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. identicon
    Andrew D. Todd, 2 Oct 2014 @ 9:06am

    Satellite Broadcast Will Inevitably Drive Out Cable Broadcast.

    I commented on this general issue several years ago:

    It is only a matter of time before the major less-developed countries decide that they want to have their own global television satellite broadcasting networks, simply as a matter of prestige. Probable candidates are India, China, Brazil, and Indonesia. India has just sent a spacecraft to Mars, as a matter of national prestige. If one looks at the way terrestrial broadcast radio (audio) used to behave, broadcasting to all the world is simply an attribute of nationality, which is normally paid for by government funds. That was the way Radio Free Europe, the BBC, Deutsche Welle, etc., all operated. While a country like Venezuela is not very likely to organize its own satellite-launching program, it may very well buy a satellite from one of the "big four," simply as a means to speak directly to North America.

    It only costs a billion dollars or so to put up a satellite, capable of broadcasting to an entire continent, with a population of a couple of hundred million people or more. On that basis, the per-capita capital cost is three dollars, and, say, fifteen cents per year, or one cent per month.

    Satellites exist in a space outside of the national law of the receiving country. The situation is similar to broadcasting from a ship five hundred miles out to sea. Satellites are therefore free to ignore copyright, and, operated according to the national interests of their countries, they very probably will. They don't need to bother with decoders, so they don't need to set up a consumer organization in the target countries. Radio Free Europe never expected people in Yaroslavl or Suzdal to subscribe to its service, or do anything likely to attract the attention of the KGB.

    At the other end of the process, collecting television signals is simple. One of the most fundamental principles of international law is that of diplomatic immunity. An ambassador's person is sacred. Diplomats have always leveraged this into a bit of discreet contraband-trading. If they get too blatant about it, they are declared persona non grata, of course, but this is a drastic remedy. If a second or third secretary in the Nigerian embassy wants to install a small Aereo-like device which picks up television signals, and retransmits them in encrypted form over the internet to, let us say, Mumbai, so that they can be re-broadcast over the satellite thirty seconds later, it is extremely unlikely that anyone will be allowed to do anything about it.

    The two American satellite broadcast systems will be forced to cut their prices to compete. This may represent a loss for the shareholders, but Dish Networks and Direct TV will be able to continue operations. The cable companies, notably Comcast, will be hit a lot harder.

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