Cable TV's Move Online Reignites 'A La Carte' Pricing Debate
July 01 2009 - 2:08PM
Dow Jones News
The cable television industry's move to bring its TV
subscription model to the Internet amid the rise of online video
will meet resistance from consumers who have complained about the
industry's bundled pricing method.
Cable network owners, like Time Warner Inc. (TWX), and
distributors, like Comcast Corp. (CMCSA), are rallying support for
an industrywide authentication system on the Web - dubbed "TV
Everywhere" - through which users could confirm their subscription
to a pay-TV offering in order to access online programming.
The plan is designed to prevent customers from dropping TV
service in favor of accessing TV programming for free on the
Internet, which could blow a hole in the economics of the TV
business. But it's also an effort by the industry to move onto the
Web a bundled pricing model that has been criticized by consumer
advocates as forcing people to pay for a large number of channels
that, in many cases, they don't watch.
"When you think about it, the Internet and its iTunes-style
model for media content is really the ultimate a la carte
universe," said Ben Scott, policy director with Free Press, a media
reform advocacy group. "When the cable TV bundle is transferred
onto the Internet, it wouldn't be surprising to see the consumer
act negatively and demand a la carte pricing online."
So-called "a la carte pricing" for the pay-TV industry was a
concept supported by former Federal Communications Chairman Kevin
Martin that would allow consumers to subscribe to just a handful of
channels of their choice in order to cut back their monthly bills
rather than pay full fare for a large bundle of basic service
channels.
The National Cable & Telecommunications Association opposes
a la carte pricing, arguing that it wouldn't save consumers money
and it would reduce the quality and diversity of programming
available to consumers.
Time Warner Chief Executive Jeff Bewkes and Comcast Chief
Executive Brian Roberts recently rejected the notion that the
industry should pursue a la carte pricing online, saying such a
plan would be more costly.
"You'll end up paying more because you won't have the ability to
have niche networks, you won't have the ability to have ad support
and you won't have a very efficient subscription payment," Bewkes
said.
With the FCC currently in transition as Julius Genachowski, the
new chairman appointed by President Obama, takes over, it's unclear
how the regulatory debate over a la carte pricing for TV service
will proceed. But executives at emerging Internet video companies
say consumer demand will force media companies that charge for
access to online video to offer a la carte options.
"Consumers who feel they're paying too much for the amount of
cable they're watching will demand to pay for only the content they
will use," said Avner Ronen, chief executive of Boxee, a startup
online video aggregator that provides a technology platform
allowing consumers to watch Web video streamed from their PC on a
big-screen TV.
"It's in the hands of the people now, and the technology and
user-demand is there, so the industry will have to follow," Ronen
added.
-By Nat Worden, Dow Jones Newswires; 212-416-2472;
nat.worden@dowjones.com