[opendtv] Re: Chairman Martin on a la carte

At 3:56 PM -0400 8/24/07, Manfredi, Albert E wrote:


He gives some examples of niche channels that cable and DBS nets refuse
to carry. I'm not sure how a la carte would change that. But it does
lead to stories in several articles copied as attachments, which talk
about how difficult it is for niche channels to be carried on TV nets,
and the role Internet television can play.

(Seems most obvious that if these rarely-watched channels are not
somehow bundled, they will simply not be offered at all.)


The real question here is one of network topology.
As long as cable continues to offer analog basic and extended basic tiers, they will be constrained in total system capacity. The current topologies that are being used have the analog tiers operating at capacity, with channel bundles that favor the cable operators. It is nearly impossible to gain analog carriage today.
This means that to gain carriage today, a network must agree to being placed in an optional digital tier, typically with a bundle of similar channels. The added expense of digital service AND the cost of the additional tier "can" significantly increase the cost of cable service for the minority groups that are lobbying AGAINST ala carte.
I say can, because it appears that at least some of the MSOs are offering special bundles for Spanish language customers.
Here in Gainesville Cox has a digital tier with about 25-30 TV and music channels in Spanish called Paquete Latino. If you subscribe to extended basic (about $54/mo.) you will need to spend another $10 per month for digital service and the Paquete Latino tier. However, Cox offers a special bundle with the limited basic analog tier and the Paquete Latino digital tier and STB for $29.95/mo.
I guess it pays to be a Spanish speaking minority, as you get much of the same content as the extended basic tier (in Spanish) for half the price of the extended basic analog service. 


I think Internet TV is the perfect vehicle for niche channels. Since
they don't get a whole lot of viewership, the Internet should be capable
of distributing them without straining. Image quality might not be HD,
but then it probably wouldn't be HD source material anyway.
The cable systems can deliver Internet TV today, if you subscribe to one of the higher data rate broadband services. But this is a far cry from being able to access the channels you want at the push of a button. As the network topologies evolve from a broadcast model where every home can access any service, to a switched digital topology, where homes request streams from neighborhood/central switches, the capacity crunch will disappear. Some of the IPTV systems are already doing this. When this happens, consumers "should" be able to access ANY channels they want, and the cable systems should be able to act as the billing service to collect appropriate fees for the channels.
The problem is that they will no longer be able to force everyone to pay for all of the channels that they do not watch, as cable subscribers do today.
I agree with Bert that the Internet TV model is better suited to the delivery of individual programs that may be of interest to the viewer. it is not optimal, however, for linear channels that aggregate all kinds of content.
The current system is propping up the double dipping business model, where we pay subscriber fees for advertiser supported content. Ala Carte would destroy this model, as most of the "browser channels" could not afford to lose the channel surfer audience that they depend on today. These channels - e.g. ABC Family, FX, Lifetime, USA, E!, A&E, Discovery, etc. - would drop subscriber fees in a heartbeat to assure that consumers would have access to their content. Others like ESPN might increase their subscriber fees, as they would lose all of the homes that don't watch sports, and those that do would have to make up at least part of the difference - even here, competitive pressures might keep subscribe fees under control.
The larger problem for ALL networks is the threat that consumers will simply buy only the programs they want to watch. I could buy a lot of content for $70/mo. at $2-3 per episode or movie.
It was appropriate for Martin to point out the financial efforts of the cable industry to use minorities to fight ala carte. Only in America do people pay twice to watch ads... 

Regards
Craig


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