A La Carte

The Pitfalls of A La Carte: Fewer Choices, Less Diversity, Higher Prices

Cable’s method of delivering programming packages, with channels bundled into basic and digital tiers, has proven to provide both choice and quality to consumers. This model has enabled all programming networks, including niche networks that serve underserved audiences, to find and build an audience.

In recent years, a number of organizations have examined the idea of implementing an “a la carte,” or channels priced and ordered individually rather than from a selected bundle, and have found serious flaws in that suggestion. Several independent and industry studies have concluded that a la carte would offer no benefit to the vast majority of consumers and would, in fact, result in higher prices, less choice and less programming diversity.

These documents provide an overview of a la carte pricing and its potential impact on cable networks and consumers.

Government Mandated A La Carte: Making You Pay More for Less
Publication Type: Talking Points

Date: 1/17/2009

A La Carte: Making You Pay More for Less

Most academic and government studies conclude that forcing cable operators to sell each channel of programming separately (a la carte) would be more expensive for consumers and result in less diversity in programming.

A la carte would result in consumers paying more for fewer channels of cable programming. Under an a la carte regime, consumers would receive far fewer channels for the same price they pay today to receive a broad array of channels on the basic and enhanced basic tiers.

Because a la carte would reduce advertising revenues (which are based on the number of prospective viewers) and increase marketing costs for many program networks, cable networks would have no choice but to significantly increase subscriber fees and/or reduce the quality and quantity of their programming. Some program networks, especially those targeting niche audiences, would not survive.

For these reasons, the FCC’s First Report on a la carte (2004) found that mandatory a la carte would be likely to make most consumers worse off.

Even the FCC’s Further Report (2006) — which is cited by some as supporting a la carte — determines that customers who already have digital boxes could receive 20 channels for about the same price that they pay today for up to 150 channels. In other words, under a la carte, you could only purchase one or two eggs for the price of a dozen – not a great bargain for consumers.

By undermining the economic viability of new networks, niche programming, and existing networks that appeal to minority audiences, a la carte would reduce programming diversity

A la carte would result in new equipment costs for many consumers, because purchasing channels in this way requires customers to have an addressable set-top box or a digital television set. People subscribing to an analog-only tier – currently 40 percent of all U.S. cable customers – would no longer be able to plug their cable directly into a TV set and view their programming: they would have to buy or rent new equipment to view a la carte channels.

A la carte would fundamentally limit the way that people enjoy television.

The benefit of cable is to provide consumers with a broad array of viewing options in a readily accessible fashion. These options accommodate a variety of tastes by different members of a household as well as changes in people’s tastes.

A la carte would destroy that model, forcing viewers to lock in their programming choices in advance, and depriving them of the ability to easily explore new shows and networks.