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A la carte cable television From Wikipedia, the free encyclopedia
A la carte cable television is an idea for cable companies to allow suscribers to select to which channels they would like to have access. This is in opposition to the large package deals currently prevelant in American cable deals, which often result in consumers paying for additional channels irrelevant to their interests.
While a la carte cable is not a major function of U.S. cable deals, the idea of it has been a major subject of debate. In a 2006 USA Today article, Kevin Martin, the chairman of the Federal Communications Commission, states his position that he is in support of users choosing their channels. However, as leading companies such as Disney, and cable providers such as Time Warner prohibit operators to sell channels which stand alone.<1>
Martin presented a report to Congress showing a potential increase in consumer savings by 13%, and with cable prices rising from 2% to 6% a year, the issue has risen in profile, and will continue to be considered. <2>
The downside of a la carte cable television is directly related to cable companies, who worry that viewers could watch less TV, and that advertising revenues could decline as certain channels fell in popularity. A mandated a la carte cable deal could inspire cable companies to increase overall prices.
Consumer issues The cable industry spends millions of dollars annually on government relationships.<8><9><10><11> Regularly this industry employs the spouses, sons and daughters of influential mayors, councilmen, commissioners, and other officials to assure its continued local monopoly and preferred market allocations, many of which have been questioned as unethical.<12>
The monopoly on cable television has historically been enforced by local governments. Cable maintains thousands of such de facto monopolies. In order to provide service to individual homes, a cable provider must place its cable wiring along and across local streets or other rights-of-way. To do so, the provider must get permission from the local government(s) that own those streets via rights-of-way permits.
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Operational permission comes in the form of a document called a local franchise agreement. Most of local government(s) chose to grant permission to only one company, however, recently states have developed broader franchising laws to drive more investment and competition. Changes in the federal law in 1992 had forced local governments to grant permission to other companies to provide service, however the U.S. Government found in 2006 that only 2% of U.S. households had a competitive choice. In some cases Comcast, with municipal government approval, had entered into market allocation schemes. By agreeing to not compete head to head, consumers thus are perpetually locked into a single monopoly cable provider with annual price escalations reaching 93% in the past decade.<13><14><15><16>
A recent third party survey of citizens found approximately 62% of the respondents were very dissatisfied (along with another 25% who were dissatisfied) with the cost of cable television service. A majority of the respondents were satisfied with the friendliness and courtesy of customer service personnel, however, approximately 30% of the respondents rated the cable company's performance as poor. With regard to open-ended comments, respondents felt that the cost of the cable service was too high, a need for cable competition existed and the desire for a basic cable package offering was desired. Although respondents cited these critical issues, the local monopoly structure preserves the status quo of poor customer service, limited product choices, no direct competition and uncontrollable annual cable TV price increases. Relief for consumers is being created by state level a multi jurisdictional franchise and service process that will spur investment and competition; thus driving economic development sought by state and local government leaders.<17>
The industry strongly lobbies against federal "family tier" and "a la carte cable television" bills that would give consumers the option to purchase individual channels rather than a broad tier of programming. These anti-consumer issues continue to garner attention from state governments, Congress and FCC Chairman Martin.<9>
And look at Romania compared to us. Loads of choices, healthy competition and cheaper and faster service. America is a dinosaur compared to Europe when it coes to TV/internet services.
Romania has very high penetration rates for cable television in Europe, with over 79% of all households watching television through a CATV network in 2007.<5> The market is extremely dynamic, and dominated by two giant companies - Romanian based RCS&RDS and U.S. based UPC-Astral. Both additionally offer IP telephony over coaxial cable and Internet services. The national CATV network is being improved, and most households are being migrated towards digital cable solutions. Digital DTH satellite service is available throughout the country, and accounts for an additional 10-15% of the market, with only about 5% being attributed to terrestrial analogue television. Digital satellite DTH is provided by a number of companies. It is possible that Romania will not migrate to digital terrestrial systems, but completely discontinue this service, since the said investments provide limited appeal.
The reasons for this appeal started in the early '90s. After the fall of the communist regime, in 1989, there was only one state owned TV channel available (see TVR), a second channel being closed in 1985 (see TVR2). Private TV channels were slow to appear, because of lack of experience and high start-up costs (most startups were radio stations or newspapers). Thus, for the first three years, over the air, one would get one or two state channels and one or two local, amateurish private channels, broadcasting only a few hours a day. In this environment, cable TV companies appeared and thrived, providing 15-20 foreign channels for a very low price (at the time 2 USD or less), some with Romanian translation, offering high quality news, entertainment and especially movies or cartoons (one of the ways cable companies advertised was the availability of a cartoon channel, Cartoon Network, appealing to children, which in turn would appeal to their parents). The first two companies to provide CATV were Multicanal in Bucharest and Timiş Cablu in Timişoara, both out of business today. Many small, startup firms gradually grew, and coverage increased (coverage wars were frequent in the early period, with many cable boxes smashed, and new cable networks offering "half off for twice the channels" and immediately wiring the building for any willing persons). However, this period soon ended, with consolidation around 1995-1996. Some large companies emerged: Kappa and RCS in Bucharest, Astral in Cluj, UPC in Timişoara, TourImex in Râmnicu Vâlcea. This consolidation came with gentlemen agreements over areas of control and pricing, with claims of monopoly abounding. This process of consolidation was completed around 2005-2006, when only two big suppliers of cable remained: UPC-Astral and RDS. Internet over coaxial cable has been available since around 2000, and IP telephony (over the CATV infrastructure) since the deregulation of the market in 2003. Currently, cable TV is available in most of the country, including most rural areas (where roughly 50% of the population live). Satellite digital TV appeared in 2004, providing coverage for the rest of the country, with both RCS&RDS and UPC-Astral having a stake in these companies. IPTV (over DSL) is also planned by Romtelecom through its TV service (Dolce), after offering Satellite digital DTH TV. However, IPTV will not be much of a competition, since the other two big ISPs are also the two biggest CATV providers.
Cable TV is very cheap for all standards, the standard/basic service, offering about 50 channels, is around 20-30 RON/month including VAT (about 7-10 €), with the most expensive service, offering 10-15 channels more, including some pay-per-view such as HBO or Cinemax, costing no more than 60-70 RON/month (around 20-23 €).
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