The Challenges Facing Bell TV

from the still-quite-a-ways-to-go dept

The fact that the Baby Bell telcos are now rushing to offer television over fiber is nothing new. Plenty of articles have been written about it, and it seems like this one is a little late to the game. However, it does raise some interesting points about the challenges the telcos face in reaching a point where they'll be competitive with cable TV. First, is that even after they spend billions rolling out fiber (to the home, or for the cheap Bells, the node) they have to sign the necessary content deals to have channels to offer. Since the content providers know the position the Bells are in (they absolutely need this content), the rates are going to be on the high side -- which, in turn, means that the subscription fees for end-users are going to be large, or the telcos will take some hefty losses on the service (which is exactly what's likely to happen in the short-term). However, it's also going to limit the flexibility the telcos have -- so they won't be in a position to do more creative pricing (like some of their cable competitors) to attack the market. While everyone knew that it would be easier for the cable companies to jump into the voice market than it would be for the telcos to jump into the TV market, the amount of time it's taken the telcos to act, combined with these hurdles, suggests that telco TV isn't going to be a money maker for quite some time -- if ever. At this point, the best the telcos can hope for is that telco TV will provide other benefits, such as reduced churn in other services.

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