Tuesday, April 29, 2008

Why A La Carte Cable is a Bad Idea

A la carte cable pricing has been a goal of consumer and family advocates for quite a while. On the surface, it seems like a logical idea that you only pay for the exact channels you want while keeping objectionable content out of the house. In reality, it’s a horrible idea that would raise cable costs for just about everybody.

Don’t believe me? Consider this. ESPN charges about $3 per subscriber. If a la carte were implemented, assume they only retain 1/2 of their subscribers. That means just to remain revenue neutral on subscriber fees, they have to double the cost to $6 each. That will be repeated for every single station you want to receive. You’ll end up paying more for less. A lot of the smaller niche channels simply won’t be able to cover their costs and will shut down. This simple analysis doesn’t even take into account reduced advertising fees or the tremendous overhead of cable distribution that is absorbed equally by all subscribers today.

Written for ParentalTech.com by COD