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Unbundling Cable TV: Be Careful What You Wish For
schnell writes Consumers have long complained about the practice of "bundling" cable services and forcing customers to pay for channels they don't want — and an increasing number of "cord cutters" are voting with their wallets. But an article in the New York Times suggests that if cable companies are finally forced to unbundle their services it may actually result in higher prices and worse service. From the article: "there's another, more subjective dimension in which the rise of unbundled cable service may make us worse off. It's possible for a market to become more economically efficient while becoming less pleasant for consumers. For a prime example, head to your nearest airport."
Head to my nearest airport and observe what?
When one revenue stream goes away, corporations will gouge their customers in other ways to make up the difference, or make more money in the long run.
The cable companies are screwing us now, and will continue to screw us in the future using whatever means available to them.
It's a rigged game, played by people who feel entitled to the revenue, and who have more power than we do.
This isn't a surprise, nor should it be.
Lost at C:>. Found at C.
And it's just getting worse. There's been articles here on Slashdot about how carriers "tune" channels for quality on the shared data pipe. SciFi, Discovery, the nature type channels that all benefit the most from good quality get the low tuned down shit, but never mind, the Home Shopping Network is always 1080P and max bps.
I haven't had cable of my own or satellite in years and I frankly don't miss it. Every time I'm at a friends or relatives and I see definitive examples of said channel tuning and all the Spanish networks being on the lowest paid for tier while even channels that are free streaming over the web and on terrestrial satellite being on upper tiers it doesn't soften my feelings towards cable companies.
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$400 ticket
+$25 for luggage
+$25 for 2nd piece of luggage
+$50 for a seat that isn't between two 300 pound men who haven't showered yet this year.
+$75 for to not have your legs knees shoved in your face when the person in front of you reclines
+$15 for internet, 2G speeds only
+$5-15 to use the entertainment console at your seat
+$10 for a light snack
+$25 to sit near the front of the plane so you don't have to spend 30 minutes in your seat both before and after the plane lands
Worse service? Than a cable company? I'm 99.99% sure that is impossible.
Nearly everyone I know has dumped cable and in most cases it wasn't to make their budget better but that once they got Netflix that commercials became insufferable and the cost per cable hour watched then skyrocketed. In my area to have a half decent set of packages you will end up paying around $100 per month. So for people who were just watching the occasional news show and not much else they realized that they were paying pretty much the same per show as the entirety of their monthly Netflix cost.
But then I hear other complaints which is that the news is becoming wildly biased while the quality of most programming is in freefall. I hear that it is becoming clear that many of the new programs are being made on silly low budgets. For instance I was over at a cable using friend's house and the weather reporter was talking to a camera on a tripod. They had eliminated the cameraman. Plus some of the travel shows are basically all selfie shots with a selfie stick or a tripod.
And CNN really took the cake when they had 1000's of hours of reporting on the missing airliner when their only two real facts were that it was missing and that it turned left.
So while in 1994 I would have killed to get my channels a-la-carte at this point it is just rearranging the deck chairs on the Titanic.
Food, drinks, legroom, checked baggage.
The thing about cable is that large majority of people don't want all the crap they force down our throat.
For example there are romance centered channels, sports centered channels, reality show channels, cartoon centered channels, science centered channels and fake science centered channels (which USED to be real science centered channels).
If you are a family with a wide array of interests than you might probably want all of that.
But I have zero interest at all on the sports channels (total geek), fake science channel (TLC, I'm looking at you), reality show channels, etc.
excitingthingstodo.blogspot.com
With fewer channels on average the value of the advertising per channel should go up. So while Logo will probably end up with less money and cost more if you really want it or go away completely. Cartoon network, AMC, and other popular channels might actually drop in price so they can sell more ads.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
Cable (and IPTV/satellite) is unbundled where I live. Guess what happened? People ended up getting less channels, paying more per-channel, and at the end their monthly bill ended up about the same. Now the CRTC is likely going to force unbundled cable to be required nationwide, and I expect to see the same thing happen in all other provinces.
Cable companies will set their prices so that their ARPU remains unaffected. The vast majority of people will save no money. A small number of people who pick an extremely limited number of channels might save some money.
Dish just introduced a $20/mo. streaming service that includes ESPN. Seems like the cord cutters have the final piece of the puzzle now.
"May" actually result in high prices and worse services? Of *course* it'll result in high prices and worse services, when the cable companies are *forced* to do anything. What you think, they'll go "ok we've learned our lesson, we're going to play nice now".?
The real answer is to starve them out. Use alternate services whenever possible. Don't give in to cable. If there's a series you want to see, wait for netflix or hulu. Or lower your expectations for TV-brain-to-mush time. I'm not a "kill your tv" person but TV just isn't important enough to put up with cable in any fashion.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
The real problem with cable companies is not that they "bundle" to create fixed service packages - it is that they are effective monopolies providing an essential service, that escape any meaningful regulation that such a model absolutely requires for to protect the interests of the public. As long as this situation persists any service pricing scheme is going to gouge the customers for Internet access as well as TV access.
The weakness of regulation is nicely conveyed by the the FCC itself:
So no regulation by any government body for "non basic services". And "basic service" regulation is entirely optional, and left piecemeal to lower levels of government where it is always ineffective in exercising oversight for national corporations which practice cartel-like collusion to protect their margins and market share.
Second class citizen of the New Gilded Age
Josh's article last year was wrong on a few levels. This article is wrong as well. What's important to understand is the price you pay depends upon "how many channels you buy, how frequently you buy, and when & where you watch, etc."
1st., you are overpaying why you buy local channels; they are free "over the air" but they are allowed to charge when a cable company transmits via their cable -- today a digital antenna works well for most and certainly anyone who is price sensitive.
2nd., we are just left with the cable TV shows and "Premium channels" -- and in this context Josh's article is right IF your family is large and/or you consume a lot of programs of different types a bundle that includes everything can be cost effective.
3rd., if we remove the cost of local TV and assume you just want to watch specific channels than Josh's calculations are certainly wrong. The question becomes when you want to watch a "new" channel or a show on an ad hoc basis -- should you subscribe to an entire bundle to get one network, or a whole network to get 1 or 2 shows?
4th., another reason Josh's calculations are clearly wrong is the time and place value of information; do you need to watch a show as a "first run" or can you wait until later and watching it on a web site like Netflix or Amazon Prime?
5th., If you limit your intake to specific networks or shows (through Google Play, Apple iTunes, NetFlix) you costs can be much lower ala carte.
http://www.hawknest.com/
It's called an Antenna....
You have an odd idea of 'most' and 'normal'. About 18-20 million people on average watch an NFL game on TV. Stadiums hold about 70K people.
Consider the Comcast policy for low cap internet as an excellent example. All plans are capped at 300GB. If you don't need that much you can reduce the cap to 5GB and get a massive $5 discount off the base price of the plan. However, under the reduced plan each GB over 5 costs a dollar per GB. If you get back up to 300GB that would cost you $295 for the same data that only saved you $5 when it was removed.
Savings per GB reduction $0.02
Cost per GB added $1.00
This is the actual pricing plan currently offered by Comcast so let's try substituting Channels for GB and see what that does for the price.
If this same ratio were applied to channels then you would save 2 cents for each unbundled channel you removed but have to pay a dollar for each channel you want. As with the internet plan the base price would still apply even with no channels so let's do an estimate. Let's say you pay $50 a month for 100 channels. Removing ALL of the channels at 2 cents per channel would save you $2 for a plan price of $48.
This means that for the exact same price as your bundle you can now only have 2 channels. Going back to all the channels you had in the bundle would cost you $148 for the same service you previously got for $50.
Neil Irwin is a talking head on CNBC, MSNBC, PBS, etc...
http://neilirwin.com/about-nei...
So he's not exactly unbiased. lol
For a decent counter to his stupid argument:
http://www.forbes.com/sites/ti...
Worstall has part of an argument against the Times opinion piece, but he makes an even bigger whopper with his "proof" that no one wants taxes raised, because people aren't voluntarily gifting their wealth to the Federal Government by the hundreds of billions of dollars annually.
But he's right. No one wants their taxes raised. Everyone wants everyone else's taxes raised. His point is people will say lots of things because of their ideology when being polled. But when the tax man comes around, the tax hike aint fair! And when they need to get on a plane, they're getting on bundle or not.
Will al-a-cart be more expensive? That depends entirely how you look at it. You currently pay about $100 for around 350 channels. But, you absolutely cannot be watching all of those. In fact, you likely only watch less than a dozen. But they know what those dozen are and they organize those in such a way that you have to pay for all 350 to get the 12 you want. When it's Al-a-cart you'll likely pay around $5/channel on average. So now you'll be paying $60 for 12 channels instead of $100 for 350. Is that more or less expensive? It's more "per channel" but its less "per month" and you're not losing anything you were using.
But that's if prices remain the same. Which they absolutely will not. There is virtually no competition on the content side, they set a price and demand it. A company like Comcast can't just turn off "Comedy central" so they're stuck paying it. For evidence of this just check out Viacoms profit margin: http://ycharts.com/companies/V...
They're running at 22% profit... that's insane Most of the people out there paying for Viacom aren't even watching it! It's just part of a package they had to get to get some other channel. With a 22% profit margin and viewers that actually have a choice in the channels they pay for suddenly Viacom might decide the $7 they're charging might be a tad high.
My problem with bundling is that your cable dollars *underwrite* crap like the Kardiashian shows, whether you watch them or not. I don't, but through my cable bill, I'm as responsible for the Kardiashians (as a media entity) as much as anyone.
I'm surprised more people aren't irked at this aspect, that as cable subscribers, they are funding any shows/channels they detest.
Cable companies are forced to sell in bundles by the content providers. That is why when there is a disagreement over rates when a contract is up you see a bunch of channels go black. I'm sure most cable companies would be glad to unbundle, it would make it a lot easier to keep customers from disconnecting. As it is now the content providers force the cable companies to place their channels on a designated tier of service and do not allow them to sell it separately in most cases (HBO being a rare exception).
If the cable companies can break out of the forced bundling they would easily crush these new startup streaming companies. They could provide the same service for the same price but with a much higher quality due to the fact they would have exponentially more bandwidth to utilize.
I have a couple friends who are senior people at Cable companies I am not sure it is always the Cable companies fault.
1. Cable companies have to pay distributors to license feeds
2. Those distributors bundle their channels. One or two popular channels, 8 - 10 undesirable ones. Cable company has to buy the whole block, it is priced as a monthly charge per subscriber to the tier that includes the block.
3. Distributors are always trying to raise the rates. Thats when you get the websites about "Tell Comcast you want to keep your channels", because the cable company is trying to hold the line on price increases
4. ESPN is the most expensive part of the cable bill. Last I saw the numbers, it cost the Cable company $5 per subscriber per month. It is probably higher now. That is why there has been an explosion of Sports Networks on cable. They are all trying to get that sweet sweet cash flow that ESPN gets.
5. The content providers have been fighting al a carte pricing. It will signal the death of a lot of channels that get few viewers. In the end, it may lead to less choice
My Cable company was very slow to get a lot of HD channels. My friend told me it was part of their strategy to hold the line on prices. They refused to pay extra to include HD feeds. Their belief was, the production company already had sunk the costs into producing the show in HD. It cost them extra to produce a non-HD feed. A customer who was watching the HD channel, was not benefiting from having the non-HD channel available too.
Maybe if I ever had Comcast, my attitude would be different, but I feel like my Cable company is doing what they can to control costs.
link: http://www.theatlantic.com/bus...
But he's right. No one wants their taxes raised. Everyone wants everyone else's taxes raised. His point is people will say lots of things because of their ideology when being polled. But when the tax man comes around, the tax hike aint fair! And when they need to get on a plane, they're getting on bundle or not.
I was always the exception. I want my tax rate raised. It's too low. For what I make, I should be paying 15% more. I make about $100k and pay about $10k in federal income tax (about $20k all direct taxes). It's insane, and it's too low. But taxes fall as income rises. The greater your disposable income, the more you can afford to "hide" income (in legal ways, of course).
What happens with these polls and stories is that there are a large number of flaws in human reasoning. Humans aren't rational. A person would rather lose $5 and have his neighbor lose $5 than see his neighbor get $20 while he gets $0. It's that flaw that people are exploiting. If I just pay more tax voluntarily, even if 50% of us do, all we'll be doing is comparatively lowering the taxes on the non-payers. But if everyone were to be taxed the same, it's a better option. The polls take advantage of that, and ask the questions to get the irrational answer, then present the poll as if the question were asked rationally.
Have you ever noticed that *no* major poll releases the actual questions asked and the order? Because the people managing the poll aren't there to get information, but to manipulate. Yes, as a research exercise (back in college), we decided the answer we wanted and crafted polls to get that answer, even doing it twice with opposite desired answers. Never failed to get the desired result. Unless a poll publishes their questions (including order, as that matters greatly), then assume it biased and worthless, unless proven otherwise
Learn to love Alaska
It's possible for a market to become more economically efficient while becoming less pleasant for consumers.
Possible? That is how it will always happen when there is no/limited choice.
You have to pay for baggage, seat choice, etc, etc.
No you don't "have to". I don't pay for baggage, I carry a backpack. I don't pay for a seat choice, I take what I get. I don't pay for meal, I pack a PBJ. I never pay a dime above the base fare, with is considerably lower than the old "full service" fare. You are just whining that no one else is subsidizing your choices.