A La Carte Cable?

Something I have been thinking about lately is cable companies and pricing. Cable companies charge people a fee per month to access channels. One problem however is there are so many stations that people don’t even use but they still pay for them. I think of the analogy of going to McDonalds and ordering breakfast and paying for everything on the breakfast menu even though you know there is no possible way to consume everything. In modern times according to Nielsen in the last three months of 2008 people were watching 151 hours of television per month (all time high). This number is somewhat misleading considering Nielson uses video watched online, from cell phones, and traditional televisions.

One underlying theme I think of is we are only able to watch all this TV because we have such a high standard of living. Let’s assume for the moment people in the early 1900’s had televisions. Even if the people from this time period had televisions they wouldn’t have much time to watch them since they would have to be up at 4 a.m. to work on the farm and would be working until the sunset leaving very little time for entertainment.

Technology like DVR’s allow people to watch television and program a machine to record something on a different station. This process allows people to do other things like read, cook, or other tasks so people don’t have to wait around until their program comes on. As mentioned in a previous blog I don’t understand why the major networks don’t open their content vaults and allowing consumers to purchase content from even 5 years ago that only aired once. This would be not only exciting for consumers but add revenue to network corporations.

A la carte cable pricing I believe would only help consumers. Certain networks obviously would not want this arrangement since they make their money from how many subscribers the cable company gets and not by how many people watch their program. Market systems don’t work like this. If a network can’t provide worthwhile content they should be out of business. Consumer groups in the 1990’s complained about television programs not being rated like movies which lead to a ratings system of the content which was ridiculous considering parents should be in charge of what their kids watch and not the government. An a la carte system would solve this problem since parents would only pick stations they felt were suitable for their children instead of getting a bundle of stations they may not want their kids to watch. Although, companies came up with clever technology to have parental locks based of a programs “rating” system. I would be interested to see how many stations the general public watches. What is really bizarre is that the Federal Communications Commission (FCC) actually agrees there should be a la carte pricing but claims cable bills could range from a 13% drop to a 4% increase.

To me I believe people like many options even if they have to pay a little extra for it. This draws on work from the behavioral finance area of people choosing to pay for phone plans that allow unlimited calling rather than charging for each call. Maybe people don’t want to feel tethered to something. Time will tell whether or not we will have a la carte pricing for cable. Perhaps people sometimes believe even though they don’t watch 80%-90% of the stations they get that maybe sometime in the near future a program they will be on station that they never watch. The odds of happening are very unlikely, but people like to be prepared for anything.