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Most cable television companies currently require customers

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Most cable television companies currently require customers [#permalink] New post 13 May 2008, 21:18
00:00
A
B
C
D
E

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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 the total number of channels offered to consumers would decrease, along with programming diversity, as a result of the a la carte pricing structure
(B) Whether advertising revenue for the cable television companies would decrease 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
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Re: CR A La Carte Cable TV [#permalink] New post 13 May 2008, 21:40
I'd say D - more if correct.
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Re: CR A La Carte Cable TV [#permalink] New post 13 May 2008, 21:45
d for me too
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Re: CR A La Carte Cable TV [#permalink] New post 13 May 2008, 23:20
Argument: Popular channels provide most optimal way to subscribe for the lesser popular ones.
If La carte pricing allows the consumers to shop for the individual channels rather than opt package, then that would affect the pricing.

(A) 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 [ The conclusion aims on pricing not diversity – eliminate it]
(B) Whether advertising revenue for the cable television companies would decrease as a result of the a la carte pricing structure [Advertisement revenues – out of scope – eliminate it]
(C) Whether the vast majority of consumers would greatly reduce the number of channels purchased if given the option of purchasing them individually [Hold it]
(D) Whether cable and satellite companies currently have the ability to buy channels individually from programmers and content providers [Satellite channels business model – out of scope – eliminate it]
(E) Whether a la carte subscribers would be required to have new television set-top boxes [ New Hardware requirement – out of scope]

Answer: C
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Re: CR A La Carte Cable TV [#permalink] New post 13 May 2008, 23:32
Ill also go for D
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Re: CR A La Carte Cable TV [#permalink] New post 14 May 2008, 00:52
D for me also. I'm curious about the OA..
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Re: CR A La Carte Cable TV [#permalink] New post 14 May 2008, 05:29
Will go with C.
OA pls?
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Re: CR A La Carte Cable TV [#permalink] New post 14 May 2008, 05:39
C

Consumer groups argue that a la carte pricing would be cheaper because they could buy only the channels they want.

Cable companies argue that popular channels subsidize unpopular channels therefore if a person wants to purchase a lot of channels the bundles will always be cheaper.

Therfore:
If you buy a couple channels, then a la carte is cheaper. If you buy a lot of channels then bundles will be cheaper.

So if the government wants to reduce pricing for consumers they need to know how many channels most of the consumers intend to buy.

(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

To me D is completly out of scope. I think they are trying to trick you into thinking that if the cable company cannot buy channels individually then they cannot sell them individually. What the cable company does with the program provider is irrelevant to what the cable company does the consumer. We are only concerned with a reduction of cost to the consumer. If Walmart can only buy candy bars in boxes of 100 from a supplier does than mean that they cannot sell one individual candy bar to me? No, so nowhere does this answer address the cost of the cable to consumers and is out of scope.
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Re: CR A La Carte Cable TV [#permalink] New post 14 May 2008, 06:37
Agree with C.
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Re: CR A La Carte Cable TV [#permalink] New post 14 May 2008, 06:40
OA is C
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Re: CR A La Carte Cable TV   [#permalink] 14 May 2008, 06:40
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