Finally a la carte TV?

Charter just sent me an advertisement that got my attention. They are offering a TV package for $21.99 per month that includes my local network affiliates plus ten other channels that I get to select. This is the first TV service I’ve seen that provides a la carte choice. The statistics from Nielsen show that the average family watches around a dozen channels and this service could give people exactly that.

The local networks included are ABC, CBS. FOX, NBC and PBS. The offer I got then allows me to pick 10 out of 65 of the most popular cable networks. This includes a wide range of options like AMC, Bravo, CNN, the Disney Channel, the Food Network, HGTV, MTV, MSNBC, TBS, and USA. I was surprised to see the offer includes the option to pick the pricier sports networks like ESPN, ESPN2 and FS1. This price includes access to the apps of your selected channels. Charter also offers around 6,000 on-demand titles, although it’s hard to know how worthwhile this might be without signing up for the package.

The offer made it sound like this was an online OTT offering, but when I went to the web site I found that I can choose between delivery through a Charter settop box or delivery through a Charter broadband connection.

My first reaction to the offer is ask how Charter is able to offer this. There are specific FCC rules that define cable tiers and I’m not sure how Charter gets away with this as a traditional cable product. This doesn’t fit the FCC definition of a basic tier and certainly is not even close to an expanded basic tier. We’ve been told for years that cable companies cannot offer a la carte pricing for channels, and yet Charter is doing just that. I’m guessing that Charter does not consider this to be a true OTT offering since it’s only available to Charter broadband customers and never touches the open web.

I also wonder about the $21.99 price. I have a hard time thinking that Charter talked the local network affiliates across their huge footprint to agree to put their content onto the web, and so Charter is going to charge local franchise fees on the product with or without having the settop box. I also wonder if Charter will charge ancillary fees like a local broadcast fee or other bogus fees they charge to their normal cable customers. Anybody getting this through a settop box is clearly going to pay for the box. A customer buying this through a settop box might end up paying $35 to $40.

I also wonder if I can watch this programming when I’m traveling, which is a major consideration for me. If they can make that work then I again wonder how Charter can ship local affiliate programming over the web.

Regardless of how they are getting past all of the regulatory rules this has the potential to be a great product. Assuming it doesn’t really cost too much more than $21.99 it blows away the base prices for other OTT options like Sling TV, Playstation Vue and DirecTV Now. Those packages have an affordable basic option, but it always costs more when you add enough tiers to get the dozen channels you really want. As a traditional cable service it’s massively better than Charter’s basic offering for around the same price that doesn’t include any popular network. Any Charter basic customer ought to upgrade to this package. Interestingly Charter is charging a $20 install fee whether this is done using a cable box or over broadband, which further confirms that this is probably not considered as an OTT product.

Surveys have always shown a huge public desire for a la carte programming. People don’t like paying for the hundred channels they don’t watch. I have to think that this is going to put the pressure on the other cable companies to offer something similar.

This product seems to be aimed at cannibalizing Charter’s other TV offerings. This offer, perhaps more than anything else I’ve seen from a cable company shows that they recognize that a huge number of their customers are thinking of bailing on traditional cable TV. This offer offers a lower price option for customers to not completely cut the cord. Unless they pad this with ancillary fees it’s hard to see much margin in this package.

This package makes a lot of sense in places like the research triangle of North Carolina where Charter is competing against Google Fiber and AT&T fiber. It’s harder to understand why they are offering a low-margin cable option where they are competing only against DSL. Perhaps the reasoning is as simple as wanting to keep a few dollars margin rather than losing customers as cord cutters.

I thought about buying this, but I don’t really trust Charter and wonder what the real price tag is – it’s almost certainly not $21.99. I would also be unhappy if this only worked when I was at home on my Charter broadband connection. I am an unabashed Maryland Terrapins fan and I also wouldn’t buy this package since it doesn’t include the Big10 Network. Perhaps my own pickiness about channels shows the real challenge of offering a la carte programming. We each have our list of favorite channels and are likely to reject any OTT offer that excludes a network we insist on buying.

 

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