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 of 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 burdens 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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