First off, read the link early in the story to his comments. Its more informative.
I wonder how he is going to address must carry channels that local governments impose upon the cable companies? I am all for choosing channels, but I wonder if this would permit currently premium channels to be chosen without excessive charges? As in, will they still permit bundle requirements to have HBO?
Considering it imposes similar rules on those companies selling channels to cable companies the host of groups who will line up to fight this will be impressive.
My favorite part is eliminating the black out rules on sports events for public funded stadiums.
Not that this bill is necessarily a bad thing, but Republicans know no end to their hypocrisy. They'll introduce all sorts of unnecessary micro-regulation to create a "free" market. This is the same guy who supported the bills deregulating the financial industry, which lead to the derivatives crisis.
I guess Senators suffer from the same problems as software engineers - they only see the problems in their living room.
Honestly, this seems like a pretty unambiguously good thing - don't assume it's bad just because you dislike the politician / party that's proposing it.
It's the "stopped clock" principle, we're wondering where the catch is, and what's going to come out and water this down into uselessness. I'll be happy and laud the originator if everything goes as proposed. They rarely do.
The "free" market doesn't exist without regulation against things like fraud, collusion, monopolies, etc.
This is exactly the sort of regulation Republicans should care about.
Not that this excuses Republicans from being hypocrites. But on this issue, there's no conflict with their core philosophy.
And frankly, even deregulating the financial industry was consistent with their philosophy. It was their support for socializing what should have been private losses that was the philosophical problem.
In my largish apartment complex, there is one cable provider: Cox. I can't use a sat dish, my apartment faces the wrong direction and I'm on the second floor. FIOS isn't available. CenturyLink agrees no "prism tv" whatever that is for me, and directtv is out because I am on the second floor and face the wrong direction.
So there's really no free market in cable providers for me, it's a monopoly situation.
The free market solution would be to require Cox to allow other cable providers to use their cable to get last mile to me and then let Cox, et. al., charge me however they wish.
I would be curious to know which situation Cox would prefer: mandatory unbundling, or force them to share the cable.
EDIT: I do wonder what keeps Verizon from offering FIOS if they wanted to. Is it too expensive to rewire a huge sprawling multi-floor apartment complex?
EDIT: I do wonder what keeps Verizon from offering FIOS if they wanted to. Is it too expensive to rewire a huge sprawling multi-floor apartment complex?
My understanding is that Verizon has dramatically slowed their FiOS rollout, primarily because they don't think they're likely to be able to sell you "premium services" long-term. Does anyone think that within 10 years there will be any content worth having not available over a 100Mbit (or gigabit, even) pure IP connection? How much can Verizon expect to charge for such a connection?
FiOS made sense when they thought they would be Skype, HBO, NetFlix and iTunes combined, or at least get a cut on all of those. But even if we don't get regulated Network Neutrality, competitive pressure alone will commoditize content and application delivery over IP.
What I don't understand is their pricing model. It seems like they would do a lot better to have A) a "cheap crappy" option which is something like 384K internet and basic cable for an extraordinarily low price, and B) a 100Mbps+ internet service at the same profit margin they would get by selling an entire "triple play" package and then optional over the top phone and cable packages effectively for Verizon's cost, the point of offering them at all merely being to be able to supply the same overall offering as their existing competitors.
The result would be that Verizon could stop giving a crap about whether you use their TV offerings or Hulu or whatever else because that's not where they make their money, but at the same time customers wanting the "triple play" package can get it from them for a total price competitive with similarly situated ISPs and with an overall profit margin they expect from such a thing. Just admit to themselves that they're in the wire business, stop trying to be in the content business, and charge accordingly for the wire. Suddenly "cord cutters" are not a problem, especially when the competing ISP realizes the logic and does the same thing.
You have described what I can only assume is Apple's sales pitch to the carriers: Do you want to be stuck charging $50/month to "cable cutters" or do you want to sell a sexy "Apple TV" with an associated $100+/month "smart TV" plan?
Basically. Except that there is no need for a "smart TV" plan, just charge that much for the wire itself. Apple TV isn't going to do Verizon any good other than build a dependence on Apple like what the recording industry did with iTunes. If people want an Apple TV they can buy one from Apple and hook it up to the wire. Or they can get a gaming console instead, or roll their own Linux box, Verizon shouldn't have to care. They're in the wire business.
But right now their "wire" costs $50 or so a month. Their users currently pay them $60 more for a standard lineup and $10 for HBO on top of that (rough numbers). What happens when those users can get all that content through the $50 connection and start cancelling their TV? A 100+% price hike would be a tough needle to thread.
The answer is to change what they're selling. You can currently get whatever it is, say a 16Mbps connection, for $50/month. Stop selling that entirely. Discontinue it; put the existing triple play customers on the new triple play (which so happens to have the same price, just with more allocated to the connection itself), stop offering that tier to existing internet-only customers as soon as their contracts expire. Your new alternative is a) a very slow connection (not fast enough for Netflix/Hulu/whatever) for $29/month, b) a 100Mbps+ connection for $99/month, or c) a "triple play" 100Mbps+ connection + basic cable + phone for $110/month, and whatever premium channels you want on top of that for exactly what the channel itself charges for its content. Or you can get phone from Skype and TV from Hulu and Verizon couldn't care less, because they're not in the content business, they're in the wire business -- they should want you to stop subscribing to their over the top offerings and switch to third party services, because that's not where the money is.
Compare the revenues or market cap of Skype or Hulu to that of Verizon FiOS, and then realize that both Skype and Hulu have more customers than FiOS, and ask yourself which business you'd rather be in. Infrastructure operators selling over the top services is just an invitation for them to interfere with competitors -- let the over the top market be competitive (and therefore have very small margins) and take the margins from the infrastructure where you can hold on to them. Look up "one monopoly rent" theory. If they're going to have a monopoly and collect monopoly rents, just let them do it in the monopoly market and not have to lose the benefits of competition in the over the top market merely in order to claim the same overall margins spread out over more products. It actually seems to be Pareto optimal -- who is going to lose out here? Maybe the cord cutters, but they're doing something which is unsustainable at scale unless what I'm proposing ends up happening. So where's the drawback?
I would love a la carte TV, but make no mistake: it will destroy the profitability of cable companies.
Bundling allows cable operators to segment the market: to sell the same product to different audiences at different prices depending on their willingness to pay.
A $100 package of bundled sports + movies can be sold to the person who is willing to pay $90 for sports and $10 for movies and also to the person who is willing to pay $10 for sports and $90 for movies.
But sports and movies are unbundled, they must be sold at the same price to everyone. Should they be priced at $10 each? $90? Somewhere in between? Pick any price and the cable companies lose money: the person who values it more will pay less for it than they would have, and the person who values it less won't buy it at all.
EDIT: I don't want to sound pro-cable; indeed, I am not; I am just pointing out the effects of this legislation. In some ways, bundling is a natural way to package content. MOG, Spotify, and other subscription music services bundle their content (you don't get to pick and choose what you subscribe to), and the big daddy of disruption, Netflix streaming, doesn't let you unbundle either. It's one flat fee for everything. In these cases, of course, it's easier to swallow because prices are so low to begin with. Perhaps it's not bundling that's the problem with cable, but the pricing.
Likewise, we have a general principal in US wherein companies should be free to develop profitable business practices.
Cable is sort of special since it's become part of our infrastructure, so it deserves some oversight, but does that extend so far as to dictate how programs are packaged?
I think a la carte is pretty tricky. I want it because I only want to watch AMC and HBO. It might not be so good for the consumer who wants 20 different networks.
Yeah, I don't see why subscribing to individual channels a la carte is necessarily more fair than bundling. Someone who watches 20 shows on 2 different channels should pay 1/10 than someone who watches 20 shows on 20 different channels?
It's like going to a pizza buffet that costs $8 for all-you-(care-to-)eat with a variety of toppings and saying, "I'm only want to eat pepperoni pizza, but you're still charging me the full $8, so I'm forced to pay for all of the other pizza I don't want."
It would change the business model for sure. Cable companies (and "phone companies" and ISPs and basically all data-to-the-household businesses) would become a commodity utility like electricity or water. Phrasing like "destroy the profitability" isn't really helpful here. My sewer service doesn't have the opportunity to engage in price discrimination, yet it still works.
The counter-argument would be something along the lines of "technology service cannot be commoditized -- it requires innovation and a return on investment!". To which I reply: cable companies.
"will destroy the profitability of cable companies"
I would phrase it as "it will eliminate the monopoly of the cable companies". Which is a good thing. Sick and tired of the limited options we have with cable companies and the "bundles" they provide. I don't want bundles. I want to watch what I want to watch.
That would be interesting. I have exactly one choice for cable TV and Internet where I live. The alternatives (DSL or satellite) are too bad to even be worth considering.
I'm surprised at the negative replies to this comment. We usually praise start ups for using bundling or other microeconmic techniques to increase revenue, but for US cable companies it's not ok (I'm not based in the US so have no idea how hated they are - seems quite a lot). If the cable companies are abusing their monopoly then they should be prosecuted for that, but it shouldn't need this new legislation to stop their monopoly.
"bundling or other microeconmic techniques to increase revenue" -- GOOD
"abusing their monopoly " -- BAD
No one is saying cable companies are evil. But having such strong monopoly is hampering innovation. Hence, we need to try and change how cable companies operate.
Why can't they be regulated using existing US antitrust law, rather than create a new legislation specific to TV networks?
As an outsider, the US seems to have a lot of innovation in TV anyway. HBO creates the best drama series', seen all over the world, and Netflix sounds amazing. In the UK we have the BBC as a monopoly but it's sadly/oddly often more innovative than other networks.
Generally, from what I have read/heard, the companies make deals amongst each other and with municipalities to be the sole provider for an area. If this is correct, then the companies are actually working together, just not for the benefit of the consumer.
See my other comment in this thread for more detail, but why do we keep referring to the cable industry as some monolith? It's not true and obfuscates quality analysis.
Under your scenario, the rational price for the cable company is probably something like $95 for sports or $95 for movies or $100 for both.
The idea that unbundling is going to save consumers a lot of money is strange. Cable companies sell these bundles knowing you don't watch most of what you get. We'll just switch from a scenario where the sports guy subsidizes the movies guy and the movies guy subsidizes the sports guy to a situation where everybody pays full freight.
I don't think you're pro-cable, I think that you're not grokking the difference between a monopoly and a competitive marketplace.
For lots of reasons, cable is effectively a monopoly. They made big capital investments, and the benefit of those investments is that every human living in a particular geography (in most places) is a captive customer.
There are a few options here.
With telephones, the government forced AT&T to divest itself from operating inter-state and intra-state networks and cede control of customer premise equipment (ie. it was illegal to own a telephone pre-1984), and eventually required the regional bell operating entities to provide access to other providers.
With electrical companies, for the most part they are able to function as monopolies for electricity delivery in a particular geography, and in exchange for that privilege their rates are tightly regulated by the State.
The problem with these options is that they are solutions driven by the states, not the federal government. The states, for various reasons (Ars Technica did some good stories about this) aren't doing much. Ala carte TV is an effort for the Feds to get involved, which I think is a bad idea. There needs to be a compromise between forcing consumers to pay $20/mo for sports content that they don't watch and getting nickle and dimed for each channel.
IMO, I'm only concerned about this as it affects universal access to internet. Cable companies are much more effective at delivering broadband than the traditional telcos, and those big TV subscriber bases almost certainly lower the cost of broadband delivery.
I suspect that something like $20/month for local(ish) broadcast stations, and $10/month per additional channel will likely be the ala-cart pricing... no way they're going to lose money on this.
I would totally love to order the sci-fi channel, fx, history channel and a couple others and not have to scroll through 30+ channels to get to them... i haven't had cable in years because it's never been worth it to me for just a few channels...
You'll probably still have to scroll through them - they'll just be marketing screens saying "call <cable provider> to order <useless channel>!"
I just downgraded my U-verse account. The channels I used to have are now just a blue screen with the image of a TV and a message either saying "you are not subscribed to this channel" or "call <number> to order this channel".
Pre-Presidential candidate was known for promoting himself as a "maverick", but I think the majority of that meme was his self-promotion and an easy media narrative. He hasn't been very independent, even if it doesn't take much to be considered an odd duck Republican in this tea party climate.
This will be awesome and it is long overdue in the United States in my opinion. The monopoluy of the cable companies is outrageous to say the least. Also, enough with the bullshit "bundles" and "packages". I don't want to pay $100 to comcast (Northeast US region where I live) and get a "bundle" of channels but if i want to watch HBO, pay extra. If I want to watch Showtime, pay extra. Basically, any channel worth watching, pay extra. I would rather pay $100 to pick 10 channels that I really watch even if that includes CNN.
1. If a channel is free (NBC, TBS, etc), cable/sat providers are required to include it as part of the base connection fee.
2. If a channel is paid, subscribers need to pay for it directly, it can't be subsidized through the basic connection fee.
Now individual networks have the power to determine if a channel is part of the basic service or not. Cable companies still have the option of bundling channels together or go ala carte if subscribers really want to access premium channels.
I am confused. How is it any different than we have today ? Free channels are always part of the base fee and where the cable companies get you is the so called "Premium" Channels which they offer in their "bundles".
I think he means channels the cable company has to pay for. Some channels don't charge the cable cable, but get all of their money from advertising. Other channels do charge the cable company and may or may not also have advertising.
The distinction is subtle but I believe it's the most important. Currently comcast is allowed to decide what channels to offer you as part of the basic connection fee (aside from OTA requirements). By putting the decision in the hands of the networks themselves to decide whether to be a default channel or a premium channel, it changes the landscape significantly. It also changes networks incentives to fight for or against being bundled with certain other channels.
I've indirectly read (I doubt those kind of memories) about people saying the current setup favours sport. What else does it favour, probably natural history? I wouldn't want to see the US backers of Attenborough become massively defunded.
The current setup favored AMC, which would have had no incentive to produce a show like "Mad Men" without the hope that it would increase the rate they could charge carriers. In an a la carte world, they'd have to rely on word of mouth from whatever tiny subscriber base they would have already had, which seems implausible.
On the other hand, anyone could produce a pilot and put it on the internet to demonstrate the existence of an audience.
Really the whole concept of "networks" and "broadcast television" should just go away. The technology exists for everything to be delivered on demand. The primary missing piece is for 99% of households to be able to watch internet-delivered programming on their actual television, which itself is primarily an issue of the installed base of TVs not being able to do it. And that could be solved in a hurry if that capacity was inserted into all the cable boxes.
How much do indoor pilots cost? Cheap pilots will probably end up being multi camera, no audience, outdoors, and overly pandering. Pilots need to be funded by people who aren't looking for high ratings within ten minutes. Netflix does look past that, but they do look at when people pause or stop, something broadcasters can't do.
Cable providers are government-sanctioned monopolies in their service areas. While I would rather there was a separation between physical infrastructure and content providers, I think that positive regulation of natural monopolies is a net win.
McCain has a history of doing a lot of sensible things. The reason people think he's a nutter is that he wanted to be president, and he learned in 2000 that you have to at least pretend to be a crazy person in order to secure the Republican nomination.
The interesting thing is that the foundation of the TV system is built on the increasingly obsolete concept of broadcast TV. If you could get rid of that, and force all content providers to compete evenly via the internet, we'd have much more interesting environment. You'd free up the airwaves for more valuable use, you wouldn't need the FCC regulating content, and you'd break up the abc/cbs/nbc/fox semi-monopoly must carry position.
Think how wasteful it is to use all that television frequency bandwidth largely to transmit tv signals from networks to cable companies. According to NAB, only 17.8% of US homes rely only on OTA.
I gave up cable TV three years ago and honestly don't miss it. I still have Internet (Netflix, Amazon Prime, NoWhere TV) and the options for providers in my area are limited... but it worth it just to pay less to Comcast. This bill, if it even passes, will not sway me to change.
This will be lobbied into oblivion.
Content providers won't go for it, because they currently use their popular programming to force their new ventures onto cable providers. You can't force a cable provider to put your crappy home and garden channel on their line-up, if nobody orders it. You can't argue with real sales metrics.
Further, cable providers can't make a living when all of their customers downgrade to the three basic-cable channels they actually watch, plus HBO. Because the idea of a la cart cable is to lower the bills by not paying for what you don't want.
Huge amounts of money will, from both sides of the cable programming negotiating table will align against this pro-consumer measure, because it will force a radical rethinking of an industry that has never really had to be pro consumer.
I'm ok with that, I've have ditched cable tv and switched entirely over to OTA digital broadcast, netflix and hulu. Considering adding Amazon Prime to the list, and it is all still cheaper then cable.
Nearly every regulatory issue in telecom (and likely most other industries, but I'll just stick with what I know) is lobbied extensively by someone. Most issues will, whatever the underlying intent, benefit certain sub-industries over others. There's absolutely nothing wrong with that. In fact, it's virtually impossible to propose a regulation that won't affect the market. By definition, regulations are supposed to to affect the market.
To assume that "cable" will outright oppose this is false, and overly simplistic. Cable is hardly a monolith, and there are things in this proposal that different types of cable companies could conceivably support. NCTA, the larger cable trade org opposes the measure, while ACA (representing relatively smaller cable companies) supports at least many of the principles behind the proposal[1].
There's a big difference in policy goals between vertically-integrated and non-vertically-integrated cable companies. Comcast, as both a cable company and a content producer, probably does enjoy policies that allow for bundling and would oppose that certain part of the proposal. However, competing cable companies who are not vertically integrated would probably support such a measure. It's not a crazy thought that Independent Cable Co. X would like to pick and choose which channels to buy for its subscribers without being forced into a bundle. In other words, for the same reason that consumers might want this choice, many cable companies could want this as well.
The part of the bill that penalizes broadcasters who switch to pay TV is something that probably all cable companies, even the big ones like Comcast, could support. Retransmission consent fees paid by cable companies to broadcasters are increasingly high and a court-blessed Aereo would provide an avenue for cable companies to simply stop paying those fees (or at least give them a good bargaining chip in retrans fee negotiations).
Oddly enough, wireless companies (e.g. Verizon) might oppose this part of the proposal. They badly want spectrum, and if FOX and others leave the airwaves, this could help get that spectrum into their hands. As an aside, I think the threats from FOX are hollow for a number of reasons.
Anyways, getting a little bit meta here, but the telecom industry is where I've been interning (various places) and would like to work in at some point. There's no reason to expect the average HNer to know these intricacies. However, from what I've learned about telecom, I can at least have a better idea of knowing what I don't know about other policy arenas. Thankfully, this will prevent me from reaching super simple (and often flat out wrong observations) such as "[t]his will be lobbied into oblivion." Obviously lots of money will be spent opposing this, but that's true for nearly any regulatory proposal, and is far from dispositive of any outcome.
This sounds really awesome, but I cannot see this being really effective.
For individual channels, they can just make it extremely cost-prohibitive to purchase single channels. Want ESPN? $20/month or you can get 20 channels for $25/month. There are some people that will take that, but I wouldn't count on it.
Same goes for cable bundling. You don't have to take ESPN with ABC, but you can either have either one of them for $15m each (making up numbers), or $15,000,001 for both.
Maybe I'm a pessimist, but these companies are experts in ignoring what people want. Without very careful checks, they'll find a way to keep their margins (which, given that they own the content, they absolutely have the right to do, as much as it upsets me.)
>ESPN? $20/month or you can get 20 channels for $25/month.
But if you never watch ESPN then even saving $5 is worth it. There are plenty of people who pay for cable exclusively for HBO, and since HBO and ESPN don't share a parent company they're not going to want their networks to be bundled together.
And it also allows you to make sensible decisions like specifically refusing to pay for HLN because it puts Nancy Grace on the air.
I have not had cable TV for nearly 3 years and it has worked out very well since I am outdoors more often. However, the day al a carte is in town is the day I buy cable again. Comcast et. al. are just like banks, they could care less about the consumer.
I am not holding my breath as McCain is simply spinning his wheels.
I always thought that the physical plant / last mile should always be another company and not any way attached/owned by the content provider(s). In most areas there are at least 2 content providers who can split the physical plant costs (+ minor profit).
The bill won't have any significant impact on most customers because cable channels won't charge the cable companies any less. If a cable companies has to pay, say, $1 Mio to distribute a channel, it needs the subscriptions to pay for that. It can either sell channels a la carte for a high fee, or sell bundles for a lower fee per channel. But the revenue will always need to be on the same level.
The only difference will be that people who want veryfew extra channels may get them cheaper than people who want all available channels. But as soon as you want 3-4 channels (or whatever the amount of channels is that the average consumer is actually interested in), a la carte won't be cheaper than the bundle.
I would love to be able to buy individual channels, however, I don't think that this is something the government should get involved in.
I would suggest working on a bill that would try to increase the prevalence of affordable high speed internet throughout the country. This would give access to all parts of the country but it would also give citizens more options when it comes to TV because Netflix, Hulu, etc would be accesible to everybody and could cause the cable companies to re-evaluate their strategy.
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[ 3.6 ms ] story [ 126 ms ] threadI wonder how he is going to address must carry channels that local governments impose upon the cable companies? I am all for choosing channels, but I wonder if this would permit currently premium channels to be chosen without excessive charges? As in, will they still permit bundle requirements to have HBO?
Considering it imposes similar rules on those companies selling channels to cable companies the host of groups who will line up to fight this will be impressive.
My favorite part is eliminating the black out rules on sports events for public funded stadiums.
I guess Senators suffer from the same problems as software engineers - they only see the problems in their living room.
This is exactly the sort of regulation Republicans should care about.
Not that this excuses Republicans from being hypocrites. But on this issue, there's no conflict with their core philosophy.
And frankly, even deregulating the financial industry was consistent with their philosophy. It was their support for socializing what should have been private losses that was the philosophical problem.
This is where every liberal/conservative rolls there eyes in disgust.
In my largish apartment complex, there is one cable provider: Cox. I can't use a sat dish, my apartment faces the wrong direction and I'm on the second floor. FIOS isn't available. CenturyLink agrees no "prism tv" whatever that is for me, and directtv is out because I am on the second floor and face the wrong direction.
So there's really no free market in cable providers for me, it's a monopoly situation.
The free market solution would be to require Cox to allow other cable providers to use their cable to get last mile to me and then let Cox, et. al., charge me however they wish.
I would be curious to know which situation Cox would prefer: mandatory unbundling, or force them to share the cable.
EDIT: I do wonder what keeps Verizon from offering FIOS if they wanted to. Is it too expensive to rewire a huge sprawling multi-floor apartment complex?
My understanding is that Verizon has dramatically slowed their FiOS rollout, primarily because they don't think they're likely to be able to sell you "premium services" long-term. Does anyone think that within 10 years there will be any content worth having not available over a 100Mbit (or gigabit, even) pure IP connection? How much can Verizon expect to charge for such a connection?
FiOS made sense when they thought they would be Skype, HBO, NetFlix and iTunes combined, or at least get a cut on all of those. But even if we don't get regulated Network Neutrality, competitive pressure alone will commoditize content and application delivery over IP.
The result would be that Verizon could stop giving a crap about whether you use their TV offerings or Hulu or whatever else because that's not where they make their money, but at the same time customers wanting the "triple play" package can get it from them for a total price competitive with similarly situated ISPs and with an overall profit margin they expect from such a thing. Just admit to themselves that they're in the wire business, stop trying to be in the content business, and charge accordingly for the wire. Suddenly "cord cutters" are not a problem, especially when the competing ISP realizes the logic and does the same thing.
Compare the revenues or market cap of Skype or Hulu to that of Verizon FiOS, and then realize that both Skype and Hulu have more customers than FiOS, and ask yourself which business you'd rather be in. Infrastructure operators selling over the top services is just an invitation for them to interfere with competitors -- let the over the top market be competitive (and therefore have very small margins) and take the margins from the infrastructure where you can hold on to them. Look up "one monopoly rent" theory. If they're going to have a monopoly and collect monopoly rents, just let them do it in the monopoly market and not have to lose the benefits of competition in the over the top market merely in order to claim the same overall margins spread out over more products. It actually seems to be Pareto optimal -- who is going to lose out here? Maybe the cord cutters, but they're doing something which is unsustainable at scale unless what I'm proposing ends up happening. So where's the drawback?
Bundling allows cable operators to segment the market: to sell the same product to different audiences at different prices depending on their willingness to pay.
A $100 package of bundled sports + movies can be sold to the person who is willing to pay $90 for sports and $10 for movies and also to the person who is willing to pay $10 for sports and $90 for movies.
But sports and movies are unbundled, they must be sold at the same price to everyone. Should they be priced at $10 each? $90? Somewhere in between? Pick any price and the cable companies lose money: the person who values it more will pay less for it than they would have, and the person who values it less won't buy it at all.
EDIT: I don't want to sound pro-cable; indeed, I am not; I am just pointing out the effects of this legislation. In some ways, bundling is a natural way to package content. MOG, Spotify, and other subscription music services bundle their content (you don't get to pick and choose what you subscribe to), and the big daddy of disruption, Netflix streaming, doesn't let you unbundle either. It's one flat fee for everything. In these cases, of course, it's easier to swallow because prices are so low to begin with. Perhaps it's not bundling that's the problem with cable, but the pricing.
Cable is sort of special since it's become part of our infrastructure, so it deserves some oversight, but does that extend so far as to dictate how programs are packaged?
I think a la carte is pretty tricky. I want it because I only want to watch AMC and HBO. It might not be so good for the consumer who wants 20 different networks.
It's like going to a pizza buffet that costs $8 for all-you-(care-to-)eat with a variety of toppings and saying, "I'm only want to eat pepperoni pizza, but you're still charging me the full $8, so I'm forced to pay for all of the other pizza I don't want."
The counter-argument would be something along the lines of "technology service cannot be commoditized -- it requires innovation and a return on investment!". To which I reply: cable companies.
I would phrase it as "it will eliminate the monopoly of the cable companies". Which is a good thing. Sick and tired of the limited options we have with cable companies and the "bundles" they provide. I don't want bundles. I want to watch what I want to watch.
"abusing their monopoly " -- BAD
No one is saying cable companies are evil. But having such strong monopoly is hampering innovation. Hence, we need to try and change how cable companies operate.
As an outsider, the US seems to have a lot of innovation in TV anyway. HBO creates the best drama series', seen all over the world, and Netflix sounds amazing. In the UK we have the BBC as a monopoly but it's sadly/oddly often more innovative than other networks.
The idea that unbundling is going to save consumers a lot of money is strange. Cable companies sell these bundles knowing you don't watch most of what you get. We'll just switch from a scenario where the sports guy subsidizes the movies guy and the movies guy subsidizes the sports guy to a situation where everybody pays full freight.
For lots of reasons, cable is effectively a monopoly. They made big capital investments, and the benefit of those investments is that every human living in a particular geography (in most places) is a captive customer.
There are a few options here.
With telephones, the government forced AT&T to divest itself from operating inter-state and intra-state networks and cede control of customer premise equipment (ie. it was illegal to own a telephone pre-1984), and eventually required the regional bell operating entities to provide access to other providers.
With electrical companies, for the most part they are able to function as monopolies for electricity delivery in a particular geography, and in exchange for that privilege their rates are tightly regulated by the State.
The problem with these options is that they are solutions driven by the states, not the federal government. The states, for various reasons (Ars Technica did some good stories about this) aren't doing much. Ala carte TV is an effort for the Feds to get involved, which I think is a bad idea. There needs to be a compromise between forcing consumers to pay $20/mo for sports content that they don't watch and getting nickle and dimed for each channel.
IMO, I'm only concerned about this as it affects universal access to internet. Cable companies are much more effective at delivering broadband than the traditional telcos, and those big TV subscriber bases almost certainly lower the cost of broadband delivery.
I just downgraded my U-verse account. The channels I used to have are now just a blue screen with the image of a TV and a message either saying "you are not subscribed to this channel" or "call <number> to order this channel".
This thought came across my mind first when I was 15, wishing for Cartoon Network without paying extra for cable that we couldn't afford.
1. If a channel is free (NBC, TBS, etc), cable/sat providers are required to include it as part of the base connection fee.
2. If a channel is paid, subscribers need to pay for it directly, it can't be subsidized through the basic connection fee.
Now individual networks have the power to determine if a channel is part of the basic service or not. Cable companies still have the option of bundling channels together or go ala carte if subscribers really want to access premium channels.
Example: http://www.sportsgrid.com/media/espn-cable-subscriber-fees/
List of a bunch of channels' costs: http://allthingsd.com/20100308/hate-paying-for-cable-heres-t...
Really the whole concept of "networks" and "broadcast television" should just go away. The technology exists for everything to be delivered on demand. The primary missing piece is for 99% of households to be able to watch internet-delivered programming on their actual television, which itself is primarily an issue of the installed base of TVs not being able to do it. And that could be solved in a hurry if that capacity was inserted into all the cable boxes.
Check which lobbyists have been visiting/donating to him recently.
(and with all the problems we have right now, all the unfilled positions for five years, this is what he is working on?)
Think how wasteful it is to use all that television frequency bandwidth largely to transmit tv signals from networks to cable companies. According to NAB, only 17.8% of US homes rely only on OTA.
https://www.nab.org/documents/newsroom/pressRelease.asp?id=2...
Further, cable providers can't make a living when all of their customers downgrade to the three basic-cable channels they actually watch, plus HBO. Because the idea of a la cart cable is to lower the bills by not paying for what you don't want.
Huge amounts of money will, from both sides of the cable programming negotiating table will align against this pro-consumer measure, because it will force a radical rethinking of an industry that has never really had to be pro consumer.
No one said it would be easy. But is it long overdue ? hell yea.
Personally I'm quite fine with that.
Nearly every regulatory issue in telecom (and likely most other industries, but I'll just stick with what I know) is lobbied extensively by someone. Most issues will, whatever the underlying intent, benefit certain sub-industries over others. There's absolutely nothing wrong with that. In fact, it's virtually impossible to propose a regulation that won't affect the market. By definition, regulations are supposed to to affect the market.
To assume that "cable" will outright oppose this is false, and overly simplistic. Cable is hardly a monolith, and there are things in this proposal that different types of cable companies could conceivably support. NCTA, the larger cable trade org opposes the measure, while ACA (representing relatively smaller cable companies) supports at least many of the principles behind the proposal[1].
There's a big difference in policy goals between vertically-integrated and non-vertically-integrated cable companies. Comcast, as both a cable company and a content producer, probably does enjoy policies that allow for bundling and would oppose that certain part of the proposal. However, competing cable companies who are not vertically integrated would probably support such a measure. It's not a crazy thought that Independent Cable Co. X would like to pick and choose which channels to buy for its subscribers without being forced into a bundle. In other words, for the same reason that consumers might want this choice, many cable companies could want this as well.
The part of the bill that penalizes broadcasters who switch to pay TV is something that probably all cable companies, even the big ones like Comcast, could support. Retransmission consent fees paid by cable companies to broadcasters are increasingly high and a court-blessed Aereo would provide an avenue for cable companies to simply stop paying those fees (or at least give them a good bargaining chip in retrans fee negotiations).
Oddly enough, wireless companies (e.g. Verizon) might oppose this part of the proposal. They badly want spectrum, and if FOX and others leave the airwaves, this could help get that spectrum into their hands. As an aside, I think the threats from FOX are hollow for a number of reasons.
Anyways, getting a little bit meta here, but the telecom industry is where I've been interning (various places) and would like to work in at some point. There's no reason to expect the average HNer to know these intricacies. However, from what I've learned about telecom, I can at least have a better idea of knowing what I don't know about other policy arenas. Thankfully, this will prevent me from reaching super simple (and often flat out wrong observations) such as "[t]his will be lobbied into oblivion." Obviously lots of money will be spent opposing this, but that's true for nearly any regulatory proposal, and is far from dispositive of any outcome.
[1] http://www.fiercecable.com/story/mccain-bill-sparks-conflict...
I'm just curious what lobby is pushing McCain? He's not a guy known for his principles.
For individual channels, they can just make it extremely cost-prohibitive to purchase single channels. Want ESPN? $20/month or you can get 20 channels for $25/month. There are some people that will take that, but I wouldn't count on it.
Same goes for cable bundling. You don't have to take ESPN with ABC, but you can either have either one of them for $15m each (making up numbers), or $15,000,001 for both.
Maybe I'm a pessimist, but these companies are experts in ignoring what people want. Without very careful checks, they'll find a way to keep their margins (which, given that they own the content, they absolutely have the right to do, as much as it upsets me.)
But if you never watch ESPN then even saving $5 is worth it. There are plenty of people who pay for cable exclusively for HBO, and since HBO and ESPN don't share a parent company they're not going to want their networks to be bundled together.
And it also allows you to make sensible decisions like specifically refusing to pay for HLN because it puts Nancy Grace on the air.
I am not holding my breath as McCain is simply spinning his wheels.
I would suggest working on a bill that would try to increase the prevalence of affordable high speed internet throughout the country. This would give access to all parts of the country but it would also give citizens more options when it comes to TV because Netflix, Hulu, etc would be accesible to everybody and could cause the cable companies to re-evaluate their strategy.