What if watching television was like ordering from a takeout menu?
By 2015, the federal Conservative government has proposed plans to mandate television content providers to unbundle channel packages in an effort to reduce cable bills. Although the plan sounds great on paper, an in-depth analysis on à la carte television reveals potential damages on service quality, channel affordability, and program diversity.
The economic affects of à la carte television, haven’t subjected to close scrutiny, and also threatens to decrease service quality. As many cable channels depend on subscription and advertising to ensure production, forcing consumers to individually choose channels will lower the overall subscriber base of individual channels, thus contributing to a reduction in the revenue they gain from advertising. This will likely cause cable companies to make drastic changes to traditional television packages and decrease service budgets.
Moreover, despite criticisms that bundling television forces viewers to subsidize extra channels in order to watch the ones they intend to pay for, à la carte can actually be more expensive in the long run. Although most live sports channels like TSN or ESPN occupy enormous percentages of the cable bills of non-sport-watchers, there is a lack of economic data to verify that the proposed alternative can help lower their cable bills.
In fact, it is more reasonable to predict that, with the à la carte system, the cable bills of every television viewer will actually increase due to individual channels raising their per-subscriber fee to compensate for a reduction in the total subscriber base. Since television stations depend on revenue from popular programs in order to invest in new channels and sustain niche programs, the prices of the most watched channels will inflate uncontrollably while other channels are pushed into extinction. As a result, consumers may end up paying a higher cable bill for less channel options.
Critics of the cable TV industry generally point out that consumers are forced to pay for mediocre niche channels in order to watch more popular programs. However, popularity does not often correlate with higher quality. Variety is also an extremely important factor in modern media and consumer welfare. Television must satisfy the different needs and wants of an ever-changing consumer base composed of many different individuals. A comprehensive selection of bundled niche channels allow television stations to better satisfy their customers by investing in new programs and offering them with affordable prices.
Unbundled television will force these niche channels to increase prices and change content in order to compete with popular channels, leading to a decrease in the originality and variety of television. A dichotomy will exist between the popular channels that would dominate television, and niche programs that could become nonexistent.
Although the bundle television system is imperfect, à la carte is not a superior alternative because it threatens service quality, causes price inflations, and will accelerate the loss of variety in TV offerings. The current government must not enforce a policy change that will jeopardize both the consumers and producers of the television industry.
