To Bundle or Not to Bundle

What’s the state of video today? The U.S. Senate Subcommittee on Communications, Technology, and the Internet tackled that question in a hearing Tuesday morning, and a slate of industry speakers and regulators racked up some notable quotes and stats. Here are a few worth repeating. All about a-la-carte
As expected, Senator John McCain (R-AZ) used the hearing to promote his push for a-la-carte TV. McCain queried, "Do consumers actually want bundles? The answer is obviously no." That may be true if you ask consumers whether they want to pay for channels they don't watch. But, as National Cable & Telecommunications Association (NCTA) President Michael Powell pointed out later, there is a "very serious question" about whether consumers would actually see lower bills with an a-la-carte line-up. Recent findings from Consumer Reports suggest that the bundling strategy works for triple-play services, and that consumers like bundling specifically because it offers a notable price break. (See Consumer Reports Say Consumers Like to Bundle.) Of course, understanding what consumers want is only part of the a-la-carte equation. There are also thorny issues related to competition and content ownership to consider. Retransmission reckoning
John Bergmayer, senior staff attorney for Public Knowledge, had plenty to say about cable regulation reform. But one stat in his testimony was particularly ear-catching. "NBC estimates that it will collect 400 percent more in retransmission fees in 2013 than in 2012," he stated. If there was any question about why broadcasters are fighting the likes of Aereo Inc., that statistic alone should answer it. Gordon H. Smith, president and CEO of the National Association of Broadcasters (NAB), emphasized that broadcasters now rely on the dual-revenue model of paid advertising and retransmission fees, which is the very model that the Aereo service threatens. Broadcast TV in an online era
Beyond retransmission issues, Smith's primary message for the hearing could be summed up in one sentence of testimony, "Broadcast television is as relevant today as ever." Despite the flood of online video and a wealth of other communications networks, Smith argued that broadcasters still provide a public service that is unmatched elsewhere; that by adhering to decency standards and offering critical information in emergencies, broadcasters offer a service that is vital to society. Smith testified, "Our spectrum comes with public service obligations that only we deliver." There is plenty more to digest from the subcommittee’s complete hearing. For a full rundown on the State of Video, an archived webcast of the session is available online. — Mari Silbey, Special to Light Reading Cable
COMMENTS Add Comment
gconnery 5/16/2013 | 2:53:44 AM
re: To Bundle or Not to Bundle Not thrilled that you're conflating the bundling of services like TV and Cable Internet with the bundling of channels and using that to help the argument that bundling is *good* for consumers (that's the way it reads to me anyway).

You might make the argument that bundling creates more choice, since it keeps channels alive that otherwise wouldn't. You might argue that the price people would have to pay for certain channels (think ESPN) would go up if only the people who wanted to watch them had to pay for them. Those are all possible arguments.

The idea however that cable prices as a whole wouldn't go down if media companies were prevented from pricing their channels (ABC, Walt Disney, ESPN) in a bundle to cable companies? Ridiculous.

Cable prices are rising much faster than inflation. Faster enough that its clearly unsustainable in the long run. Something has to happen, and one of the possible ways of addressing things, without all of us cutting the cord completely is to unbundle more channels. Sure some channels like "The WB" might have to die in the process.

Myself I could live with the same number of great shows on fewer channels that we all pay a little more for individually but for our cable bills to go down somewhat, or simply to stop growing so fast in return. That would be the free market in action.
msilbey 5/15/2013 | 3:02:36 PM
re: To Bundle or Not to Bundle jtombes- Yes, the revolving door is always spinning. It's hard when you have a limited number of folks with domain expertise, but there are certainly conflict of interest issues at work.
jtombes 5/15/2013 | 2:42:21 AM
re: To Bundle or Not to Bundle That would be former Senator Gordon Smith (R OR) testifying before the Senate Subcommittee? The revolving door spins again. Another thing to like about b'cast TV: The HD is uncompressed.
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