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December 23, 2005

Dumb Idea

Consumer "activists" are pressing Congress to mandate "a la carte" pricing for cable television.

Note to activists - stop "advocating" for me on this one, please. OK?

Don't get me wrong - bundling is irritating. I have to buy eight channels I don't want to get "Discovery", for example, and couple more for "Comedy Central".

Tom Readmond of the Media Freedom Project takes the Cable industry's side in today's Strib:

Imagine if the government were to mandate that newspaper publishers had to produce an entertainment-section-free version of the paper, as well as versions tailor-made for subscribers who don't want stocks, sports, and so on.

In the end, you might end up with a paper free of the "Source" section -- but you might also end up paying $6 for your daily paper.

Readmond goes on to note that bundling is the norm, not an exception, in marketing.

He misses the real problem, of course; local cable systems always operate as a government-chartered monopoly within an area. They place prices where they want to because, really, what else are you going to do?

As long as cable companies have an effective monopoly on bringing reliable, relatively inexpensive programming to your TV set, there's no real market-driven reason for them to change.

So what's the answer? Allowing telephone and internet companies to start using their pipelines for provide programming along with their regular services? That is, of course, the answer - which is why cable companies have been fighting that natural, market-based reform (which responds to a market need that cable companies themselves are creating).

Worst case: Government forces cable companies to provide a la carte pricing - but regulates alternate programming.

Next-worst case: Government forces cable companies to provide a la carte - but doesn't regulate internet and phone companies' efforts. This will eventually drive a huge shakeout in the cable industry, as cable companies, saddled with huge infrastructure, can't compete.

Best case: Leave it all alone. The programming you're getting on cable now will be available through a couple of alternate channels soon - which will, in turn, eventually force the cable companies to respond with the individual-channel pricing we all want anyway.

Settle down, "activists". On this issue, we're better off without you.

Posted by Mitch at December 23, 2005 08:28 AM | TrackBack
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