Cable a la carte4/17/2013
The cable television industry is capitalism at its most corrupt. Outside of refusing to partake, cable and satellite subscribers have close to zero recourse in bringing down the cost of the service. While it would seem the fate of TV viewers is sealed, one provider has stepped in to potentially stem the tide of ever-climbing cable bills.
Verizon Fios proposed last month to change its payment model to a system where networks are paid for their content based on the actual number of views they receive, not the current system of set, negotiated rates. Cable bills are, for the most part, comprised of “carriage fees,” which is the amount networks get paid per subscriber to their service. The amounts are rather small with payments anywhere from $4 for ESPN to less than a nickel for networks such as MTV2, LOGO and BBC World News.
While those carriage costs don’t seem like much by themselves, many networks refuse to sell their content unless a cable provider buys their secondary stations; i.e. ESPN2, ESPN News, etc. With this in mind, it should come as no surprise sports networks make up more than 40 percent of most cable bills. Under Verizon Fios payment redesign, the payment networks receive would be based on one’s viewing habits. ESPN’s $4-per-subscriber fee could skyrocket if the station is truly as popular as it claims to be.
In 2006 former FCC chairman Kevin Smith testified to Congress that the average consumer only watches 17 cable channels. Smith believed the industry needed to switch to an “a la carte” to offer a fairer pricing model. Under an a la carte system, subscribers would only pay for the channels they actually watch. Should your grandma be forced to pay for ESPN, Spike and Cartoon Network if all she watches is Lifetime, AMC and the Hallmark channel?
Could Verizon Fios’ move lead to an a la carte system? Initially no, but it might bring down the cost of cable and, hopefully one day, push networks to advocate for their content to be offered directly to consumers in the pick-and-choose, a la carte manner. CV
Patrick Boberg is a central Iowa creative media specialist. For more tech insights, follow him on Twitter @ResponsiblyWild.