À la carte TV offerings will result in fewer choices, higher prices: NCTA

The National Cable and Telecommunications Association (NCTA) in the United States released a white paper May 5 that opposes a proposed U.S. government policy that would require à la carte distribution of cable and satellite TV networks. The NCTA argues that offering consumers a choice of a variety of basic and digital TV tiers has resulted in substantial and well-established networks. Distributors in Canada are doing the opposite - pushing for the right to offer more channels à la carte. Below is an excerpt from the NCTA’s white paper, entitled The Pitfalls of à La Carte: Fewer Choices, Less Diversity, Higher Prices. …Tiers combine new networks with well-established networks, thereby allowing new networks to be sampled by consumers so they can find and build an audience. By allowing new networks to share the large subscriber base created by established networks, tiers provide a critical financial base for new networks to reach the potential audience necessary for survival. And this dynamic creates the investment incentives that produce the rich diversity of programming consumers enjoy today. Under the tiering model, program growth has been spectacular. There are 339 national and 84 regional cable networks today, and creative ideas for new networks continue to be developed. Likewise, consumer enthusiasm for cable networks continues to be developed. Likewise, consumer enthusiasm for cable networks, both new and established, has been enormous. Cable network viewership continues to increase as the broadcast audience declines, and critical acclaim for cable’s programming is growing sharply as well. There is more program diversity today than at any point in history, and the tiering model developed by the cable industry is responsible for this success. Notwithstanding the clear pro-consumer benefits of tiers, some policymakers have suggested that basic cable program networks should be sold on an unbundled, à la carte basis, instead of, or in addition to, program tiers. While this suggestion may offer superficial appeal, on further examination, it is evident that à la carte is neither feasible nor desirable and, in fact, would cause significant harm to programmers, cable operators, and consumers alike. An à la carte pricing model would require a fundamental restructuring of the cable and programming businesses. It would change the way programming is distributed and marketed by the cable and satellite industries. It would destroy the economic underpinnings upon which companies have invested billions of dollars to build new infrastructure and develop new programming. It would require a complete overhaul of customer service operations to handle the vastly more complicated processes involved in offering hundreds of channels on a stand-alone basis. …The use of program tiers by the cable and satellite industries has produced an enormous amount of diverse, high-quality programming for American consumers. In particular, tiers provide a critical financial base that allows new program networks, including niche networks that serve previously unserved audiences, to find and build an audience. As all video distributors have found, tiers are an efficient way to provide consumers with a large number of program networks, including niche networks that serve previously unserved or underserved audiences, to find and build an audience. As all video distributors have found, tiers are an efficient way to provide consumers with a large number of program networks at a reasonable price. Whether measured by more than 90 million cable and satellite customers that have purchased program tiers, or by the ever-increasing viewership garnered by cable program networks, consumer enthusiasm for the tiering model is clear. By contrast, an à la carte pricing model would reduce program diversity and increase prices for consumers. Moreover, the complexity of offering hundreds of channels on a stand-alone basis would leave consumers confused and frustrated. And the technical and operational impediments to à la carte, and their associated costs, are overwhelming. Given these problems, there is simply no reason for the government to impose à la carte pricing...

À la carte TV offerings will result in fewer choices, higher prices: NCTA

News | 05/06/2004 4:00 am EDT

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