Lincoln in Rewind Channel" should be able to do so for significantly less than those who want to add ESPN and FOX News (shudder).

So don't give me any of this "my package would cost $500" crap. No sentient being would pay that amount for 900 channels about basket weaving in Lapland. If cable channels could profitably charge that amount under a la carte, why wouldn't they do so under channel bundling?

|12.9.05 @ 9:42AM|#

"Nip/Tuck had necrophilia on their Halloween episode this year."

Detail: Nip/Tuck runs on FX, which is a cable network, and thus is not "broadcast television," i.e., a free, over-the-air program.

|12.9.05 @ 9:44AM|#

Jennifer,

1) The individual articles in a magazine aren't the right analogy here. A number of different magazines is the right analogy - as if you were required to subscribe to Time, the Nation, and Juggs to get Reason.

2) Cable television operates as a regulated monopoly, not in a free market. Since there are no actual market forces to discipline their behavior in conformance with their customers' wishes, it falls to the government to do so.

|12.9.05 @ 9:45AM|#

. So all you folks who want to add the "Bannana Torture Channel" and the "Lincoln in Rewind Channel" should be able to do so for significantly less than those who want to add ESPN and FOX News (shudder).


Actually, ESPN and Fox will probably cost a lot less than obscure channels, for the same reason that 60-watt bulbs are cheaper than 25-watters: there's less demand for the latter, so the sellers have to charge more per unit since they sell less in terms of volume.

And then we can demand an FCC investigation into why channels Person A likes are so much more expensive than the channels Person B does NOT like!

|12.9.05 @ 9:47AM|#

The individual articles in a magazine aren't the right analogy here.

But McDonald's is?

Cable television operates as a regulated monopoly, not in a free market. Since there are no actual market forces to discipline their behavior in conformance with their customers' wishes, it falls to the government to do so.

No, it falls to the government to get the fuck out of the Regulating Luxury Media business altogether, so that there WILL be a market.

|12.9.05 @ 9:50AM|#

Buy a billion channels. I'd rather not subsidize your Spike habit, thanks.

Then don't. Joe, there are many channels I would like to have, but I can't afford them. No one forces you to pay for cable.

I shouldn't have to go through the effort of blocking a channel I don't want, because you are determined to make sure everyone gets that channel in their package.

I'm not determined to do any such thing. If cable companies want to offer a la carte pricing, they're welcome to it. I just don't think that the government should mandate it.

The big problem is that major programming outlets such as Viacom sell stuff in packages. Comcast or whoever buys these packages and sells them to the viewer. In order for a la carte pricing to become a reality, the government must prevent either the content provider or the cable company from selling their stuff they way they want to. And that just doesn't sit well with me.

|12.9.05 @ 9:52AM|#

I shouldn't have to go through the effort of blocking a channel I don't want, because you are determined to make sure everyone gets that channel in their package.



So the purpose of government is to save you from having to make an effort to change the TV channel?

|12.9.05 @ 9:53AM|#

Jennifer,

The McDonald's example was only meant to address the pricing/options argument, not the freedom/rights argument.

"No, it falls to the government to get the fuck out of the Regulating Luxury Media business altogether, so that there WILL be a market." Yeah, and I want a pony. A magical, sparkling pony that shits Hershey's kisses. But I'm still going to clean the cat box until I get one, know what I mean?

|12.9.05 @ 9:56AM|#

"Actually, ESPN and Fox will probably cost a lot less than obscure channels, for the same reason that 60-watt bulbs are cheaper than 25-watters: there's less demand for the latter, so the sellers have to charge more per unit since they sell less in terms of volume."

I guess that explains why the foreign country channels are so damn pricey?

|12.9.05 @ 9:57AM|#

I wonder what the subscription overlap between Juggs and Reason actually is.

Ruthless?

|12.9.05 @ 9:57AM|#

"No, it falls to the government to get the fuck out of the Regulating Luxury Media business altogether, so that there WILL be a market." Yeah, and I want a pony. A magical, sparkling pony that shits Hershey's kisses. But I'm still going to clean the cat box until I get one, know what I mean?

What's so different between your magical pony of mandated a la carte pricing, and my magical pony of an unregulated cable business? Oh, that's right, the difference is that the government is the one riding on your pony.

|12.9.05 @ 9:58AM|#

Joe, say I own a cable channel that does nothing but play old movies. Then I start up a second channel that does original programming, but of course this stuff is all new and many people will be reluctant to spend money on untried new stuff, so I include my original-programming channel as a package deal with my old-movie channel. Let's also assume you hate my original programming, but it's coming to your cable box nonetheless.

Please explain to me why what I am doing is such an egregious violation of human rights that the government needs to get involved.

Warren|12.9.05 @ 9:58AM|#

Jennifer,
You may notice that whenever someone argues the market should be allowed to function and joe points out that it isn't being allowed to now, he always thinks that the answer is more regulation. That somehow the corrupt evil government that is currently doing the bidding of the big bad corporations will become the champion of the people providing all manner of wonderful things to the less fortunate, if only we gave it more power.

|12.9.05 @ 10:00AM|#

Stretch,

"No one forces you to pay for cable." "If cable companies want to offer a la carte pricing, they're welcome to it. I just don't think that the government should mandate it." The government/corporate monopoly forces me to buy the package they decide on when I subscribe to cable. The normal function of a market precludes a provider from basing their sales practices entirely on what they "want" to do, but cable doesn't act like a market. As such, neither your preference, nor mine, nor that of the people selling the service, is worthy of claiming the high ground here on freedom and choice.

It seems to me that this doesn't sit well with you, emotionally, because your reaction is predicated on viewing suppliers as the good guys, with government as their opponents. But that's not what's happening here. I'm afraid you're actually going to have to consider the question on its - shudder - merits, rather than giving the provider the benefit of the doubt, as you are used to doing (with no little justification) when the provider's decisions are made as a result of market pressures.

|12.9.05 @ 10:03AM|#

Joe, if this goes through and it turns out that a la carte pricing is MORE expensive than the current system (at least for those who want channels other than Fox, ESPN and HSC), will you accept that this is just how things work, or will you demand still MORE government regulation to undo the bad effects of the government regulation that was supposed to undo the bad effects of the PREVIOUS government regulation?

|12.9.05 @ 10:07AM|#

Jennifer, the government is involved. If we were talking about a wild and woolly free market of customer choice, and the government was stepping in to forbid packaging, I'd be arguing your side. But we're not.

Stretch, the difference is that revising the agreement between the govenrment and cable providers to require an a la carte option is realistic in the short term, while an unregulated cable system that functions like a market is either a long way off, or impossible. I know incorporating practical considerations like that is not libertarians' strong point, but if you're going to make statements about policy, rather than philosophy, you have to take the fallen world into account.

Warren, you may notice that you can't hold your own in a reality-based discussion, and fall back on mind-reading and ideological skylarking in most arguments.

|12.9.05 @ 10:07AM|#

It seems to me that this doesn't sit well with you, emotionally, because your reaction is predicated on viewing suppliers as the good guys, with government as their opponents.

I have no such delusions that cable suppliers are "good guys" at all. I have plenty of beefs with them. As such, I can choose to put up with their bullshit in return for their service, or not. I'm not giving the provider the benefit of the doubt. I'm saying that they can choose what to sell and I can choose what to buy.

|12.9.05 @ 10:08AM|#

"Actually, ESPN and Fox will probably cost a lot less than obscure channels, for the same reason that 60-watt bulbs are cheaper than 25-watters: there's less demand for the latter, so the sellers have to charge more per unit since they sell less in terms of volume."

Jennifer: I'm with you that the answer is deregulation, not more gov't interference. Having said that, your reasoning above is flawed. Ceteris paribus, lower demand always means lower prices. If outlier cable channels have some sort of differing price structure that restricts their supply more than mainstream channels, then maybe they will end up having higher prices. But there is no given revenue that any business must make such that if they can't sell as much they will automatically charge a higher price to regain that revenue level. Econ 101 anybody?

|12.9.05 @ 10:10AM|#

Jennifer, if people end up paying more and having fewer choices with an a la carte options, I will need to reevaluate my beliefs, just as I would if the Iraqi political system resembles Minnesota's in six months.

|12.9.05 @ 10:11AM|#

Stretch, the difference is that revising the agreement between the govenrment and cable providers to require an a la carte option is realistic in the short term, while an unregulated cable system that functions like a market is either a long way off, or impossible.

You're right, Joe, increasing regulation is certainly more realistic.

|12.9.05 @ 10:12AM|#

Jennifer, the government is involved. If we were talking about a wild and woolly free market of customer choice, and the government was stepping in to forbid packaging, I'd be arguing your side. But we're not.

Nice way to avoid answering my questions.

Having said that, your reasoning above is flawed. Ceteris paribus, lower demand always means lower prices

Not always. The 25-watt-bulb example was taken from some economics article I read (and if you don't believe that25-watt bulbs cost more than 60-watters go check your local store); there are also things like, say, those obscure journals and magazines that charge dozens, or even hundreds, of dollars an issue because they have so few subscribers, just a few university libraries and such.

|12.9.05 @ 10:13AM|#

I'm sorry, but why exactly is the federal government involved in this? It's really a content issue, and neither the FCC nor the Congress have the power to regulate content decisions for a nonbroadcast provider. If they try, even a conservative Supreme Court will slap them silly. They might even overturn Pacifica if they get feisty (speech issues are one area where conservatives can come to surprising conclusions, even where "decency" is concerned--remember the CDA?).

The cable industry should stand firm on this issue, though if it wants to gouge us some more by going ala carte (I agree with Tim on the pricing issue), it certainly may. The local cable monopolies will be gone, sooner or later, so this debate really isn't worth the effort. We already are seeing the move to more on-demand options (both legal and illegal, I might add), and new service alternatives like streaming video, satellite (not "new", of course), television via the phone company, whatever are all in play.

joe, you really want ala carte, don't you? That was a pretty rough remark about the Reason Foundation getting cable money. I thought Tim's points were valid enough. Do we need media finance laws, now? :)

Warren|12.9.05 @ 10:13AM|#

joe,
I am rather fond of ideological skylarking. However I plead innocent to the charge of mind-reading, an activity I scrumptiously avoid. Further more your repeated contention that your position is �reality based� (as opposed to those you are addressing) does not make it so.

|12.9.05 @ 10:16AM|#

Actually, cable companies already offer more than one package. There are usually at least 3 levels of service with progressively more channels. Not to mention channels like HBO that you have to subscribe to.

The question is why they don't offer even more options. I dunno. I assume they're trying to balance the expense of more complex operations with the greater number of customers (and revenue) that they can get by offering a variety of options. That they struck a balance that some consider sub-optimal doesn't mean they aren't offering choices.

I'm all for more choice, mind you. Ending their local monopoly status seems a good start.

Finally, an entertainment analogy: My wife and I went on a cruise for our honeymoon. Many of the amenities on the ship were included in the price, but some amenities cost extra. Thing is, we didn't use a lot of the free amenities. Why shouldn't the cruise ship offer everything a la carte?

You can say that this is different, but cable TV and cruises are both entertainment items.

|12.9.05 @ 10:26AM|#

"Having said that, your reasoning above is flawed. Ceteris paribus, lower demand always means lower prices."

Yes, except it's not ceteris paribus, as a TV channel has fixed costs that must be continually met. As viewership falls, at some point the price can no longer be lowered to attract more viewers without dropping below the fixed costs. For example, if it costs $500,000 to run a channel each month, then if you have 1 million viewers you could charge 50 cents a month and cover costs. If your viewership falls to 500,000, then you'll have to charge $1 a month; if it falls to 10,000, you'll have to charge $50 a month. Now you can try keeping the price low in hopes that you'll attract new viewers, but obviously, unless that actually works, you can only do that for so long before running out of cash. The problem for a lot of marginal cable channels is that there are only a few tens of thousands of people in the entire country who would actually be willing to pay to specifically watch them, and many of those viewers probably would be unwilling to pay more than a few dollars. Thus, they're only economically viable if they are bundled with channels that attract millions of viewers.

|12.9.05 @ 10:33AM|#

This is the least of our worries. Mandatory closed captioning kicks in on Jan. 1. Many local productions, like Masses and area business shows will fold, as CCing is so damned expensive.

Interesting point, Jeff. I find that whenever blanket requirements like that are passed, they're done in such a way that's impossible, or at least cost-prohibitive, for small companies to comply.

|12.9.05 @ 10:35AM|#

"In other words, the FCC proposes to get us back to a package that will deliver exactly four channels more than I used to get on a rabbit-ears TV when Gerald Ford was president. Only now you have to pay for it. Of course, you can supplement that package with individually purchased channels. You may have a cable package more humble than my own expanded-basic deal, but if we take the lowest end of the FCC's per-channel estimate, it's still costing me more than $500 per month to reproduce what I'm now getting for $65. Whether I watch those channels frequently, rarely, or not at all, this can not be described as anything other than a drastic reduction in consumer choice."

It's fun to see Tim twist this issue with careful wording. Wheeee!

First, let me say that I'm in favor of a-la-carte pricing options. Have been for quite awhile. I like the idea, but I don't know how viable it will be. I certainly don't support any government regulation in this arena, though...especially this blackmailing shit they're doing now.

That having been said, Tim's paragraph quoted above could also be read as: Right now, each channel is relatively cheap. Using Tim's example of 147 usable channels for $65, that comes out to about $0.44/channel. However, what Tim really fails to address is this: the reason that these channels are so inexpensive is because it's set up like an insurance pool. When you force everyone to pay for everything, that means a whole lotta people pay for what they don't use, while others use what they don't pay for. You have freeloaders, and those who the freeloaders take advantage of. Just like the government's taxation scheme.

The true market value for these channels is not realized in this scheme. Tim uses the FCC's per-channel estimate, but all this means is that there are certain channels who are not viable. More choice may certainly result in less choices, but only those who were freeloading in the first place will be out of luck. Meanwhile, the people who only watch 15 channels but pay for 150 may be better off. The only thing a viable a la carte system would provide is a closer approximation of the true worth of each channel. I don't buy the government's scheme, but I also don't buy Tim's assertion a la carte is necessarily bad.


On the other hand, the point can be even better understood when you apply this example to other mediums. For instance, what if lawnmower manufacturers were forced to offer a la carte lawnmowers? Every feature in their lineup was required to be added or subtracted during the purchase. Or, what about cars? What if we forced them to offer every feature available, or instead, offer a stripped-down version, sans radio and heat? It's not viable in every instance.

The problem with Tim's article is that he supposes that a la carte is necessarily unviable, but this is not so.

Yes, a good like cable is different from cars, because there is a limited delivery infrastructure, resulting in a natural (or, unnatural) market cap on innovation and competition.

In that vien, anyone know if there is any sort of regulation on the satellite industry? Why do we only have Dish & DirecTV? Seems like, if satellite is an expandable market, then, sooner or later, a company will decide to tap that market for a la carte pricing. This is how it should be done, though, not via puritanistic government blackmail.

|12.9.05 @ 10:44AM|#

Can't the cable and satellite companies solve this by offering more programming package options? A package for uptight bluenoses, a package for people who claim to hate TV, a package for mass culture gluttons etc...

This is probably what will happen if a la carte goes through. You'll be able to build your subscription channel by channel or choose from one of the pre-configured packages the cable or satellite company has put together. Most will opt for the package option, because most are lazy.

|12.9.05 @ 10:55AM|#

Pro L,

The government is involved because a few decades ago, cable television was set up as a regulated market (like air travel) to allow it to get off the ground. The system established was as a regulated monopoly. As part of the deal, the government was authorized to regulate the operations of the cable distributors for the common good. Neither side of the discussion is the free market side - either the regulated monopoly contracts to provide packages A, B, and C, or they contract to provide packages A, B, C, and D.

Also, I don't know if I'd sign up for a la carte dealie or not. I just abhor the stink of rotten, dishonest arguments.

thoreau, there are competing cruise ships; therefore, cruises have to act according to a market. If a la carte cruise pricing was desired by a portion of the public, somebody would be able to come along and offer it, or everybody would start offering as one of their options.

|12.9.05 @ 11:10AM|#

joe, I'm no telecommunications expert, but I do recall that the FCC has no content authority over cable. Of course, we can always quibble over what the meaning of "content" is.

|12.9.05 @ 11:15AM|#

The rub I have with a la carte is that I pay for satellite so I can have a lot more channels than what I can get for free. I have never really looked at it as paying for channels I don't watch. I see it as paying for more channels I can watch. If the a la carte pricing structure makes the more niche and obscure channels un-viable, then I'm going to lose a big part of why I pay for TV in the first place - variety.

I understand the argument that you shouldn't have to pay for what you don't use. The problem I have with it in this case is that you chose to pay for the service in the first place. The fact there are channels on it you don't watch isn't my problem. You knew the pricing structure when you signed up. Pay TV is not a right. That's why they call it pay TV. You don't have to have it. If you don�t like the way it�s set up watch broadcast and go buy DVDs. Don't ruin what I enjoy about pay TV because your pissed you have to get Spike to get A&E.

|12.9.05 @ 11:30AM|#

Warren,

I'm fond of ideological skylarking, too. But it can only take you so far when you're dealing with messy policy options on the ground.

ralphus, somebody else might like a their own a la carte package, and not having to worry about the kids watching Nip/Tuck, just as much as you like your package. Why should we give your preference the, er, preference? If package pricing had become universal because of market forces, you would have a very strong comeback. But it didn't - the cable companies have been able to foist it on the public for the specific reason that they DON'T have to operate under market conditions.

The only arguments in favor of packaging are 1) corporations should be able to do whatever they want, even when they operate as government-granted monopolies, 2) only receiving channels is a legitimate preference, not receiving channels is not, and 3) if we assume a huge change in how cable services are priced won't change the prices of channels, than it would be more expensive to have a la carte. None of these are terribly convincing.

James Anderson Merritt|12.9.05 @ 11:36AM|#

Of course, the future of video is not ala carte cable, but video on demand, whether delivered through a special cable "service," or over the usual internet, using cable as broadband pipe.

You can see evidence of this evolutionary direction everywhere you look: companies such as Comcast are heavily promoting their own "On Demand" offerings; broadcast and premium channel websites now offer a growing number of video clips that range from show promos to full-blown episodes; ABC, NBC, and others are providing episodes of prime-time shows via iPod; there is even a website (www.internacia.tv) where you can get continuous streaming video of programming in the ESPERANTO language, for cripes sake. I mention this last example to point out that the overhead costs for global distribution of video programming over the internet are so low that even the niche market of esperantists (estimated 3M speakers worldwide) can get their own, global "TV Channel" that bypasses the broadcast and cable distribution infrastructure entirely (except that some viewers coincidentally happen to use their cable line as an internet hookup). Other, larger special-interest populations would have an even easier time, getting the programming the want via the direct-video-over-internet model.

If direct video were still only an idea on the drawing boards, there might be reason to doubt its coming ascendancy over broadcasting and cable-as-we-know it. But it is a fact, and becoming more commonplce everyday.

Perhaps it is best to let government busy itself with broadcasting and cable, but jealously guard the freedom of the internet, while the audience votes with their feet. In the end, the government will have total control over the empty bag they are holding; wouldn't it be nice to see THAT, for a change?

|12.9.05 @ 12:02PM|#

"Yes, except it's not ceteris paribus, as a TV channel has fixed costs that must be continually met."

Correct, and if the market will not bear a price that meets those fixed costs, the channel will fold. (Also, the existence of fixed costs are not a violation of ceteris paribus. Highly successful channels also have fixed costs; probably higher than many of the obscure channels.)

"Not always. The 25-watt-bulb example was taken from some economics article I read."

I won't deny that 25-watt bulbs are more expensive than 60-watt bulbs, but I defy anyone to demonstrate that it's *due to* lower demand rather than *in spite* of it. It is always possible to increase price in the face of lower demand so long as supply is sufficiently restricted.

Businesses are profit maximizers: they are not looking to find the price that covers their costs, but to find the price that maximizes their profit. If 60-watt bulbs could be sold at a higher price that would not be offset by a drop in quantity sold (or that would not lead to Senate investigations), then bulb peddlers would sell it at that price.

My point was that (market driven) a la carte pricing would lead to price dispersion. I hold that most obscure channels would charge a lower price than their mainstream competitors. Some might be so costly to run that they either go out of business or manage to market themselves to a small niche that is willing to bear the high price. But it most certainly will not be the case that all the most popular channels are the absolute cheapest, while the channels that nearly no one wants to watch charge an arm and a leg.

Tim Cavanaugh|12.9.05 @ 12:03PM|#

ask if Cox and AT & T have dropped any twenties into the Reason bucket lately?

If so, they're not getting their money's worth. AT&T and Verizon have both said they're going to offer a la carte packages. I made that point twice in the article, and-contrary to your claim (and Evan's) that I'm dismissing a la carte pricing out of hand-made it clear that they should be free to do so, and see if they can offer a competitive package.

It's true I'm pessimistic about the current plan for a la carte pricing, both for the reasons I laid out in the article (and by the way, am I missing something: why is it wrong to use the FCC's estimates of per-channel costs in an article about an FCC proposal to offer per-channel pricing?) and because I can't remember the last time I ordered anything a la carte in a restaurant. Or no, actually I can. We went to a birthday party at a tapas restaurant earlier this year, and got stuck with an $80 bill for a meal for two that wouldn't have filled up a goldfish. There's a reason Americans have voted overwhelmingly for the prix fixe in most areas of their lives.

It's interesting to hear that entering a deal for service with my local cable company and paying my bill every month makes me a freeloader who's taking advantage of other subscribers. I guess the real predations of the market are the ones we don't even see.

|12.9.05 @ 12:05PM|#

Also, don't forget that there is already price dispersion among channels to the cable companies. Do you think that Cox pays Oxygen as much as it does ESPN? Under market driven a la carte pricing Cox would just reveal that price dispersion to us.

|12.9.05 @ 12:12PM|#

"and by the way, am I missing something: why is it wrong to use the FCC's estimates of per-channel costs in an article about an FCC proposal to offer per-channel pricing?"

Tim,

Nothing wrong with saying that's what the FCC says the per channel cost would be. It's just that you then seem to accept that as fact and run with it (maybe I'm wrong and should read the article again).

"There's a reason Americans have voted overwhelmingly for the prix fixe in most areas of their lives."

You have a point. And almost any good one purchases has some element of bundling. Even a cake is a bundle of flower, sugar, coloring, etc. But there are limits to the bundling that is likely to be efficient, and I'm pretty sure that gov't granted monopolies have lead to it in the Cable industry. Don't get me wrong: I don't want the FCC to force a la carte pricing any more than you do. I'm just more optomistic about that pricing structure than your article suggests you are.

Warren|12.9.05 @ 12:13PM|#

Joe,
I'm fond of ideological skylarking, too. But it can only take you so far when you're dealing with messy policy options on the ground.

And my point is, that we should always be trying to move the system from where it is, to something more closely resembling a free market. While you inevitably identify [correctly] the political difficulty in doing so, and [falsely] claim that the regulatory scheme must therefore be expanded and [astonishingly] believe that placing more power in the hands of bureaucrats will better serve society.

|12.9.05 @ 12:21PM|#

ralphus, somebody else might like a their own a la carte package, and not having to worry about the kids watching Nip/Tuck, just as much as you like your package.

Block FX. Or better yet, know what your kids are watching. You knew FX was on the list of channels you would be getting. If you don't like that don't get cable. There is plenty of entertainment you can buy, a la carte, at your local or online DVD retailer. Cable is not your only option for entertainment.

Why should we give your preference the, er, preference?

You're not. You're choosing to pay for the same service I did. So why should we give preference to your preference. If you don't like that service don't buy it.

If package pricing had become universal because of market forces, you would have a very strong comeback. But it didn't - the cable companies have been able to foist it on the public for the specific reason that they DON'T have to operate under market conditions.

To go back to your fast food analogy; you wouldn't eat at a restaurant that only offers supersized pricing. You would choose to go somewhere else or to make your burger at home. You might be forced to eat there if it were the only place to get food in town, but it wouldn't be. Just like cable isn't your only choice. To say that Cable and Satellite don't act under market conditions is not accurate. Cable isn't the only game in town for news and entertainment. Broadcast TV, satellite TV, radio, satellite radio, the Internet, DVDs all come to mind as alternatives. You don't have to consume your media via cable.

The only arguments in favor of packaging are 1) corporations should be able to do whatever they want, even when they operate as government-granted monopolies, 2) only receiving channels is a legitimate preference, not receiving channels is not, and 3) if we assume a huge change in how cable services are priced won't change the prices of channels, than it would be more expensive to have a la carte. None of these are terribly convincing.

1) The fact that Cable is a gov granted monopoly is a separate issue. If you don't like dealing with a monopoly don't get cable. Although I would argue that it isn't technically a monopoly since there are other options for news and entertainment. 2) Getting a bunch of channels is why most people pay for TV in the first place. You know what channels you are buying up front and you have the ability to block channels you don't like. That's the deal. Don't like it. Choose not to sign up. 3) I agree that it won't necessarily be more expensive, but that is not my argument. What it will do is decrease my options. If pay TV were strictly a la carte there would be fewer channels to choose from because fewer channels would be viable on their own.

Like I said in an above post. I think it would be wise for the pay TV providers to come up with different package options, but they dont have to. If you dont like their service as is dont get it. If enough people did that, cable and satellite would respond to the market and create packages of programming that appeal to them. Or maybe even offer a la cart. Right now they dont have to because the majority of subscribers are just fine with the current system.

|12.9.05 @ 12:22PM|#

Damn you all for making me agree with joe. ;-) As a govt-enforced monopoly, cable industry is free from the controlling activity of the free market, so govt regulation must try to emulate the market as best it can.

Satellite is not really a competitor with cable, either, considering the equipment which must be bought to subscribe. That would be like saying that your electric company should be free to charge whatever rates it wishes, because you always have the option of buying a generator.

And yes, I admit that those 10-channel watchers who subsidize Tim's universe of choice, do have the option of foregoing cable entirely. However, that situation is hardly better for consumer choice than one where consumers actually choose what they're willing to pay for.

In other words, the current setup is great for choice when you're channel-surfing, but not so good when you're deciding how much you want to pay for.

|12.9.05 @ 12:23PM|#

Uh, yeah, Tim, who ever heard a restaurant where you tell the person you want this burger and that sized coke, and have the option of paying for the fries or not?

Warren, I've stated no opinion about deregulating cable. I've simply decided to talk about a different question. One that is actually up for debate, with a decision that could go either way. Is that ok?

|12.9.05 @ 12:28PM|#

Don't give me shit about the lack of apostrophes in the word don't in my post. Cut and paste don't always work right.

|12.9.05 @ 12:36PM|#

In other words, the current setup is great for choice when you're channel-surfing, but not so good when you're deciding how much you want to pay for.

The choice is all or nothing. Not the greatest incarnation of choice I agree, but choice nonetheless. DVDs, the Internet, broadcast TV are all still out there. Cable is not the only game in town. Nor is it a basic human right.

|12.9.05 @ 12:38PM|#

Ralphus,
You get a free porn channel for post 69.

|12.9.05 @ 12:46PM|#

Sweet!

Now there is a whole new reason to be happy with my package.

|12.9.05 @ 12:53PM|#

ralphus,

I'm not saying cable is a human right, I'm responding to Tim's assertion that

[an a-la-carte system is] still costing me more than $500 per month to reproduce what I'm now getting for $65. Whether I watch those channels frequently, rarely, or not at all, this can not be described as anything other than a drastic reduction in consumer choice.

|12.9.05 @ 1:14PM|#

It's interesting to hear that entering a deal for service with my local cable company and paying my bill every month makes me a freeloader who's taking advantage of other subscribers.

Tim, it is not you but the cable company who takes advantage of the other subscribers. Your interests just happen to be aligned with the company's in this case. You want a lot of channels for a set price, and they want to charge a set price for a package composed mostly of channels few people watch.

But don't pretend that those who don't want all those extra channels, and would rather be paying, say, $40 a month for the ten channels they actually watch, aren't getting screwed on the deal.

Pooh|12.9.05 @ 1:23PM|#

I'm baffled that the proposed solution to a problem created by government regulation is...more regulation. Besides that, you are willfully ignoring the fact (ok, fine, the LIKELIHOOD) that the next step after not forcing you to receive-but-block FX is to force me not to receive it. Because if Vic Mackey is allowed to beat up suspects on TV, and people are watching, the terrorists win.

How about this for an idea, get together with all of your neighbors who are similarly too lazy to block FX and tell the cable operator that you want the option for a la carte pricing. If it makes sense for them to do so, they will, and if not they won't. Them's the breaks. Sorry if my pony diddled in your catbox.

|12.9.05 @ 1:47PM|#

Pooh,

The problem is not created by govt regulation, except in the sense that cable TV would never have come into being without govt regulation. How would cable companies have been able to put together a delivery system without using utility rights-of-way seized through eminent domain?

Considering there's only one delivery system available in any area, there is no way anything other than a monopoly is going to exist in that area. Given the options of a regulated or an unregulated monopoly, I prefer the former. Do I have to turn in my libertarian decoder ring?

|12.9.05 @ 1:50PM|#

When I found myself paying fifty bucks per month to watch less than ten hours per month, I chose to cancel the cable. I am only slighly more clueless about popular culture, but I have not given my money to the cable bastards in about ten years. I don't understand why so many people are pissed about shitty programming. Why don't they do what I did? I hate hearing an asshole complain that he is forced to receive channels he doesn't like. Where is my tiny fucking violin?

Pooh|12.9.05 @ 1:56PM|#

Crime, good points on why the regulation came about. (Note that I was not responding to you in my original post, others, more obtuse than you were the target.)

And your second graf has some traction with me as well. However, I still take issue with the "only one delivery system available in any area" bit as a factual matter, given the other entertainment options that have been detailed elsewhere. (Not to mention that you can just choose to not get more than broadcast if you don't think you are getting you money's worth...). In that aspect I think that their are at least market-like substances present.

Additionally, the fact that many of the proponents of enforcing a la carte pricing avowedly do so on grounds of 'enforcing decency', is both troubling and indicative to me that there would be a 'next step' after a la carte.

And what about getting your buddies together and demanding a la carte options?

|12.9.05 @ 2:20PM|#

Pooh,

Yes, it's not impossible to get a bunch of people together to convince the cable company to offer a la carte programs, and that would be a good way of working with the existing system.

However, what I took exception to was Tim's assertion that we're better off without a la carte options. Those of us who like having 147 channels available for a relatively low price are indeed better off, because many of those channels are subsidized by those who would otherwise not pay for them. But those of us who want to pay less for 10 channels are not.

|12.9.05 @ 2:21PM|#

> public forum to get sweaty over all the "bestiality" and "necrophilia" available on broadcast television in prime time (naturally without specifying where the average viewer might be able to see this kind of action).

Well there was that episode of "Boston Legal" where a wife was trying to have her marriage annulled because her husband liked to have sex with cows. Not explicit, but on broadcast tv.

|12.9.05 @ 2:32PM|#

ralphus,

"Block FX." Throw out "Midget Pain Sluts Magazine" when your package of magazines arrive. "Or better yet, know what your kids are watching." Or better yet, leave it in your house, and make sure your kids don't read it. "You knew FX was on the list of channels you would be getting. If you don't like that don't get cable." You knew "Midget Pain Sluts" was on the list of magazines you would be getting. If you don't like it, don't subscribe to magazines. "There is plenty of entertainment you can buy, a la carte, at your local or online DVD retailer. Cable is not your only option for entertainment." There is plenty of information available on TV and by talking to people at the mall. Magazines are not your only option for information. Do you really think this is a good system, or a good outcome?

"You're not. You're choosing to pay for the same service I did." Because it's the only service available - see, that's where the "preference" part comes in.

"The fact that Cable is a gov granted monopoly is a separate issue." No, it is an extremely relevant issue, that goes directly to the choice/freedom argument, and you ducked the issue, demonstrating how little your anti-regulation speil has to do with markets and their benefits.

"You know what channels you are buying up front and you have the ability to block channels you don't like. That's the deal. Don't like it. Choose not to sign up." You know USPIRG gets a fee out of your tuition when you go to college, and you have the ability to do a negative check off (much more easily than keeping track of 900 channels and blocking the, btw). That's the deal. Don't like it? Choose not to attend college.

"If you dont like their service as is dont get it. If enough people did that, cable and satellite would respond to the market and create packages of programming that appeal to them. Or maybe even offer a la cart. Right now they dont have to because the majority of subscribers are just fine with the current system." There is no direct competitor to cable TV. Rabbit ears don't even get decent reception anymore. Once again, you are simply assuming the presence of market forces that can discipline behavior, but they're not there.

|12.9.05 @ 2:33PM|#

Joe, you never did answer my question: if I own Channel A, and then come out with Channel B and package it to my Channel A subscribers, and you want Channel A but hate the fact that you also get Channel B when you buy it, HOW does this constitute such an egregious violation of your human rights that the government needs to get involved?

|12.9.05 @ 2:37PM|#

"Besides that, you are willfully ignoring the fact (ok, fine, the LIKELIHOOD) that the next step after not forcing you to receive-but-block FX is to force me not to receive it."

I have never seen anyone explain credibly why this is likely. I have explained many, many times why a la carte programming makes this much less likely, and no one has come up with a counterargument besides, "Oh, they'll do it all right!"

|12.9.05 @ 2:40PM|#

There is no direct competitor to cable TV.

Turn off the tube. Go outside and play.

|12.9.05 @ 2:41PM|#

Jennifer, the government is involved. That's not the question. Other topics I'm not answering questions about are cat food, putters, and the space program.

The argument on the table, the one that bears a passing relationship to something beyond this thread, and the one I'm interested in taking part in, revolves around what is the best policy for fufilling the government's obligations in the current regulatory environment. If you want to jump in the Wayback Machine and convince Congress not to enter into this setup with cable providers, be my guest.

|12.9.05 @ 2:43PM|#

Thanks, Twba. It's a good feeling for me when the threads enter the Change the Subject Phase.

|12.9.05 @ 2:51PM|#

Joe,

I think people are worried that once the fundies get control of cable, they will not be satisfied until they eradicate certain channels. Fundies are upset that their kids are forced to socialize at school with kids who watch offensive channels. How's that for tying together disparate threads?

|12.9.05 @ 2:51PM|#

Other topics I'm not answering questions about are cat food, putters, and the space program.


Nobody's here asking you about cat food, putters or the space program. I've asked you twice, though, how your rights are violated by having to skip over a channel you don't want.

The argument on the table, the one that bears a passing relationship to something beyond this thread, and the one I'm interested in taking part in, revolves around what is the best policy for fufilling the government's obligations in the current regulatory environment.

Which assumes that the government is not only obligated to make sure you don't get cable channels you don't want, but ALSO assumes that the government's V-chip mandates don't go far enough because. . . . why? You think you have a RIGHT to not have to spend a few seconds blocking a channel you don't want your kids to see? That's the government's job, not yours?

|12.9.05 @ 3:04PM|#

Satellite is not really a competitor with cable, either, considering the equipment which must be bought to subscribe.

Whether the cable box gets broken out separately on your bill or not, you pay for that, to. That's not a sensible distinction between the types of services.

|12.9.05 @ 3:09PM|#

How can I help you today mr. joe?

You'd like to sign up for our a la carte service? Are you sure you wouldn't be interested in one of our packages? We're offering some terrific promotional rates right now.

No, OK, well then, which channels would you like?

Some very good choices there, let me total you up:

Customer charge is $7, and you'll need a digital box, so that'll be an additional $7. The a la carte plan is $15. You added ESPN for $5, Oxygen for $1, TLC-Discovery-and-History edu-pak for $6, Comedy Central for $4, CNN for $1, MTV for $1, VH1 for $1, CSPAN for $1, and AllHailTheMightyStateTV for $1. Then there are state, county, and local taxes, franchise taxes, FCC tax, federal universal service, and federal-WTF-is-this-tax-for-tax, which are $4, $2, $2, $1, $3, $1, and $1, respectively.

That comes to $50 before taxes, $64 all together.

Sure beats the heck out of getting basic cable for $40, huh?

Thanks for calling, have a nice day.

|12.9.05 @ 3:12PM|#

federal-WTF-is-this-tax-for-tax

Heheh.

Larry A|12.9.05 @ 3:13PM|#

I won't deny that 25-watt bulbs are more expensive than 60-watt bulbs, but I defy anyone to demonstrate that it's *due to* lower demand rather than *in spite* of it.

There are two parts of the commerce equation, cost and value.

In this case cost is affected by economy of scale.

• The cost of materials for 25 watt and 60 watt light bulbs is roughly equal.
• However, the cost of mass manufacturing them is affected by how many are made. The more you manufacture the more efficiently you can use the mass resources. It may cost essentially the same to manufacture 50 light bulbs or 100 light bulbs. If you can only sell fifty 25 watt bulbs but you can sell a hundred 60 watt, then it costs half as much per bulb to make the 60 watt bulbs you can sell.
• Shipping and handling works the same way. If a store orders a case of five hundred 60 watt bulbs and a case of one hundred 25 watt bulbs the shipping cost may be virtually the same. But the shipping cost per 25 watt bulb is five times higher.
• At the sales level, it costs almost the same to sell a customer a package of two 25 watt bulbs or a package of six 60 watt bulbs.

This affects the cable example because it may cost the cable company about the same administrative/recordkeeping/billing fee to switch on one channel or a set of 100 channels for a customer. The cable overhead for twenty individual channels may easily be 20 times the overhead for a set of a hundred channels.

The other part of the equation is value. Value is not directly related to cost. Value is in the eye of the customer. I would guess the typical person who wants ESPN will be willing to pay more than the typical person who wants the easy listening Music Choice channel. I personally wouldn't pay a penny for either.

Each channel will have to find a balance where the fee times the number of subscribers will be greater than the costs of production and distribution. Those that can't will fold.

Therefore the channel selections will have different prices, further complicating the administrative situation. Particularly with government interference. For instance, do you think Congress would agree to any system that charges for C-SPAN? Or sets any but the most minimal charge for "children's" channels? So there will still be cross subsidies.

There is also the issue (previously unraised) of privacy. Given that the genesis of this movement is concern over "indecency" do you really want everyone to know you subscribe individually to FX, where they show Nip/Tuck? Is that "child abuse?" Could it be an issue in divorce/custody hearings?

They are already after your library/movie rental records.

Actually, the case for censoring a channel becomes much, much weaker once nobody is required to receive it as a condition of having cable.

The "case" for censorship is, "I don't like it and we need to eliminate it for the children." The fact that lots of people want the programming will be about as relevant as the fact that lots of people want to smoke.

|12.9.05 @ 3:29PM|#

YFLCO,

Do you think cable companies are not already charging subscribers those fees and taxes?

|12.9.05 @ 3:40PM|#

I wonder what government remedies Joe will insist upon when a la carte channels become the norm, and eventually, in red states, Fox News becomes the ONLY news channel available, because the cable companies in those states have so few subscribers for the other channels that they drop 'em from the lineup, citing a lack of profit.

|12.9.05 @ 3:57PM|#

Twba: "I think people are worried that once the fundies get control of cable, they will not be satisfied until they eradicate certain channels. Fundies are upset that their kids are forced to socialize at school with kids who watch offensive channels. How's that for tying together disparate threads?"

Not to mention that the fundies are also upset that cable programming content might be influencing (1) broadcast programming and (2) the culture at large. Taking these points one at a time:

(1) There is some truth to this. It's no secret that broadcast and cable networks make little or no distinctions between each other's media anymore; they regard each other as direct competitors, not to mention as sources for copycatting. (One oft-cited example is that Desperate Housewives debuted on ABC almost immediately after Sex and the City ended its run on HBO.)

(2) I strongly suspect that one thing the fundies fear at least as much as what they include in their talking points is a future in which indecency on subscription-based TV, unencumbered by broadcast-style restrictions, has not only infiltrated mainstream culture (which it already has) but becomes the mainstream's "rule" rather than its "exception." (In other words, a future in which some softcore porn series could end up becoming the next M*A*S*H, Seinfeld or E.R.)

|12.9.05 @ 3:59PM|#

Jennifer,

Well, for that to happen, you'd have to have the vast majority of people choosing to get all their news from Fox News. Which would mean the Dems would already have to be in pretty awful shape.

|12.9.05 @ 4:07PM|#

Seriously, Crimethink, is it that hard to imagine areas of the country where so few people would want to pay for news channels other than Fox that the cable company stops carrying them?

Of course, I only chose Fox as an example because I think it's the one Joe would find most distrubing. (As do I.) But it's interesting that nobody has brought up the very real possibility that a la carte programming--or rather, government-mandated a la carte programming--will in many areas result in consumers having LESS choice than they currently do.

So what government regulation will then be proposed, to offset the damage done by this current government regulation which was supposed to offset the damage of the last set of government regulations?

|12.9.05 @ 4:24PM|#

Joe,

Subscription services are not the only way to get magazines. I can go and purchase them a la carte at any number of locations. Just like I can purchase a DVD of any movie or TV show I want to see. I can also get news from any number of sources. I don't need a subscription service to get a magazine just like I don't need cable to get news and entertainment. Now if I do sign up for a service that brings Midget Pain Sluts Magazine into my home that would be my choice and it would be up to me to keep it out of my kids' hands, not Congress or the FCC.

The fact that Cable is a gov granted monopoly is a separate issue." No, it is an extremely relevant issue, that goes directly to the choice/freedom argument, and you ducked the issue, demonstrating how little your anti-regulation speil has to do with markets and their benefits.

I argue that cable it is not a technically a monopoly because I have a choice not to use it. If I want to watch TV or a Movie I don't have to watch cable programming. Cable and satellite may be the only pay TV services available, but you can choose not to have those services. Having 900 channels is not a necessity. It is a choice. There is no right to VH1 that I am aware of.

Obviously cable does respond to markets because millions of people pay for it everyday even though they don't really need it. So they must be offering a product people want or people wouldn't subscribe. If enough consumers truly want a la carte it would happen without the government's help because they would be canceling their subscriptions in droves. Cable would respond by giving them what they want. That's how a market works.

You know USPIRG gets a fee out of your tuition when you go to college, and you have the ability to do a negative check off (much more easily than keeping track of 900 channels and blocking the, btw). That's the deal. Don't like it? Choose not to attend college.

Thats retarded. If I wanted the benefits of going to College but didn't want to support USPIRG I would check the box and go to college. Not that difficult. Just like if I wanted the benefits of having multiple channels of news, sports and entertainment but objected to the content of some of those channels. I would get the cable, skip the channels I don't like or take 10 min to block the ones the kids shouldn't see. It's not that hard. Does your VCR still flash 12:00?

There is no direct competitor to cable TV. Rabbit ears don't even get decent reception anymore.

Not true. If satellite isn't a direct competitor, how come the cable companies always call me with offers to switch back to them? And like I said before, there are plenty of options for news, sports and entertainment. You don't have to have cable. Its nice and convenient, but that convenience comes at the price that you might see some things you may not like. TV antennae still work just fine by the way. Used one up at the deer lease not too long ago.

But its all really a moot point as James Anderson Merritt pointed out. On Demand technology is going to change the media consumption model completely. We'll have choices coming out of our yinyang in the next few years.

|12.9.05 @ 5:13PM|#

How can I help you today Mr. crimethink?

Well, yes, the government does require us to charge all those taxes. They're itemized out on everyone's bill regardless of which service plan they subscribe to.

Well, yes, I understand that it adds up to fair sum every month, but we feel that it's still inexpensive entertainment at just a few dollars per day.

And, yes, I see that your a la carte choices add up to more than some of our regular packages. That's why we feel that our packages offer excellent value - many more channels for the same money, no matter what you like to watch.

Your local officials said you could expect significant savings with mandatory a la carte? I'm sorry, but you shouldn't believe politicians when their mouths are moving. But really, sir, you shouldn't have expected a 90%, 60% or even 30% reduction in price for a 90% reduction in channels.

Well, no, sir, not all of our channels cost the same. They are priced according to demand and the entertainment they provide. The suits upstairs call it "value based pricing" or some such nonsense.

If you won't sign up for a package, I can't reduce your bill, but I give you one of our "The FCC forced a la carte pricing and my cable bill went UP" promotional T-shirts.

Thanks for calling, have a nice day.

Pooh|12.9.05 @ 6:16PM|#

Joe

I have never seen anyone explain credibly why this is likely. I have explained many, many times why a la carte programming makes this much less likely, and no one has come up with a counterargument besides, "Oh, they'll do it all right!"

Well the fact that a la carte pricing came up in the context of hearings on decency. Not sure how I managed to 2+2=4 that one.

The money quote of course: "You can always turn the television off and, of course, block the channels you don't want, but why should you have to?"

Sounds like somebody we know...

|12.9.05 @ 11:54PM|#

YFLCO,

Like my actual local cable operators tend to do, you failed to answer my question. ;-)

Which was, of course, how I could get basic cable for $40 a month, when the applicable taxes and fees alone amount to $42 a month? In other words, I suspect you're pulling numbers out of your fundament.