Friday, May 10, 2013

Is Unbundling Cable The Answer - Sen. McCain Thinks So

As William Shakespeare once said, To Bundle Or Not To Bundle, That Is The Question," an age-old question that plagues us to this day.  So perhaps the real question to ask is whether bundling is a good thing or not.  The concept of bundling has been around a very long time.  Products that we buy come with other pieces, "all included" in our purchase; from electronics to vacuum cleaners those "bundled extras" make our purchase easier than trying to figure out all the pieces to buy, from cords to attachments.  In cable TV, bundling gives consumers access to a ton of channels at one price, some we may want, some we don't, but in a single purchase we have a big pile to access.   We tend to believe that if we only pay for what we watch, our price will decline, but that is not necessarily the case; buying in bulk enables all to share from the pile and keeps the individual channel prices low. 

Sometimes too we say we don't want to watch something until a show appears on a channel we never have watched before and we add that piece to our own favorite pile.  That case happened in my own family.  We never watched the Nat Geo Channel.  Unbundled we never would have paid for it.  Yet with their new show, Brain Games, advertised, my kids sought out the show and the channel and have now become viewers of both.  It was included in our package; had it been unbundled, I cannot say that we would have individually purchased the network to watch the show.  The result, the show, the network, and the viewer all lose. 

Certainly there are arguments to unbundle some more expensive programming with sports channels being the biggest culprit.  But the bill, called the Television Consumer Freedom Act, doesn't talk about expensive networks verse the inexpensive ones.  "The bill would require programmers to make their channels available to cable operators on an a la carte basis; does not allow the bundling of co-owned cable channels and TV stations in carriage negotiations;  and gets rid of the sports blackout rule for stadiums built with any public money."  The industry has matured rapidly where once broadcasters competed against cable, they now own cable networks.  Where once there were a ton of independently owned cable networks (like the old world of cable operators), today the big ones are all owned by the media giants.  In the world of cable, like elsewhere, the big fish have swallowed the little fish. There is consolidation in the industry with fewer players owning the networks.  

And while the motive of this bill to unbundle is to keep consumer costs low, it is unlikely to achieve that result.  Costs per cable network will rise and ultimately the consumer will pay more for less.  What can McCain do?  Encourage disruptive technologies to exist against the mainstream.  Aereo is one such player.  Netflix, YouTube, Google and others are all invading the media content and distribution space.  And with their arrival and development, monopolistic industries are put to the test.  Innovative disruptive is to be encouraged, not law making.  In the case of unbundling, it will only lead to other problems.

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