“Tiering” Promotes Consumer Choice
WASHINGTON D.C. - Requiring that cable or satellite TV providers offer programming on an "a la carte" basis would result in "higher prices, lower viewership and less program availability for consumers," according to comments filed at the FCC by Progress & Freedom Foundation Vice President for Research Thomas Lenard and Director of Communications Policy Studies Randolph May.
According to Lenard and May, in today's competitive market, the MVPDs (multichannel video program distributors, such as cable and direct broadcast satellite) have sufficient incentive to offer consumers the video services they want in the form they want it - i.e., bundled or a la carte. The FCC's own studies show that competition already gives consumers significant choices among suppliers of video programming.
According to Lenard and May, "Tiering has played an important role in encouraging the investment and expenditures of funds that has made possible the vast array of choices that consumers have available in today's video marketplace. That choice would be seriously threatened by an a la carte requirement that would interfere with the ability of MVPDs to offer programming bundles or 'tiers' as they currently do. Indeed, the practice of offering programming in bundles is what we would expect in industries with the characteristics of cable and DBS [large up-front fixed costs and significant economies of scale] and is consistent with economic efficiency considerations." "Simply put," according the authors, "if an a la carte requirement were in place, some programming that is now produced would not be produced."
The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.