Forthcoming playground for economists?

FCC chair suggests that cable companies should move toward "a la carte" pricing. If they do, will the typical customer pay more, or less? Will customer surplus increase? Will cable companies go broke?

Guarantee you can take to the bank: there will be a lot of studies by economists.

Comments

[Brock]

The cable companies are a utility. Mark my words, within a shorter number of years than most people would believe we'll pay a montjly fee for our Internet connection from the local IP utililty (whether Comcast, Verizon, or someone else) and purchase everything that comes over the IP (voice, TV, blogs) seperately.

[Gabriel Rossman]

Another interesting question is whether the leading content providers will gain more or less of industry sales.
Under the current system, top channels can charge a fortune to all subscribers (even those who never watch) and they can get it because the MSOs don't dare go without ESPN. So in that way the current system promotes inequality. On the other hand, if one had to pay for each channel, one would probably not subscribe to a channel unless one watches it regularly, whereas now one occasionally channel surfs over. If most people never subscribes to such a channel, its ratings will drop. So here's a mechanism for ala carte to promote inequality.