Not Just Consumers Cutting The TV Cord: Small Cable Companies Dropping TV Also

from the internet-is-where-it's-at dept

For years now, we've been talking about TV watchers cutting the cord and preferring to go internet-only. There are a variety of reasons for this, such as the price of cable TV these days, which keeps rising at a rapid pace, and also the simple fact that the internet provides a much better value for many people. But it turns out it's not just the viewing pubic that is cutting the cord. A bunch of smaller/regional cable companies are dropping TV from their offerings as well -- and the reasons are similar: the cost to offer TV channels keeps going up and up, and focusing on just internet service is a better deal all around. In some cases, cable companies are simply dropping expensive channels, and in other cases, they're giving up on TV altogether. From the WSJ:
The latest is Suddenlink Communications, an operator that serves about one million customers, which says it plans to drop Viacom Inc.'s TV channels, including Nickelodeon and MTV, at midnight Tuesday. Suddenlink says it has already signed long-term contracts with other channels to fill the Viacom channels' slots.

[....]

After seven years of selling customers cable-TV services, BTC Broadband got out of that business late last year and now provides just broadband and phone services. The Oklahoma company, which had been serving about 420 TV subscribers, decided it simply couldn't afford to keep paying rising fees to carry a basic lineup of channels including ESPN, TNT and MTV.
The article notes that companies offering cable TV to about 5 million current customers probably will no longer be offering such video services, almost entirely due to cost. Those companies are finding that it's just a better deal for them to focus on offering internet services as well.

We've been arguing for years that the TV business is unsustainable, but the big media companies still see it as a last beacon of hope as other parts of their business have been chipped away. Because of that, they're increasingly relying on it (hence the rapidly increasing fees). But it's unsustainable, in large part because the internet undermines the whole thing.

While we don't hear it that much any more, a decade ago, the talk of the industry was the vaunted "triple play" offering: "voice, video and data." Some analysts would add in a fourth item of "wireless" to make a "grand slam" (mixing up their baseball metaphors). But as we've been saying for a decade, that was always misleading: "voice and video" are data. You don't need "voice, video and data." You just need "data." Wireless is just a way to deliver the data. But the internet enables all of those things. The greater access that can be offered at greater speeds, unencumbered, the less specialized services for "voice and video" matter. The traditional phone business is already on the way out. Video is next. These small players leaving the video business are just an early warning shot, just like the cord cutters.

It's all data.

But this is also why the net neutrality fight is so important -- and why the big players like Comcast (while pretending otherwise) are so desperate to control things and block true net neutrality. The longer the big old media companies can keep the highly inefficient system of cable TV alive, the more money it can squeeze out of it -- and there's a LOT of money being squeezed. It won't die any time soon, but it will die off. That's just the natural progression of things when you realize that it's all just data, and a pipe that is optimized just to "deliver data" is always going to win out in the end.

Filed Under: data, internet, net neutrality, tv
Companies: btc broadband, suddenlink communications


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  1. icon
    Ninja (profile), 2 Oct 2014 @ 3:53am

    Re:

    Will consumers stay with a company that provides only internet, if they are forced to a competitor to get TV service?

    Personal reply: yes. I did it for a while because the internet offerings from the TV provider was crap. Up to the time I ditched cable tv altogether. I would pay for online access to some channels depending on their cost but this is largely impossible nowadays for reasons only the cable tv companies can tell.

    Also, if they walk away from the TV business, will a bigger company (or another company) come in, wire up the area, and offer cable and internet at a better price?

    If they wish so. The question is, people are increasingly dropping cable so would it be profitable?

    Are they shooting themselves in the foot, cutting services and cash flow to obtain a better bottom line result in the short term, without consideration for consumer behavior after that point?

    Again, if they have a small set of users and the prices are becoming prohibitively high it is a good step. Add that the natural decline in cable users and they are actually setting a good future plan.

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