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Unbundling Cable TV: Be Careful What You Wish For

Posted by samzenpus on from the a-buck-a-show dept.

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."

31 of 448 comments (clear)

  1. And? by Anonymous Coward · · Score: 3, Insightful

    Head to my nearest airport and observe what?

    1. Re:And? by thaylin · · Score: 5, Funny

      its only 7 days into the year, I dont smell that bad, lets give it another 3 weeks before you bully me.

      --
      When you cant win, ad hominem.
    2. Re:And? by Marginal+Coward · · Score: 3, Interesting

      TFA bascially makes the point that you now have to pay for a lot of things individually on airlines that you used to get for "free", and that not everybody enjoys paying for these things. True enough, but the article brushes off the very real benefits of paying less when you get (and need) less. For example:

      As fliers have learned all too well in the last decade, air flight has become unbundled. Want a bit of leg room? That will be a $50 upgrade for a seat in your airline’s “premium economy” cabin. Sandwiches are on sale for $9, a glass of wine for $7. Checking that bag costs $25, and there is a $200 change fee for your ticket, or buy a much more expensive one upfront.

      However, what's wrong with bringing fewer bags, if you want to, or else paying the going price for the bags you really need?

      In the cable world, I certainly can imagine someone whining about "Why do I now have to pay X for channel Y - that's a ripoff!", but I don't see how it can be a bad thing to pay less for only what you really want. It really boils down to economics: if it now is efficient to allow people to select and pay for cable channels individually, that's bound to happen. It's only a matter of time.

    3. Re:And? by LynnwoodRooster · · Score: 4, Funny

      Read the fucking article?

      READ the fucking article?

      THIS

      IS

      SLASHDOT!

      --
      Browsing at +1 - no ACs, I ignore their posts. So refreshing!
    4. Re:And? by rudy_wayne · · Score: 4, Interesting

      But this is a weak analogy at best. I now pay for a bunch of sports channels and kids TV that I don't care about. Your example of internet access; if I'm not going to use it on the plane I don't have to pay for it. Same thing for the light snack or entertainment. I don't have to pay for it. Or I can bring my own candy bar. But with cable, if I want Channels X & Y, I have no choice but to get the package that offers Channels M through Z whether I want them or not. The idea that now you have to pay for a lot of things individually on airlines that you used to get for "free" assumes that I cared about any of those "free" things in the first place.

      The problem is, getting rid of the things that you don't want and only getting the things you want, doesn't necessarily lead to lower prices.

      People want unbundling of cable channels because they have done the following math:

      200 channels for $100 a month = 50 cents per channel.
      Therefore, if I pick only the 50 channels I might ever possibly care about, my bill will be 50 x 0.50 = $25, a substantial savings.

      But there's nothing forcing the cable company to charge the same price for every channel. If you have odd tastes and most of the 50 channels you like are very unpopular, you might actually get your 50 channels for around $25.. But there's nothing stopping the cable company from charging much higher prices for the channels they know are the most popular, so, you could end up choosing your 50 channels and still end up paying about the same amount of money that you pay now for 200 channels.

    5. Re:And? by rot26 · · Score: 4, Insightful

      You missed the point... again.

      The "airport model" means that "normal" or base service is degraded into total uselessness, and you have to pay to add functionality until the service is no longer useless and/or intensely unpleasant. This may or may not be cheaper than what you had before... but you can't complain because you opened the door for a-la-carte pricing, which will inevitably be used to increase profits.

      --



      To ensure perfect aim, shoot first and call whatever you hit the target
    6. Re:And? by MightyYar · · Score: 3, Insightful

      The difference is that air transportation is the most practical (and often cheapest) way to reach many places. Cable is pure luxury. If the "base service" sucks, I just won't buy it. I don't have cable now - we instead watch the Netflix and Amazon stuff. Without commercials you don't even know what you are supposed to feel like you are "missing". People tell me about a good show and I'll get around to watching it eventually.

      Sports is another matter. I'm not a huge sports fiend, but it would be nice to catch a game now and then. As it is, I can only watch the broadcast games. I would probably pay them if they would take my money, but they won't.

      --
      W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
    7. Re:And? by vux984 · · Score: 5, Insightful

      However, what's wrong with bringing fewer bags, if you want to, or else paying the going price for the bags you really need?

      The cognitive burden of facing all those "decisions" and the constant bombardment of the nickle and diming fees makes the entire experience less enjoyable for everyone.

      Imagine a game where you paid a fee to unlock each level, each quest, each item. If you don't play the game much, its more economical this way.

      However, the game itself isn't much fun because instead of playing it you spend all your time deciding whether its really worth another 50 cents for a bigger bag or whether that dungeon is going to be worth $2 or whether equipping this item is really worth another 25 cents...

      I'd MUCH rather pay $30 for the game, and have it all available, even if I don't end up exploring every nook and cranny.

    8. Re:And? by Marginal+Coward · · Score: 3, Interesting

      Interesting point. Certainly, there is a tradeoff here. I think in specific case of cable, though, the burden of selecting channels at first and perhaps once a year wouldn't be too onerous. In fact, most people make choices about channels - specifically, which ones to watch - on a daily basis.

    9. Re:And? by AmiMoJo · · Score: 3, Interesting

      TV channels are simply becoming obsolete, and most if not all will have to go away eventually. Some will move to a Netflix type model, some will simple become production companies that sell to Netflix et. al. and some will probably make more money posting content on YouTube.

      The idea that they will all continue to be viable while using such an inefficient and expensive delivery medium, coupled with a linear time broadcast format, is outdated I think.

      --
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  2. In other words ... by gstoddart · · Score: 5, Insightful

    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.
  3. Cable service is already shitty. by pecosdave · · Score: 3, Interesting

    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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  4. Worse service? by bananaquackmoo · · Score: 5, Insightful

    Worse service? Than a cable company? I'm 99.99% sure that is impossible.

  5. How about unburdening Cable services by EmperorOfCanada · · Score: 5, Informative

    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.

  6. Airline anaolgy is incorrect by gurps_npc · · Score: 5, Interesting
    The thing about airlines is that they unbundle things that almost everyone wants.

    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
    1. Re:Airline anaolgy is incorrect by dirk · · Score: 3, Insightful

      The bigger problem is that a lot of these channels will probably go away if they get rid of bundling. A lot of the smaller niche channels survive until they can support themselves by being bundled with more popular channels (and many of them never make any money and totally live off of other channels). If bundling is gone, then every channel basically has to be making money in a short amount of time or they will be gone.

      For example, I would bet dollars to donuts that the Sci-Fi channel didn't make any money for years. It survived because it was bundled with other channels so cable companies were forced to carry it. Basically, unbundling means the channels downgrade to the lowest common denominator because no one will be willing to spend the money on hoping a channel can find it's audience.

      --

      "Information wants to be expensive" - Stewart Brand, the same guy who said "Information wants to be free"
    2. Re:Airline anaolgy is incorrect by gurps_npc · · Score: 3, Insightful
      I agree this is probably true. But it's not a bad idea, it's a good idea. Specifically, it's called capitalism.

      Good channels survive. For example the Sci-Fi channel does not exist. There is an abomination called the SyFy channel that should die a horrible death. Why? They screwed themselves. Before they even changed their name, they abandoned good Sci-Fi for wrestlers talking about vampires for some god forsaken reason.

      But getting rid of bad channels is not a bad thing. New channels will take their place. Good TV will still find a place to get made. They need to fire those idiots and let someone else with more brains and less marketing have a go at it.

      --
      excitingthingstodo.blogspot.com
    3. Re:Airline anaolgy is incorrect by nine-times · · Score: 5, Insightful

      This is true, but... do we really need channels at all?

      Personally, all I'm interested in is shows. There are a handful of shows on TV every season that I want to watch, and I don't care what channel they're on. I don't care what time slot they're on. All I actually care about is, when is it available for on-demand viewing?

    4. Re:Airline anaolgy is incorrect by tlhIngan · · Score: 3, Insightful

      I agree this is probably true. But it's not a bad idea, it's a good idea. Specifically, it's called capitalism.
      Good channels survive. For example the Sci-Fi channel does not exist. There is an abomination called the SyFy channel that should die a horrible death. Why? They screwed themselves. Before they even changed their name, they abandoned good Sci-Fi for wrestlers talking about vampires for some god forsaken reason.

      But getting rid of bad channels is not a bad thing. New channels will take their place. Good TV will still find a place to get made. They need to fire those idiots and let someone else with more brains and less marketing have a go at it.

      False.

      Cable channels ALREADY have prepared for a la carte. And they're not going the "better channels" route. They're going the "more eyeballs" route.

      First, you'll notice that your favorite programs are now spread across three or four channels. What used to be on History is now on H2/H3/other associated channels now. What used to be on Discovery is now on Science and the other channels.

      Next, have you noticed how the main channels like Discovery and History have gone practically all reality? Guess what? That's on purpose - because those kind of shows are popular with the public and get the eyeballs in. More eyeballs means more people wanting that channel.

      Your model is called the PBS model. No, we're not going to get more PBS-like programming channels (ever notice how PBS, who doesn't worry about eyeballs, always seems to keep a high level of programming and no ads?). Even so, PBS is under attack because of taxpayer funding through various means.

      In the battle for subscribers, you don't get them by producing thoughtful shows. You get them by producing crap that gets eyeballs in. Few want good documentaries on World War II. More want more Pawn Stars (and they want drama, not crap about crap), more people racing each other through dirt countryside and all that.

      Oh wait, you'll need ot purchase 4 channels now for that to spread the eyeballs around, too.

      In short - only two ways to get good programming - PBS, or subscriber funded channels like HBO. The other channels? They're going to fight tooth and nail for eyeballs.

      And yes, it'll cost more. After all, Discovery by itself is around 25 cents/subscriber/month, with all the bundling they force, it's probably closer to 40-45 cents. You can bet your cable provider will charge 25 cents or more for each channel. Maybe a whopping dollar per channel (right now, less than $1 of your fees are for Discovery).

      You want to see savings? ESPN charges $10-15/subscribe/month. Probably more because of bundling.

      Trust me, the networks are all prepared for this day. And they're not going after the people who want to see smarter TV programming. They're going after the lowest common denominator because there are more of them than you. History and Discovery catering to you? Probably a few subscribers. Cater to the crowds? At least 10 times, if not more subscribers.

    5. Re:Airline anaolgy is incorrect by DarkOx · · Score: 3, Informative

      Right the airlines are not operating what is the model of an efficient market. They are actually trying to take advantage of inefficiency. As you say these 'unbundled' items are not really items at all. They have no value or even meaning outside the context of the other product.

      A hour of content is an hour of content, independent of what transport protocol gets it to my display. Leg room on a flight to Dallas no so much.

      The airline game is really about reducing your access to information and making it harder to price compare. So when you go to the travel website and see Airline A wants $200 and airline B wants $220 a ticket you can't immediately determine which is the better deal, because you first have to find out if they charge for checked bags, how much, is the first bag free, etc.

      Unbundling cable has the opposite effect it will make it perfectly clear where you money goes (ESPN). Without the cross subsidy will the hangers on have the pricing power to be profitable. My guess is no, but really nothing of value will be lost.

      --
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    6. Re:Airline anaolgy is incorrect by Sri+Ramkrishna · · Score: 3, Insightful

      You can thank our Republican friends for this. Apparently, they've seen to have forgotten the happy days of growing up on Seseame Street and The Electric Company.

  7. Or it could lower the cost. by LWATCDR · · Score: 4, Insightful

    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.

    --
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  8. We have unbundled here. Prices went up. by Guspaz · · Score: 5, Interesting

    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.

  9. Re:Right Place by Anubis+IV · · Score: 5, Informative

    Dish just introduced a $20/mo. streaming service that includes ESPN. Seems like the cord cutters have the final piece of the puzzle now.

  10. "May"? by roc97007 · · Score: 3, Insightful

    "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.
  11. The Problem is Monopoly, Not Bundling by crunchygranola · · Score: 4, Insightful

    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:

    Your local franchising authority - the city, county or other governmental organization authorized by your state to regulate cable television service - legally may (but is not required to) regulate the rate your cable TV provider can charge for "basic" cable service. The rates you pay for other cable programming and services, such as expanded cable channel packages, premium movie channels and pay-per-view sports events, are set by your cable TV provider.

    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
  12. Re:Right Place by MitchDev · · Score: 3, Interesting

    It's called an Antenna....

  13. Re:um yea... by Charliemopps · · Score: 3, Interesting

    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.

  14. One good reason for unbundling: The Kardiashians by joabj · · Score: 5, Insightful

    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.

  15. I am not sure it is the Cable Companies Fault by weiserfireman · · Score: 5, Insightful

    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.

  16. Re:Spirit? by ShanghaiBill · · Score: 3, Insightful

    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.