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Consumers are Cutting the Cord to Gain Choices and Pay Less

Congress and the FCC can help consumers have more broadband options as they choose online services over cable TV.

In recent years, a lot of media and telecommunications executives dismissed the idea that Americans would stop subscribing to cable and satellite TV services. But the cord-cutting phenomenon can no longer be ignored.

American cable and satellite companies collectively lost more than

600,000 subscribers in the second quarter of this year, the biggest decline the industry has ever seen. Analysts expect the trend to accelerate as more people replace cable with Internet-based services like Netflix, HBO Now and Amazon, which are much cheaper than the traditional TV package offered by companies like Comcast and DirecTV.

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***** Moderator's Note *****

The one thing I don't get is how people can stand the lower bandwidths that over-the-air Internet offers. There's no way that cellular 3,4,

5, or "N"-G pipes can replace cable when it comes to carrying capacity.

Bill Horne Moderator

Reply to
Monty Solomon
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To article , the moderator appended:

It doesn't. Consumers aren't dropping their Internet subscriptions, just the expensive video bundle.

Without any premium channels, I pay more than $90 a month for video service from Comcast -- and that's in a building with competition from both RCN and Verizon FiOS, and I own my TiVo rather than renting an inferior "box" from Comcast. If it were not for the downsides to streaming (inconsistent user interfaces, DRM to prevent ad-skipping, lack of access to certain sports) I would probably cancel my video service as well.

As it is, I'm still contemplating switching to FiOS video, because they carry (Comcast-owned) Universal Sports, whereas Comcast and RCN do not. The events to which the NBC networks own the US broadcast rights (including the Olympics) are not legally available for streaming in the US to those who do not subscribe to a cable or satellite bundle that includes the channel on which they air.

-GAWollman

Reply to
Garrett Wollman

That doesn't sound right. For about that price Verizon FIOS offers me

  • Phone service: unlimited local and long distance

  • 25/25 internet

  • Local channels (the ones you might get with a very powerful antenna)
Reply to
Ron

Depends how you define "competition". The alternative is Comcast. So, yes, I could move from Verizon to the company that twice earned the Worst Company in America award from Consumerist readers.

I think the question becomes, "Does Garrett Wollman have any alternative to Comcast in his area?" If not, the crazy pricing is more understandble.

Reply to
Ron

The answer to which question was in the second half of the sentence of mine that you quoted. The building I live in has all three local video carriers, which is as much competition as anyone in the U.S. has for wireline video service. (We don't have satellite, and the construction of our building is such that the OTARD rule does not apply -- so there are other people in my neighborhood who have a choice of five video carriers: Comcast, RCN, VZ, DirecTV, and Dish.)

All three of the wired carriers offer phone service as well. Currently VZ is trying to force customers off CO-battery-powered POTS service onto FiOS Voice (but keeping the POTS tariff), so I'm going to have to decide whether I want to continue my landline with an inferior level of service (that I have to pay for the electricity to run!) and if so, whether I want to stick with the tariffed (but relatively expensive) service or go to one of the unregulated VoCATV options. If I'm not going to get the reliability and CO power of POTS, the service is worth quite a bit less.

-GAWollman

Reply to
Garrett Wollman

The referenced NYT article states:

| In other words, the big telecom companies will still have | plenty of leverage. Some analysts predict that as | customers desert cable TV packages for Internet-based | services, the telecom giants like Charter and AT&T will | simply charge more for Internet access, wiping out some | or all of the savings consumers had hoped for

Perhaps. But there's a countervailing argument: the big telecom companies won't have to pay monthly license fees for the programming they distribute over the internet. To the extent that subscribers drop their cable TV subscriptions and switch to internet delivery for the same programming, subscribers pay for the programming directly.

The article notes that cable and satellite TV companies lost 600,000 video subs during second quarter of 2015. Assuming that's true, the programmers also lost 600,000 subs. Some of them may have recovered some of the lost revenue through direct sales, but programmers that don't offer programming over the internet lost all 600,000 subs.

This is particularly true in the case of broadcast stations. Except for local news programs (and perhaps other locally-produced programming) broadcast stations don't sell their signals over the internet. Collectively, broadcast stations lost 600,000 retransmission-consent fees with no alternate source of revenue.

Will the broadcast industry learn a lesson from this situation? Will station owners moderate their demands for retransmission-consent fees in the future?

Time will tell.

Neal McLain

Reply to
Neal McLain

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