

McCain working on bill to allow for 'a la carte' cable TV packages - fady
http://thehill.com/blogs/hillicon-valley/technology/298609-mccain-works-on-a-la-carte-cable-tv-bill

======
codex
I would love a la carte TV, but make no mistake: it will destroy the
profitability of cable companies.

Bundling allows cable operators to segment the market: to sell the same
product to different audiences at different prices depending on their
willingness to pay.

A $100 package of bundled sports + movies can be sold to the person who is
willing to pay $90 for sports and $10 for movies and also to the person who is
willing to pay $10 for sports and $90 for movies.

But sports and movies are unbundled, they must be sold at the same price to
everyone. Should they be priced at $10 each? $90? Somewhere in between? Pick
any price and the cable companies lose money: the person who values it more
will pay less for it than they would have, and the person who values it less
won't buy it at all.

EDIT: I don't want to sound pro-cable; indeed, I am not; I am just pointing
out the effects of this legislation. In some ways, bundling is a natural way
to package content. MOG, Spotify, and other subscription music services bundle
their content (you don't get to pick and choose what you subscribe to), and
the big daddy of disruption, Netflix streaming, doesn't let you unbundle
either. It's one flat fee for everything. In these cases, of course, it's
easier to swallow because prices are so low to begin with. Perhaps it's not
bundling that's the problem with cable, but the pricing.

~~~
codegeek
"will destroy the profitability of cable companies"

I would phrase it as "it will eliminate the monopoly of the cable companies".
Which is a good thing. Sick and tired of the limited options we have with
cable companies and the "bundles" they provide. I don't want bundles. I want
to watch what I want to watch.

~~~
jcromartie
That would be interesting. I have exactly one choice for cable TV and Internet
where I live. The alternatives (DSL or satellite) are too bad to even be worth
considering.

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vampirechicken
This will be lobbied into oblivion. Content providers won't go for it, because
they currently use their popular programming to force their new ventures onto
cable providers. You can't force a cable provider to put your crappy home and
garden channel on their line-up, if nobody orders it. You can't argue with
real sales metrics.

Further, cable providers can't make a living when all of their customers
downgrade to the three basic-cable channels they actually watch, plus HBO.
Because the idea of a la cart cable is to lower the bills by not paying for
what you don't want.

Huge amounts of money will, from both sides of the cable programming
negotiating table will align against this pro-consumer measure, because it
will force a radical rethinking of an industry that has never really had to be
pro consumer.

~~~
adelevie
> This will be lobbied into oblivion.

Nearly every regulatory issue in telecom (and likely most other industries,
but I'll just stick with what I know) is lobbied extensively by someone. Most
issues will, whatever the underlying intent, benefit certain sub-industries
over others. There's absolutely nothing wrong with that. In fact, it's
virtually impossible to propose a regulation that won't affect the market. By
definition, regulations are supposed to to affect the market.

To assume that "cable" will outright oppose this is false, and overly
simplistic. Cable is hardly a monolith, and there are things in this proposal
that different types of cable companies could conceivably support. NCTA, the
larger cable trade org opposes the measure, while ACA (representing relatively
smaller cable companies) supports at least many of the principles behind the
proposal[1].

There's a big difference in policy goals between vertically-integrated and
non-vertically-integrated cable companies. Comcast, as both a cable company
and a content producer, probably does enjoy policies that allow for bundling
and would oppose that certain part of the proposal. However, competing cable
companies who are not vertically integrated would probably support such a
measure. It's not a crazy thought that Independent Cable Co. X would like to
pick and choose which channels to buy for its subscribers without being forced
into a bundle. In other words, for the same reason that consumers might want
this choice, many cable companies could want this as well.

The part of the bill that penalizes broadcasters who switch to pay TV is
something that probably all cable companies, even the big ones like Comcast,
could support. Retransmission consent fees paid by cable companies to
broadcasters are increasingly high and a court-blessed Aereo would provide an
avenue for cable companies to simply stop paying those fees (or at least give
them a good bargaining chip in retrans fee negotiations).

Oddly enough, wireless companies (e.g. Verizon) might oppose this part of the
proposal. They badly want spectrum, and if FOX and others leave the airwaves,
this could help get that spectrum into their hands. As an aside, I think the
threats from FOX are hollow for a number of reasons.

Anyways, getting a little bit meta here, but the telecom industry is where
I've been interning (various places) and would like to work in at some point.
There's no reason to expect the average HNer to know these intricacies.
However, from what I've learned about telecom, I can at least have a better
idea of knowing what I don't know about other policy arenas. Thankfully, this
will prevent me from reaching super simple (and often flat out wrong
observations) such as "[t]his will be lobbied into oblivion." Obviously lots
of money will be spent opposing this, but that's true for nearly any
regulatory proposal, and is far from dispositive of any outcome.

[1] [http://www.fiercecable.com/story/mccain-bill-sparks-
conflict...](http://www.fiercecable.com/story/mccain-bill-sparks-conflict-
between-aca-and-ncta/2013-05-10)

------
seanalltogether
Perhaps we need a bill that covers 2 things.

1\. If a channel is free (NBC, TBS, etc), cable/sat providers are required to
include it as part of the base connection fee.

2\. If a channel is paid, subscribers need to pay for it directly, it can't be
subsidized through the basic connection fee.

Now individual networks have the power to determine if a channel is part of
the basic service or not. Cable companies still have the option of bundling
channels together or go ala carte if subscribers really want to access premium
channels.

~~~
codegeek
I am confused. How is it any different than we have today ? Free channels are
always part of the base fee and where the cable companies get you is the so
called "Premium" Channels which they offer in their "bundles".

~~~
samolang
I think he means channels the cable company has to pay for. Some channels
don't charge the cable cable, but get all of their money from advertising.
Other channels do charge the cable company and may or may not also have
advertising.

Example: <http://www.sportsgrid.com/media/espn-cable-subscriber-fees/>

List of a bunch of channels' costs: [http://allthingsd.com/20100308/hate-
paying-for-cable-heres-t...](http://allthingsd.com/20100308/hate-paying-for-
cable-heres-the-reason-why/)

------
NoPiece
The interesting thing is that the foundation of the TV system is built on the
increasingly obsolete concept of broadcast TV. If you could get rid of that,
and force all content providers to compete evenly via the internet, we'd have
much more interesting environment. You'd free up the airwaves for more
valuable use, you wouldn't need the FCC regulating content, and you'd break up
the abc/cbs/nbc/fox semi-monopoly must carry position.

Think how wasteful it is to use all that television frequency bandwidth
largely to transmit tv signals from networks to cable companies. According to
NAB, only 17.8% of US homes rely only on OTA.

[https://www.nab.org/documents/newsroom/pressRelease.asp?id=2...](https://www.nab.org/documents/newsroom/pressRelease.asp?id=2761)

------
Shivetya
First off, read the link early in the story to his comments. Its more
informative.

I wonder how he is going to address must carry channels that local governments
impose upon the cable companies? I am all for choosing channels, but I wonder
if this would permit currently premium channels to be chosen without excessive
charges? As in, will they still permit bundle requirements to have HBO?

Considering it imposes similar rules on those companies selling channels to
cable companies the host of groups who will line up to fight this will be
impressive.

My favorite part is eliminating the black out rules on sports events for
public funded stadiums.

------
aneth4
Not that this bill is necessarily a bad thing, but Republicans know no end to
their hypocrisy. They'll introduce all sorts of unnecessary micro-regulation
to create a "free" market. This is the same guy who supported the bills
deregulating the financial industry, which lead to the derivatives crisis.

I guess Senators suffer from the same problems as software engineers - they
only see the problems in their living room.

~~~
jerrya
I don't have a free market in cable providers.

In my largish apartment complex, there is one cable provider: Cox. I can't use
a sat dish, my apartment faces the wrong direction and I'm on the second
floor. FIOS isn't available. CenturyLink agrees no "prism tv" whatever that is
for me, and directtv is out because I am on the second floor and face the
wrong direction.

So there's really no free market in cable providers for me, it's a monopoly
situation.

The free market solution would be to require Cox to allow other cable
providers to use their cable to get last mile to me and then let Cox, et. al.,
charge me however they wish.

I would be curious to know which situation Cox would prefer: mandatory
unbundling, or force them to share the cable.

EDIT: I do wonder what keeps Verizon from offering FIOS if they wanted to. Is
it too expensive to rewire a huge sprawling multi-floor apartment complex?

~~~
twoodfin
_EDIT: I do wonder what keeps Verizon from offering FIOS if they wanted to. Is
it too expensive to rewire a huge sprawling multi-floor apartment complex?_

My understanding is that Verizon has dramatically slowed their FiOS rollout,
primarily because they don't think they're likely to be able to sell you
"premium services" long-term. Does anyone think that within 10 years there
will be any content worth having not available over a 100Mbit (or gigabit,
even) pure IP connection? How much can Verizon expect to charge for such a
connection?

FiOS made sense when they thought they would be Skype, HBO, NetFlix and iTunes
combined, or at least get a cut on all of those. But even if we don't get
regulated Network Neutrality, competitive pressure alone will commoditize
content and application delivery over IP.

~~~
AnthonyMouse
What I don't understand is their pricing model. It seems like they would do a
lot better to have A) a "cheap crappy" option which is something like 384K
internet and basic cable for an extraordinarily low price, and B) a 100Mbps+
internet service at the same profit margin they would get by selling an entire
"triple play" package and then optional over the top phone and cable packages
effectively for Verizon's cost, the point of offering them at all merely being
to be able to supply the same overall offering as their existing competitors.

The result would be that Verizon could stop giving a crap about whether you
use their TV offerings or Hulu or whatever else because that's not where they
make their money, but at the same time customers wanting the "triple play"
package can get it from them for a total price competitive with similarly
situated ISPs and with an overall profit margin they expect from such a thing.
Just admit to themselves that they're in the wire business, stop trying to be
in the content business, and charge accordingly for the wire. Suddenly "cord
cutters" are not a problem, especially when the competing ISP realizes the
logic and does the same thing.

~~~
twoodfin
You have described what I can only assume is Apple's sales pitch to the
carriers: Do you want to be stuck charging $50/month to "cable cutters" or do
you want to sell a sexy "Apple TV" with an associated $100+/month "smart TV"
plan?

~~~
AnthonyMouse
Basically. Except that there is no need for a "smart TV" plan, just charge
that much for the wire itself. Apple TV isn't going to do Verizon any good
other than build a dependence on Apple like what the recording industry did
with iTunes. If people want an Apple TV they can buy one from Apple and hook
it up to the wire. Or they can get a gaming console instead, or roll their own
Linux box, Verizon shouldn't have to care. They're in the wire business.

~~~
twoodfin
But right now their "wire" costs $50 or so a month. Their users currently pay
them $60 more for a standard lineup and $10 for HBO on top of that (rough
numbers). What happens when those users can get all that content through the
$50 connection and start cancelling their TV? A 100+% price hike would be a
tough needle to thread.

~~~
AnthonyMouse
The answer is to change what they're selling. You can currently get whatever
it is, say a 16Mbps connection, for $50/month. Stop selling that entirely.
Discontinue it; put the existing triple play customers on the new triple play
(which so happens to have the same price, just with more allocated to the
connection itself), stop offering that tier to existing internet-only
customers as soon as their contracts expire. Your new alternative is a) a very
slow connection (not fast enough for Netflix/Hulu/whatever) for $29/month, b)
a 100Mbps+ connection for $99/month, or c) a "triple play" 100Mbps+ connection
+ basic cable + phone for $110/month, and whatever premium channels you want
on top of that for exactly what the channel itself charges for its content. Or
you can get phone from Skype and TV from Hulu and Verizon couldn't care less,
because they're not in the content business, they're in the wire business --
they should _want_ you to stop subscribing to their over the top offerings and
switch to third party services, because that's not where the money is.

Compare the revenues or market cap of Skype or Hulu to that of Verizon FiOS,
and then realize that both Skype and Hulu have more customers than FiOS, and
ask yourself which business you'd rather be in. Infrastructure operators
selling over the top services is just an invitation for them to interfere with
competitors -- let the over the top market be competitive (and therefore have
very small margins) and take the margins from the infrastructure where you can
hold on to them. Look up "one monopoly rent" theory. If they're going to have
a monopoly and collect monopoly rents, just let them do it in the monopoly
market and not have to lose the benefits of competition in the over the top
market merely in order to claim the same overall margins spread out over more
products. It actually seems to be Pareto optimal -- who is going to lose out
here? Maybe the cord cutters, but they're doing something which is
unsustainable at scale unless what I'm proposing ends up happening. So where's
the drawback?

------
tyre
This sounds really awesome, but I cannot see this being really effective.

For individual channels, they can just make it extremely cost-prohibitive to
purchase single channels. Want ESPN? $20/month or you can get 20 channels for
$25/month. There are some people that will take that, but I wouldn't count on
it.

Same goes for cable bundling. You don't have to take ESPN with ABC, but you
can either have either one of them for $15m each (making up numbers), or
$15,000,001 for both.

Maybe I'm a pessimist, but these companies are experts in ignoring what people
want. Without very careful checks, they'll find a way to keep their margins
(which, given that they own the content, they absolutely have the right to do,
as much as it upsets me.)

~~~
AnthonyMouse
>ESPN? $20/month or you can get 20 channels for $25/month.

But if you _never_ watch ESPN then even saving $5 is worth it. There are
plenty of people who pay for cable exclusively for HBO, and since HBO and ESPN
don't share a parent company they're not going to want their networks to be
bundled together.

And it also allows you to make sensible decisions like specifically refusing
to pay for HLN because it puts Nancy Grace on the air.

------
codegeek
This will be awesome and it is long overdue in the United States in my
opinion. The monopoluy of the cable companies is outrageous to say the least.
Also, enough with the bullshit "bundles" and "packages". I don't want to pay
$100 to comcast (Northeast US region where I live) and get a "bundle" of
channels but if i want to watch HBO, pay extra. If I want to watch Showtime,
pay extra. Basically, any channel worth watching, pay extra. I would rather
pay $100 to pick 10 channels that I really watch even if that includes CNN.

------
fixxer
I gave up cable TV three years ago and honestly don't miss it. I still have
Internet (Netflix, Amazon Prime, NoWhere TV) and the options for providers in
my area are limited... but it worth it just to pay less to Comcast. This bill,
if it even passes, will not sway me to change.

~~~
ameister14
Yeah, I guess I just don't see the point in legislating something that is
going to be gone soon anyway.

------
tjansen
The bill won't have any significant impact on most customers because cable
channels won't charge the cable companies any less. If a cable companies has
to pay, say, $1 Mio to distribute a channel, it needs the subscriptions to pay
for that. It can either sell channels a la carte for a high fee, or sell
bundles for a lower fee per channel. But the revenue will always need to be on
the same level. The only difference will be that people who want _very_ _few_
extra channels may get them cheaper than people who want all available
channels. But as soon as you want 3-4 channels (or whatever the amount of
channels is that the average consumer is actually interested in), a la carte
won't be cheaper than the bundle.

------
alexsilver
As much as it kills me to support McCain (I'm not a fan of him at all), all I
can say is "Holy cow, well done!!!"

This thought came across my mind first when I was 15, wishing for Cartoon
Network without paying extra for cable that we couldn't afford.

~~~
aaronblohowiak
pre-presidential-race McCain was known for stuff like this.

~~~
illuminate
Pre-Presidential candidate was known for promoting himself as a "maverick",
but I think the majority of that meme was his self-promotion and an easy media
narrative. He hasn't been very independent, even if it doesn't take much to be
considered an odd duck Republican in this tea party climate.

------
jetti
I would love to be able to buy individual channels, however, I don't think
that this is something the government should get involved in.

I would suggest working on a bill that would try to increase the prevalence of
affordable high speed internet throughout the country. This would give access
to all parts of the country but it would also give citizens more options when
it comes to TV because Netflix, Hulu, etc would be accesible to everybody and
could cause the cable companies to re-evaluate their strategy.

------
jsymolon
I always thought that the physical plant / last mile should always be another
company and not any way attached/owned by the content provider(s). In most
areas there are at least 2 content providers who can split the physical plant
costs (+ minor profit).

------
dlhavema
I would totally love to order the sci-fi channel, fx, history channel and a
couple others and not have to scroll through 30+ channels to get to them... i
haven't had cable in years because it's never been worth it to me for just a
few channels...

~~~
Avenger42
You'll probably still have to scroll through them - they'll just be marketing
screens saying "call <cable provider> to order <useless channel>!"

I just downgraded my U-verse account. The channels I used to have are now just
a blue screen with the image of a TV and a message either saying "you are not
subscribed to this channel" or "call <number> to order this channel".

------
Vivtek
I'm going to be seriously conflicted if McCain does something I like.

~~~
jacoblyles
With McCain I learned that "maverick" means "no consistent underlying
principles". Sometimes it works to your favor.

------
rocky1138
Too little, too late. We needed this around 1990.

------
zeroexzeroone
I have not had cable TV for nearly 3 years and it has worked out very well
since I am outdoors more often. However, the day al a carte is in town is the
day I buy cable again. Comcast et. al. are just like banks, they could care
less about the consumer.

I am not holding my breath as McCain is simply spinning his wheels.

------
ck2
Beware of conservatives bearing "gifts".

Check which lobbyists have been visiting/donating to him recently.

(and with all the problems we have right now, all the unfilled positions for
five years, this is what he is working on?)

~~~
CrazedGeek
It seems like he's been spending a lot of time recently banging the Benghazi
drum, so this is at least an improvement.

