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2/19/2006 3:48:19 PM

Updated 01/25/06
 


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Cable Firms Prefer One Choice Ė Theirs
Customers faced with channels for every interest except for those who want to pay a la carte.

By Dan Gainor
The Boone Pickens Free Market Fellow
Feb. 15, 2006

Send this page to a friend! (click here)     One of the most obvious dividing lines between old and young is the ability to recall free television. To anyone who has grown up in an era of cable and satellite TV, the concept of a handful of channels delivered free to your home is absurd.

¬†¬†¬†¬† Americans went from a couple of channels in each market to a lineup only the most veteran couch potato can track. In 1992, Bruce Springsteen released the song ď57 Channels (And Nothiní On)Ē and now we can look at that title and think it quaint.

¬†¬†¬†¬† Limited options gave way to unlimited choice Ė or so it seemed. My Comcast cable has channels for every interest Ė golf, travel, NASCAR, shopping and religion. Even without the extra pay channels, that number tops 100.

     We pay for all of it.

¬†¬†¬†¬† Thatís right. Whether you watch ESPN, Oxygen or Logo (the gay channel), you pay for it. The only other option you have is no TV at all. Roughly 72 million homes are plugged into cable and another 26 million have satellite. That means the vast majority of the 112 million U.S. households get TV one of those two ways.

¬†¬†¬†¬† Some choice. The delivery methods vary, but the content is essentially the same. Cable and satellite pile on channel after channel that you wonít ever use. According to the Federal Communications Commission, cable watchers only bother with 17 of the channels that they fork over big bucks to see. Thatís like trying to buy a burger at McDonaldís and having to pay for five different combo meals just to eat.

¬†¬†¬†¬† The cable companies like it that way, only now they are threatened by new competitors, new technologies and a word associated with an entirely different political battle Ė choice.

     That one word scares the cable companies most of all. They make money through ads and by selling packages of channels when all we really desire is one channel out of the pack. We buy because we have no choice.

¬†¬†¬†¬† It doesnít have to be that way.

¬†¬†¬†¬† Cable choice would give us the option to pay only for channels we want, but it wouldnít be easy. Critics are right in saying choice would create technological issues and customer service headaches. Those arenít good enough reasons to avoid responding to market demands. Cable companies have even created ďfamily-friendlyĒ packages so they can pretend to offer what people want. Theyíre another version of the same problem.

¬†¬†¬†¬† A new FCC report argued that consumers could save as much as 13 percent if they could pick and choose which channels they wanted Ė a la carte. Too bad that will probably fall on deaf ears. While Congress is willing to hold hearings on the issue to score political points with concerned citizens, thereís little chance that august body will get off its august butt and do anything unless consumers make it happen. Cable company funds help grease the wheels of the political process. Thatís their right, but itís not right that Congress ignores the rest of us.

¬†¬†¬†¬† This isnít an unfair assault on a business or discussion of some crazy government attempt to regulate industry. Cable already is regulated by 30,000 local cable franchise authorities. Cable TV isnít a free market issue at all; itís a game of monopoly Ė one that consumers have been losing for decades. Now that it looks like weíve figured out the rules, the cable companies are unhappy.

¬†¬†¬†¬† The National Cable & Telecommunication Association fears any government action and said: ďMandating a la carte distribution of cable networks will reduce the availability and diversity of programming for consumers.Ē

¬†¬†¬†¬† So what? I could lose 20 channels tomorrow and not even notice. Researching this topic, I found channels I didnít even know I had. My cable box has 1,000 slots and Comcast wonít be happy until every one is filled with something that I am supposed to pay for.

¬†¬†¬†¬† The cable firms claim that shoppers in the marketplace should ďdictate cable programming and marketing decisions.Ē They should. The marketplace clearly wants choice, only customers donít have that option. The cable companies also claim that consumers would ďwind up paying much higher prices to receive the same level of service they get today.Ē Of course, but only about 20 people in the entire United States want or need that many channels. The rest of us, according to the FCC, would get a chance to save.

¬†¬†¬†¬† FCC chairman Kevin J. Martin was quoted in the February 10 New York Times saying ďIncreasingly, consumers are saying that they don't want to pay $10 more for 10 more channels.Ē Itís scary when even government understands something and industry doesnít get it.


Dan Gainor is a career journalist and The Boone Pickens Free Market Fellow. He is also director of the Media Research Centerís Free Market Project www.freemarketproject.org.

 


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