Unbundling Cable TV
Let the Free Market Take Charge
By Daniel Muniz

As what happens with many families from time to time, my debt recently ballooned. My budget needed to be tamed and the easiest expenses to cut are usually the discretionary luxuries. As a result, I decided to target my cable bill, which was already way too large as a monthly expense. The bill itself was not yet outrageous but because of my belt tightening, I wanted to trim what I didn’t need.

I called up my local cable provider, which was Time-Warner, and asked for the cost of their absolute bare-bones package as well as the cost of the next tier of channels.

The bottom of the line no-frills package that they offered was dirt-cheap but it only included the local networks and the public access channels. I asked them what the difference was with this particular package as opposed to me just using the rabbit ears on my TV. Their only answer was the better reception of those stations to my television set.

I then asked what the next tier of options included. They explained that it had 78 channels but it was three times the amount of the bare bones special.

I was incensed.

I only needed handful of extra channels because I am a rabid Spurs fan and I wanted to watch the occasional games that are not shown on the local stations. My wife also wanted a few channels for herself but like me, she didn’t need the entire package. But as for as Time-Warner was concerned, and the entire cable industry for that matter, they will only sell bundled packages of networks instead of allowing the customer to pick what he or she really wants.

I was cutting my expenses and I felt that I was being blackmailed into buying something that I didn’t want.

At that point, I wanted to tell the customer service rep where they could stick some rabbit ears into. Unfortunately, I am not alone in my frustration. The entire cable industry across the country is set up that way.

It is natural for the American consumer to only want to pay for what he or she wants to buy in a product or a service instead of subsidizing an entire industry.
 

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For lefties, they don’t want their bill to include Fox News while right-wingers don’t want to pay for CNN, MSNBC, PBS, and a host of other channels. A single bachelor may loathe the Lifetime Network, Oxygen, and the other girlie channels, while a bachelorette may snap them up.

In addition, some families don’t want to pay for raunchy networks although the cable industry has vigorously promoted use of the V-Chip in remote controls. However, many people feel it is just easier to not the have the channels in the first place.

Cable executives contend that the entire industry would collapse if consumers could pick and choose their own networks. The subsidized stations would lose their marketing edge and go into oblivion. In other words, our 500-channel universe would get slashed in half overnight and the survivors would have to fight amongst themselves and be at the mercy of the consumer. The result would then be a far higher cable bill with fewer choices available when all the carnage is over with.

The problem I have with that argument is that it blatantly contradicts the tenets of Free Enterprise.

Businesses in our economy already have to fight for customers on a day to day basis. That is called competition. What the cable industry has is a quasi-monopoly, which drastically limits the choices of consumers and makes people pay for things that they do not necessarily want to buy.

But worst of all, the industry is selling a bogus claim.

For instance, a particular network may insist that it reaches into 60 millions homes so that it can charge a certain advertising rate. The reality is that the channel may only have a miniscule number of loyal viewers but by bundling all these networks together and forcing the customer to buy them creates an illusion of a huge purchasing audience.

Yes, if the cable companies unbundled the packages of channels, some of the networks would cease to exist. But what is wrong with that in the Free Market?

Companies live and die every day because of the choices that consumers make. Cable networks are not any different than the businesses of other industries.

And also, I do not subscribe to the industry’s prediction of gloom and doom. The Free Market has a mechanism to correct itself when drastic changes occur. Some networks may have to actually do something to improve their programming. Other channels may change their entire format to become more palatable to a bigger audience.

Competition will make the cable channels far more receptive to their customers so that they can remain in businesses. And that is how it works everywhere else.

But most importantly, the cable market in itself is already far too large to ever go back to a time where there were only three networks. Losing a couple of hundred channels is not the end of the world when there are still another two hundred to choose from.

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