[opendtv] Re: Scrambled channels irk cable viewers
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Fri, 14 May 2004 09:14:10 -0400
At 9:38 AM -0400 5/13/04, Manfredi, Albert E wrote:
>
>What Comcast should have said is that this is the a la carte
>service you customers have been asking for. Of course it ends up
>costing you more. Just as it would cost you more if you bought
>eggs one by one at the supermarket.
>
Too bad your analogy is based upon an unsupportable premise, Granted,
buying thinks in small quantities rather than in bulk generally is
more expensive. But this is not a discussion about buying individual
food items in bulk; it is a discussion about buying all of your
groceries once a month.
A more appropriate analogy would be as follows:
Operating a big grocery store where people can browse the isles and
buy only the products they want is obviously more expensive than
operating a warehouse where a few employees would prepare shopping
carts filled with a pre-selected menu of foods. Instead of competing
grocery stores where you could buy exactly what you want, the
government would step in and hand out a few franchises creating a
grocery oligopoly, which they would regulate. The regulators would,
on occasion, tell the oligopolies what they could or could not sell,
based on what they perceive as being a health diet.
The lifeline basket would be cheap, and would only include the
essential basics to sustain your family. You would get a dozen eggs,
a gallon of milk, some hamburger and hot dogs, etc.
The expanded basic basket would include a wider selection of foods
based on the most popular items that people want. Along with the eggs
and milk you would get some orange juice, bacon, sausage, and a
bottom round roast. If you do not like some of the stuff that other
people like, too bad...everyone gets the same basket of food, and
throws away the stuff they don't want.
If you want to spend a little extra you could subscribe to some
premium food tiers. With the meat tier you would get some steaks and
pork chops. The Vegetable tier would include a selection of premium
fruits and vegetables. Thus you would be able to get all the
groceries you really want, but you would be buying a bunch of stuff
that you don't want and you would be paying far more than you do for
the ala carte grocery shopping we enjoy today.
Why?
Without the competition that exists by virtue of the fact that you
can choose between brands and competing grocery chains, the food
industry would likely consolidate around the products that go into
the extended basic baskets consumed by the masses. The grocery stores
would try to maximize profits by cutting deals with a few big
vendors, who would focus their manufacturing efforts on the
homogenized mix of products that are most popular with the masses.
In time prices would creep up as both manufacturers and grocers would
keep raising prices, as there would be little if any competitive
pressure to control prices.
The reality of cable and DBS today is that they are moving toward a
digital infrastructure that will easily support ala carte selection
of programming. DBS already does this today, as all set top boxes use
conditional access cards that enable you or the system operator to
enable or disable channels individually. The DBS systems already keep
track of your demand based purchases (NVOD), periodically downloading
the data cache that contains your purchases. The cable guys can do
the same with their new digital tiers, but it is much more difficult
to enable or disable individual channels in the analog tier,
especially since millions of homes use the cable ready tuners that
have been built into their TVs for the past two decades.
The solution is easy. IF the politicians were to demand that
programming be offered on an ala carte basis, the DBS industry would
have a major advantage over cable. The cable industry would have
little choice but to complete the transition to digital, so that they
could control access to every channel. And this would have the major
benefit of eliminating the need for analog cable ready tuners in
TVs...the same TVs that account of 85% of all TV units sold today.
With real competition between channels, it is likely that prices
would actually decline rapidly. As I have stated before, the browser
channels would quickly drop ANY "use fees" so that they would be
accessible to everyone. Fees might climb on channels like ESPN, which
are very popular among a segment of the marketplace. And with ala
carte pricing in place, there could be a major incentive to fund
content directly rather than through all of those annoying ads. The
important take away, is that content producers would be free to try
new business models, rather than spending their time trying to win
favor from the content and distribution oligopolies that control what
we see today.
Regards
Craig
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