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A la carte answer could solve squabble between GCI, ROOT

Posted: January 17, 2012 - 1:01am

As GCI and ROOT Sports have engaged in now-public negotiations about if, when and how Alaska’s cable near-monopoly will offer the channel that shows Seattle Mariners games — along with Pac 12 sports and games from the universities of Alaska Anchorage and Alaska Fairbanks — a representative of GCI made a rather startling statement.

When discussing the possibility of offering channels a la carte — that is, allowing customers to pick and choose the programming they want instead of having to take prepackaged bundles — GCI spokesman David Morris told the Anchorage Daily News that was something the cable company couldn’t do, but wanted to.

“We would love to get to that point,” he said in a Friday article.

That’s an abrupt change from a player in an industry that has for years fiercely fought the idea of a la carte pricing, with lobbying by D.C. heavyweight Booz Allen Hamilton to stick customers with 200 channels, when they may want just 20, or two.

The reasoning has been to spread out the costs of acquiring channels that are increasingly appealing to a niche audience. GCI’s Preferred Service tier, which subscribers must take in order to get the two ESPNs and the cable news networks, also includes channels tailored to specific interests, such as the NFL Network, Cartoon Network, Speed (motorsports) and the Food Network. The sports tier holds even more niche networks, so a golf aficionado who wants the Golf Channel must also take — and pay for — the Big Ten Network, the Sportsman Channel (hunting and fishing, mostly) and Fox Soccer.

Without spreading out the costs of acquiring all of that programming, the argument goes, the per-channel cost of each of the niche networks would prohibit all but the most die-hard watchers of a certain channel from taking that channel. A casual golf fan might not have the Golf Channel on 24/7, but might watch for a bit if he or she 1) has the channel and 2) “there’s nothing else on.” Advertisers, too, love channels that can claim viewership in large numbers of households, regardless of whether anyone in those households actually watches them. It would seem a savvy advertiser would love to be able to target his or her message to a narrowly tailored audience that so desires a certain type or programming that it is willing to pay specifically for it, but that’s another discussion for another time.

However, getting away from this model of bundled programming would avoid issues like the current battle between ROOT and GCI — or the one in New York state between the Madison Square Garden channel and Time Warner Cable, which is keeping the state’s NBA and NHL teams off the box for many folks there. Do you want a network that offers the Mariners and University of Washington hoops? Great. Simply tick the box next to ROOT Sports when you fill out your subscription form, and add the monthly fee to the fees from the other networks you want.

For folks who only watch a few channels, but ones spread out across different bundles, this would be a much better fit that having to subscribe to a ton of channels that go unwatched. Nothing would stop cable or satellite providers from offering bundles to customers who still want a wide variety of channels, operating as they do now by negotiating with providers to get good deals. A sports bundle of 13 channels like GCI offers now could go for $6-$7 a month, instead of, say, $1 or $2 per channel per month, for customers who would like a wide variety of programming. Yes, there would still be negotiating, but any cost increases could be passed to the people who actually watch and want the higher-cost channels, instead of forcing cable and satellite companies to choose between raising rates on everyone or denying programming like sports that is one of the main draws to paying for TV in the first place.

And, with recent changes in Federal Communications Commission rules, a la carte pricing is something service providers can do now. Cable operators have to provide a basic bundle of channels — essentially local network affiliates, public television and non-affiliated local channels — to all subscribers. From there, however, they have wide discretion about what channels to offer and how to offer them.

“Cable television operators are not required to offer channels on an a la carte or individual basis,” the FCC website states. “However, cable operators are free to offer channels other than those required to be on the basic tier on an a la carte basis. For example, premium movie services are often offered on an individual basis rather than as part of a package.”

Customers are already tailoring their entertainment choices to fit their interests online. Netflix, Hulu and the like offer live streaming of movies and television shows, while three of the four major professional leagues offer their multi-market packages to viewers online, which allows fans to get the sports they want without a cable or satellite connection at all. Offering a la carte programming could keep customers from switching completely away from cable and satellite and to the Internet — as is starting to happen, according to an Aug. 12, 2011 USA Today article. It could also prevent sports fans and other supporters of niche programming from being stuck in the middle when cable and satellite operators squabble with content providers.

Such an a la carte option was apparently on the table in the GCI-ROOT Sports debate, according to Russell Stigall’s article in Wednesday’s Empire. Depending on which press release you believe, that option was either withdrawn by GCI or passed on by ROOT. Putting that option back into play might be the best way to serve both fans of Pacific Northwest sports teams and customers who don’t want to support expensive sports rights fees because they don’t enjoy the programming those fees provide.

With a little less than a month before Mariners pitchers and catchers report, and with hoops action from the Pac 12 and two Alaska universities ongoing, here’s hoping both sides keep all their options open and resolve this dilemma quickly.

• Charles Ward is Deputy Managing Editor of the Juneau Empire. The opinions expressed here are his, and do not necessarily represent the views of the Juneau Empire’s editorial board.

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