The Truth About Ala Carte Cable

Oxymoron of the day: AT&T backs a-la-carte cable.

No Kidding…. This Is Surprising?

MSNBC/Motley Fool has this op-ed about how FCC is looking out for consumers. News flash guys …. no. Its looking out for the phone companies. It is using the consumer as a “bulletproof vest” on this thorny issue. (Don’t get me wrong…. I love the idea of not having to pay for say FX or some other crappy channel, when all I want is HBO and ESPN!)

Isn’t it in the Bell operators’ best interest to disrupt the money making part of cable operators’ business. Isn’t it in their best interest to retrofit the regulation to meet their limited, some day it might be possible Microsoft-based IPTV service? Of course it is! Hence the support from company-formerly-known-as-SBC!

Here is why: Over past few years cable operators have managed to grow their top-line and EBITDA, while the Bell operators have been slowly sliding south. Since cable operators have finished their major network upgrades, for next couple of years they can afford to spend money only on projects that can directly generate revenue. They can also be much more aggressive in new service offerings such as premium tier broadband, or VoIP services. Those two offerings can give phone companies a serious migraine.

Some analysts estimate that cable companies get about $82 a month per user, of which $42 comes from high-speed Internet, and rest from video. (Anyone have better data than that?) Add to the mix, phone service, and well things become downright scary for phone companies. Bells at present cannot compete on speed in broadband, and have no video. So disrupt the video-part of the equation where cable guys have a lot of expertise, and you can inflict some serious damage. Five years from now if cable companies even get 10% of the fixed line market, they would come out ahead. (Getting 10% of the video market is going to cost phone companies a pretty penny!) There are already 2.4 million VoIP-over-cable customers and Comcast hasn’t even launched. Crisis time…. who are you gonna call …. of course the regulators!

Hence the push for ala carte cable! Looking beyond the recent fiscal performance, one wonders who the Bells refuse to practice what they preach.

“We support giving customers flexibility and options,” AT&T said in a statement prepared for USA TODAY.

Isn’t that lovely! If that was the case, where is the the long awaited, much promised the mythical broadband big-foot – Naked DSL? Didn’t I read this morning that the very same old-SBC-posing-as-new AT&T is now trying to bundle Cingular Wireless and its fixed line service?

Ala Carte Cable, is almost like un-bundling the television. Which is not such a bad idea, as long as we unbundle the phone network as well. Oh wait, we did that… and then FCC changed its mind!

(Joseph Weisenthal compares ala carte cable to portobello mushrooms… seriously!)