Glenn Reynolds has endorsed this idea, while John McCain has colorfully complained that cable consumers "have all the choice of a Soviet election ballot." Conservative pro-family groups like the idea of refusing to buy vulgar or distasteful programming. But it's not just conservatives: The idea is supported by a broad and bipartisan swath of people across the country.
The metaphor of the grocery store is common. Brent Bozell has said, "If you go to the 7-Eleven to buy a quart of milk, you are not forced to take a six pack of beer, too." Similarly, a New Jersey columnist pretended that groceries were bundled as well: "I want milk and bread; they offer a "basic" bundle of milk, bread, cola, pizza, artichokes, lima beans, tampons, and beer. I can't get milk and bread without getting all the rest."
I haven't studied this issue in any detail. Still, a key distinction occurs to me: Groceries and most industries involve products that impose a significant marginal cost. If you have twelve average-priced items in the cart and add 100 more at the average price, you've added a lot of cost to the grocery store. Or, if you buy only a pack of gum, you've imposed a lot less cost on the store than the person who fills a cart to the brim.
This doesn't apply to the cable company. The signal is already there in the wire, whether you watch nothing at all or whether you buy three TVs and leave them on 24 hours per day. Cable, like other communications industries, has high fixed costs (i.e., the cost of running cable into your house in the first place) and practically zero marginal cost (i.e., it costs nothing more if you watch an extra program or channel). That's why the grocery metaphor just doesn't work here.
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Normally, economic theory would say that an industry should price at marginal cost. But here that would be zero, or next to it, and this would leave the fixed costs uncovered. It would be impossible to supply cable on those terms.
There are several possible solutions: Ramsey pricing, in which the people who are going to demand the product regardless are charged proportionally more. Or, price discrimination, as airlines do when charging more for business travelers than for families on vacation or funeral-goers. Or, fully distributed cost pricing, in which each product or service contributes on some proportional basis to the fixed costs.
But cable companies have trouble following any of those schemes. Ramsey pricing is notoriously difficult without closely-tailored knowledge of price elasticities of demand. Price discrimination is also difficult, because the cable company might have difficulty pinpointing those customers who have a higher willingness to pay than anyone else. Plus, like most industries, they have trouble preventing sharing (unlike airlines, which require ID for that very reason). Fully distributed cost pricing is incoherent, because there is no agreed-on way to specify which services actually "imposed" the fixed costs in the first place, much less in what proportion.
So cable companies have settled on bundling as an option. You can buy two or three tiers of service, each with a distinct price and each with a distinct package of services.
Interestingly, newspapers have chosen essentially the same approach as well. They have high fixed costs (i.e., the costs of hiring reporters and editors, paying the bills, etc.), but very low marginal costs (i.e., the cost of printing an extra copy of the paper). So they bundle together an entire package of every type of news story that someone might want to read in a given day -- politics, human interest, local stories, sports, comics, TV schedules, classifieds, etc. Anyone who wants some piece of that package enough will pay the newspaper's subscription price.
But you can't expect the newspaper to satisfy each individual reader's idiosyncracies. Take the fact that I never read the sports section, and that I would be happy to have a newspaper without it. If I demanded that the newspaper carrier actually remove the sports section from the paper every day, I would be causing an extra cost to the newspaper. Thus, I should have to pay more, not less.
The same is probably true here. It would create a higher cost each time that a customer wants to block a channel, because the cable company has to go to extra trouble. It is as if it literally cost the grocery store more for you to leave 20 items behind rather than buying a full cart.
Again, I haven't studied this issue at all, but my instinct is to say that unbundling here is a very bad idea.
UPDATE: Read Arnold Kling's excellent essay on this topic.