I miss Michael Powell
By Arnold Kling
The FCC thinks that cable TV’s bundling policies are bad, according to this report.
Chairman Kevin Martin, reversing a course set by predecessor Michael Powell, told lawmakers on Tuesday that cable subscribers could benefit if given the option to pick individual channels instead of being forced to sign up for predesigned programming packages. Another option would be the creation of “family- friendly” packages.
…”His support for a la carte pricing should help push it forward, giving consumers’ wallets a break and allowing them more control over their television choices,” said Gene Kimmelman of the Consumers Union, publisher of Consumer Reports magazine.
My guess is that the only way that a la carte pricing will be lower is if regulators force it to be lower. My guess is that if I were a cable company trying to maximize profits, I would charge more for packages that include fewer channels.
With some phone companies threatening to get into the TV business through their fiber-optic cables, this point may become moot. It could be that in a competitive market, unbundling will occur naturally. There is absolutely no reason for the FCC to inject itself into cable TV pricing in this way.
I happen to think that cable TV is over-priced. I express my opinion by not subscribing. If only my issues with Kevin Martin of the FCC could be dealt with so easily.
And if you are in any doubt about whether a policy is justified or not, you can be sure that “protecting the children”/”family-friendly” is a contrarian indicator.
UPDATE: Reader Steve Postrel recommends a paper by Yannis Bakos and Erik Brynjolfsson on the economics of selling large bundles when marginal costs are low.
Oh, and Steve also recommends this essay, which was Instalaunched. I’m either getting senile or I write too much, because I had not remembered about that one. At least my current position on the issue is consistent with the one I forgot about!