Consumers Will Lose If Cable Is Unbundled
Cable companies bundle channels because it lowers consumer costs
September 17, 2013
A former Disney Channel starlet strumpeting her way to notoriety on basic cable in late August has reignited interest in the "Television Consumer Freedom Act of 2013" (S.912). Introduced by Sen. John McCain, R-Ariz., in May, and co-sponsored by Sen. Richard Blumenthal, D-Conn., S.912 would force multichannel video programming distributors (MVPDs – satellite and cable companies) to offer pay channels a la carte to their customers rather than providing bundled or tiered packages.
"Forcing people to buy things they don't want to get what they do want is un-American and might even raise anti-trust issues," Blumenthal told the Hollywood Reporter. "I don't mean (cable bundling) is prohibited. But it's in the tradition. It fulfills the same kind of value."
No doubt many individuals would prefer paying only for what they actually consume rather than rankle at buying bundled packages with less in-demand viewing cachet. Apparently for Sens. McCain and Blumenthal, however, it's only when government flexes its muscle that businesses best provide acceptable customer service. In fact, increasing numbers of television viewers are receiving the programs they enjoy already in a la carte fashion. It's called the Internet, Mr. Senators, and it's a relatively inexpensive method of making available the programs people want to watch without having to pay for access to those channels they don't.
Along with the technological naiveté on display by McCain and Blumenthal is the shocking ignorance of how content providers and MVPDs actually work, and how S.912, if enacted, would likely force MVPDs reduce consumer options while simultaneously raising prices in order to comply.
MVPDs bundle channels because it's an effective business model that actually lowers consumer costs while offering a variety of viewing choices. Content providers – the networks that produce the programs retransmitted by MVPDs – established this model by forcing MVDPs to purchase less-popular programs in order to supply the must-see TV their customers demand.
S.912 would put the financial onus squarely on the shoulders of the MVDPs, which will be forced by networks to provide unpopular channels for which no one wants to pay, driving up the pricing of the channels they do want. The eventual loser is the consumer, of course, who still is forced to pay a premium for programming he or she doesn't view.
Curmudgeons and S.912 supporters can order twerking 20-somethings off their TV sets all they wish – a la carte or not, they'll still subsidize the spectacle.
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