Cable television options

[CrackXam]

Most cable television companies currently require customers to subscribe to packages of channels, but consumer groups have recently proposed legislation that would force the companies to offer a la carte pricing. Subscribers would pay less, argue the consumer groups, because they could purchase only the desired channels. However, the cable industry argues that under the current package pricing, popular channels subsidize less-popular ones, providing more options for viewers. For this reason, the industry claims that it is always cheaper for the consumer to purchase many bundled channels than to buy them individually.

Which of the following would be most important for the government to determine before deciding whether to require cable television companies to offer a la carte pricing in order to reduce consumer costs?

A. Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure.

B. Whether the total number of channels offered to consumers would decrease, along with programming diversity, as a result of the a la carte pricing structure.

C. Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually.

D. Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers.

E. Whether a la carte subscribers would be required to have new television set-top boxes.

[lsr]

Imo C.

[G.Unit]

Another vote for "C"

[LegoLife]

My answer is C.

Argument : Consumer groups are trying to bring benefits to people by forcing cable companies to offer a la carte pricing.

Counter-argument : Packaging is less than a la carte because some channels are subsidized when purchased in groups.

Required factor : Do we need all the channels in the package? The cable company assumes that people will still pay for all channels in the package using a la carte pricing scheme.

Hence, choice C states that the Govt should look into the options whether people will significantly reduce the number of channels that they are currently watching if an a la carte pricing is offered.

[VikSharma]

IMO B

-my Argument against C-

Consumer has no choice to greatly increase/decrease current offering, which is packaged channels. Say the consumer's choice is to watch one channel and not 49 useless channels in a 50 package channel, and now after new legistlation, this consumer purchases just one channel - are you saying that this is a problem - in the absolute sense the purchase has gone down from 50 to 1, however, this is not necessarily an issue

-My argument for B-

If the programming diversity and choice is decreased due to a-la-carte pricing, then this development is of the detriment to the consumer, since this one consumer might want to subscribe to say a chess channel that gets canned because it was previously subsidized by say a sports channel. This scenario needs to be carefully considered if true impact on consumers is to be assessed

--what's the Official Answer btw?

[lsr]

IMO B

-my Argument against C-

Consumer has no choice to greatly increase/decrease current offering, which is packaged channels. Say the consumer's choice is to watch one channel and not 49 useless channels in a 50 package channel, and now after new legistlation, this consumer purchases just one channel - are you saying that this is a problem - in the absolute sense the purchase has gone down from 50 to 1, however, this is not necessarily an issue

-My argument for B-

If the programming diversity and choice is decreased due to a-la-carte pricing, then this development is of the detriment to the consumer, since this one consumer might want to subscribe to say a chess channel that gets canned because it was previously subsidized by say a sports channel. This scenario needs to be carefully considered if true impact on consumers is to be assessed

--what's the Official Answer btw?

Which of the following would be most important for the government to determine before deciding whether to require cable television companies to offer a la carte pricing in order to reduce consumer costs?

Vik, the issue discussed in the passage is not diversity of programming, the scope of the argument is limited to consumer costs.

[VikSharma]

I agree, LSR. I overlooked "in order to reduce consumer costs" piece, B is out of scope and has nothing to do with consumer costs.

Thanks for the explanation.

-Vik

[nikiforos]

Another C

[CrackXam]

Official Answer is C! Now I wonder why I ever chose D! !!