Showing posts with label bundling. Show all posts
Showing posts with label bundling. Show all posts

Friday, December 17, 2010

Old Debates Over "A La Carte" Might Not be Relevant in Future

An economist might say the typical video bundle works because it allows distributors to apply scale and scope economics.
 
The corollary is that most networks, which are advertising supported, want to be part of a "no choice" basic tier for business reasons of their own, namely the ability to better sell the advertising that underpins their business models.

According to some studies, relatively few networks actually make a $100 million or more in annual ad revenue, though.

When multichannel video distributors say a bundled approach creates economics that favor smaller, niche networks to thrive, they are right.

Deprived of carriage on a broad "enhanced basic" tier, perhaps 60 percent of networks might find themselves immediately imperiled, as going concerns.

An end to bundling would likely decimate most smaller, more-lightly-viewed networks. To the extent that content and program diversity is a desired end user benefit, "choice" in all likelihood would decline in a full a la carte environment, because most people would not buy most channels.

The possible advent of over-the-top TV viewing worries most in the current ecosystem for one compelling reason: "households view less than one quarter of the networks they are forced to buy in the bundle," the Consumers Union noted in an past analysis assuming a 50-channel offering. Even today, with hundreds of available channels, end user behavior does not seem to have changed much.

Most people watch a dozen or so channels on a regular basis.

Cable operators have argued that end-user costs might actually climb in an a la carte environment, for a number of reasons. Higher customer care costs, operating and marketing are likely, cable operators have argued. Part of the argument has been based on the need to supply new decoders to customers who did not previously need them. That is likely not much of an issue these days, as cable operators convert to largely-digital or all-digital services where customers already must be provided set-top boxes.

So perhaps some of the historic objections from a distributor point of view have eroded.

Separate studies by the Federal Communications Commission seem to have concluded that unbundling could save money, or wouldn't save money. See this study. One of the studies suggested “consumers that purchase at least nine networks would likely face an increase in their monthly bills" when buying a la carte.

Likewise, one of the studies suggested bill increases ranging from 14 percent to 30 percent under a la carte, while the other suggests a consumer purchasing 11 cable channels would face a change of bill ranging from a 13 percent decrease to a four percent increase, with a decrease in three out of four cases.

The point is that it is very hard to tell, conslusively, what might happen if providers shifted to a la carte viewing. With online delivery coming to the fore, it might not ultimately matter. A la carte might happen, but on the Internet.


Sunday, August 19, 2007

Is Wireless Cable's Achilles Heel?


In the early 1990s, Comcast and other cable partners invested in an earlier version of "SpectrumCo," a business that would eventually become Sprint PCS, only to pull out later in the decade when the going got tough. Cablevision, for its part, also flirted with creating its own PCS network, but ultimately decided against it.

In 2005, Comcast, Time Warner Cable (TWC), Cox (COX), and Advance/Newhouse Communications banded together with Sprint Nextel to creat the "Pivot" service.

Sprint CEO Gary Forsee says that it took longer than expected to get Pivot off the ground and subscriber numbers haven't been released. That logically suggests uptake has been slow.

Recently, Sprint abruptly withdrew from SpectrumCo, the entity that in late 2006 snapped up $2.37 billion worth of licenses to wireless airwaves. The acquisition had spurred speculation that together, Sprint and cable companies were planning their own wireless network.

All of which might suggest wireless continues to be the platform telecom competitors can use to parry cable's wireline thrusts. It is, after all, a simple line extension to add voice and broadband access to a cable network. It is a discontinuous jump to offer wireless services over a completely distinct network. And cable execs dislike discontinuities as much as any other exec.

And the evidence is growing that mobile is way people "do voice."

"Tokens" are the New "FLOPS," "MIPS" or "Gbps"

Modern computing has some virtually-universal reference metrics. For Gemini 1.5 and other large language models, tokens are a basic measure...