Britt: A la Carte Pricing Would Backfire - Multichannel

Britt: A la Carte Pricing Would Backfire

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Washington -- Government-imposed a la carte pricing would raise cable bills, drive niche networks out business and force set-top boxes into the homes of unwilling customers, Time Warner Cable chairman and CEO Glenn Britt said in a speech here Wednesday.

Some consumer advocates and small cable companies are turning to Congress and advocating an a la carte pricing model as a means of addressing rising cable bills. But Britt warned that such a plan would backfire, with consumers paying the same or more for a fewer number of channels.

"Journalist H.L. Mencken put it best a half century ago, when he said, `There is always an easy solution to every human problem. Neat, plausible and wrong,'" Britt told the Washington Metropolitan Cable Club.

Per-channel prices would rise, Britt said, because programmers would need to make up for lost subscriber and advertising revenue; new networks would fold because they couldn't establish an audience base; and consumers would rebel because a la carte options would require one or more set-top boxes, depending on the number of sets in the home.

"In order to turn all of these channels on and off, we would have to force set-tops in all these homes. That's not only a cost, but a lot of people just wouldn't want the set-top box," Britt said, noting that 50% of cable homes do not have set-tops.

A la carte pricing would also impose burden on cable companies. Britt said he was in doubt about the business model for MSOs: Would they mark up each channel, or charge a broad access fee?

And then there are back-office issues. "None of us have billing systems that can actually bill each channel individually. We have very inexpensive, simple billing systems that can bill from packages. So we would have to rewrite all that software," Britt said.

Sen. John McCain (R-Ariz.), chairman of the Commerce Committee, supports greater a la carte options, arguing that bundling programming into tiers forces consumers to pay for programming they don't want in order to receive their favorite channels. McCain's staff is reportedly drafting legislation on the issue.

"I think the allure of a la carte pricing is very simple: You pay for what you watch. But again, unfortunately, it not that simple," Britt said.

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