It’s been five years since Congress told cable companies that they needed to start offering programming in “a la carte” mode (in other words, letting subscribers buy the channels they want instead of the “tiers” of programming which have been the standard for years). At the time, the cable companies made some appropriate noises in front of a couple of committees and then went on their merry way ignoring the mandate.
But the one-two punch of technological innovation and economic collapse have caught up with cable companies. Video-on-demand services have gone from being something only a few nerds could use to being on the cusp of mainstream. Even as people were getting pissed off with Netflix’s unwelcome announcement last week about spinning off their DVD rentals, every industry analyst agreed that the move was necessary to allow them to focus on their far-more-valuable streaming video business and that DVDs are in their death throes. Plus none of those pissed off people were banging on Comcast’s door as an alternative to Netflix. “Cord-cutting” (cancelling cable TV and going all-Internet for TV) is still more niche and unlikely to result in mass defections any time soon, but it has taken a bite, too. My long-time blog buddy Solonor took the plunge a couple of months ago and wrote an excellent summary of the experience.
As more and more American households find that they have less and less disposable income, people are discovering that the can live without the Full Monty cable package, too. Though it’s one of the last things people will cut back on, things are getting so tough that the time of reckoning has come for cable, and it’s actually costing them more customers than cord-cutting. Our personal experience is illustrative: we were paying Comcast $189 a month for their phone-internet-TV bundle WITHOUT any pay channels or added tiers and switched to Verizon FiOS and reduced our monthly bill to $82/month for essentially the same service. Given that Verizon’s Internet-only FiOS package is about $60/month and that we would still end up paying for a slate of VOD services (Netflix, Hulu, iTunes, etc.), we’re pretty much getting the best possible deal.
So earlier this week, the industry made a huge about-face and said that they would develop a la carte offerings as a way to retain customers who can no longer afford such an expensive service. I remain suspicious; last week’s announcement from Comcast that they would offer a low-cost Internet package to people who couldn’t afford the service came with an awful lot of caveats, requirements, and other gotchas. My gut tells me that any initial a la carte offerings will fall under the same sort of weaselly bullshit, but it’s a start, and they may ultimately have no choice given the increased competition.
