• Red Herring, Friday, March 17, 2006 11:15 AM

The battle royal continues: à la carte pricing is good for cable customers. No, it's bad. No, it's good. Back and forth, the battle has raged for years, with the Federal Communications Commission itself actually staking out two different positions along the way. Most recently, relying on the results of a Booz Allen study, the FCC lined up with consumer groups that have long demanded an option allowing subscribers to pick and choose among channels. But a more recent study points to mathematical errors in the Booz Allen work and says that--as the cable industry has argued all along--à la carte pricing would lead to higher monthly bills for subs. Consumers are likely to reject a la carte once the downside--including the required installation of more hardware in their homes--is fully explained, says an independent report from Leichtman Research. "The concept of being able to choose and pay for only the channels that you want initially sounds appealing to many consumers, but in assessing bona fide interest in an à la carte offering, it is important to provide consumers with the actual implications of receiving such a service," says Bruce Leichtman, president and principal analyst for Leichtman Research. Meanwhile, the cable industry--now with the vocal support of the Walt Disney Company--is preparing a new campaign to persuade the FCC that consumers are best served by the tiered pricing system that has long been the industry convention.

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