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We’ve just passed through a very contentious mid-term election, characterized by a change in the political majority in the House of Representatives, and a smaller margin in the Senate.

In addition to the usual established political parties, a newer movement, the self-named Tea Party, is grounded in protests against ‘big government,’ deficit spending, and ‘creeping socialism’ and has managed to secure quite a few seats for itself in Washington come next January.

Regardless of how you feel about the recent tempestuous election and its outcome (which isn’t anything new; review your American history and you’ll find similar political uprisings in the past), you’d have to agree that there is widespread concern about our government trying to be all things to all people, filing in the economic holes that free market, capitalist systems often leave behind.

The way our system of government works now, many of your tax dollars go to benefit people in other towns, cities, counties, and even states. You may not be aware of it (most people aren’t), but for every mile you drive on a federally-subsidized interstate highway, someone in another state is driving on a similar highway, part of which was paid for with your tax dollars. (n some states, LOTS of your tax dollars.)

Is that socialism? Sure it is! Our legislators made a decision that all American citizens benefit from an interstate highway system, even if most of us never drive more than 50 miles from home.

Now, back to my cable TV analogy. You pay taxes because you have to, and your tax dollars subsidize many government agencies and programs. But you don’t pay cable TV bills because you have to. After all, no one forces you to watch television!

Yet, your cable TV payments subsidize numerous TV networks that you’ll probably never watch. That’s because your cable TV operator has decided that all of its subscribers benefit from having 200+ channels of programming to choose from, even if most viewers never watch more than 15 channels.

Is this socialism? Essentially. Your cable TV payments (beyond operating costs and profit) are split up and shared among a wide variety of channels using a tiered model of distribution. You pay for a block (tier) of channels, and you can watch or ignore them – it’s your choice. This revenue structure ensures that all cable TV networks get a guaranteed rate of return, although there is quite a disparity between the most popular networks like ESPN (over $4 per subscriber) and small-audience channels like Lifetime and Oxygen (nickels and dimes per subscriber).

Trouble is; many Americans are trying to make ends meet in a recession right now. And all of their monthly expenses are coming under scrutiny, including ever-escalating cable TV costs. So it’s not unreasonable to ask why cable companies expect them to pay every month for an ‘all-you-can-eat buffet’ when smaller, a la carte dishes will suffice.

And there’s the thrust of my argument. Cable TV revenue subsidizes minor TV networks and channels that would never make it on their own in a free market system – they just wouldn’t draw enough viewers. Yet, we still have to pay for them anyway and keep them alive whether they deserve to stay in business, or not.

Satellite TV systems, FiOS, and U-Verse also work the same way. You pay a flat monthly rate and are delivered a slew of channels, many of which you’ll simply ignore as you stay hooked to ESPN, Discovery, Fox News, USA, AMC, MSNBC, TBS, TNT, and other ratings leaders.

Is it time to move to a different model? You betcha, especially when cable TV channel subscriptions are being dropped like hot potatoes. Even the head of Time Warner cable, Glenn Britt, has acknowledged that it is probably time to come up with ‘value’ cable TV packages that will convince customers to stay aboard, yet deliver the popular channels that viewers really want. (For more on this story, read what GigaOM had to say about Britt’s comments.)

The cable TV industry has vigorously resisted any moves towards a la carte pricing, because channel tiers are best for the company’s bottom line. But that may have to change, as consumers start to value Internet connections more than TV channel packages and access TV content over broadband connections in lieu of changing channels.

So my question is this: If socialism is supposedly a bad thing when it comes to government, why is it a good thing when it comes to cable TV service?

Posted by Pete Putman, November 8, 2010 2:55 PM

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About Pete Putman

Peter Putman is the president of ROAM Consulting L.L.C. His company provides training, marketing communications, and product testing/development services to manufacturers, dealers, and end-users of displays, display interfaces, and related products.

Pete edits and publishes HDTVexpert.com, a Web blog focused on digital TV, HDTV, and display technologies. He is also a columnist for Pro AV magazine, the leading trade publication for commercial AV systems integrators.