Smaller Cable Companies Are Giving Up On Cable TV Altogether

from the unsustainable dept

As giants like Amazon, Apple, AT&T, and Comcast rush to dominate the TV market, smaller cable providers are suddenly finding themselves unable to compete. Pay TV margins have been tightening for years, and without the kind of scale enjoyed by companies like AT&T/DirecTV/Time Warner or Comcast/NBC Universal, smaller cable companies have warned for years how they would probably have to ditch the TV business and focus exclusively on broadband.

Some companies, like Kansas cable TV provider Rainbow Communications, are finally following through on those promises. The company sent a letter to its customers this week (hat tip, Cord Cutters News) informing them they'd be shuttering their cable TV operations, and suggesting impacted customers should probably go check out this whole streaming video thing:

"You’ve probably heard about streaming TV. Streaming is watching TV over your internet connection, and now with new applications, you can stream shows on television sets. While Rainbow will not be your TV provider moving forward, your new digital picture and sound can be delivered over our Rainbow internet service. When you combine our high-speed internet with HD-picture, the clarity will surprise you.”

It's the beginning of what's expected to be a fairly ugly shake up as the long-unsustainable pay TV sector transitions from "wink wink" competition to a new streaming video fist fight. Gone are the days where cable TV providers could neglect customer service and charge $130 a month for a bundle of 500 channels nobody actually watched. Under the new reality, margins are tight as hell, and unless you're doing double duty as a cable provider and broadcaster, you're not going to have the scale to be able to compete with massive giants with the leverage of scale.

But good news (for them)! Because U.S. broadband is so painfully uncompetitive, most of these smaller cable companies can shift entirely to broadband, where they can raise rates largely with impunity. They can also impose arbitrary and unnecessary usage caps and overage fees, letting them both jack up the cost of broadband service, and cash in on the streaming video services they're now pushing captive broadband customers to. That same lack of competition will also let them ignore the abysmal customer service the cable sector is historically known for.

In other words, most of these companies can simply pivot from overcharging you for cable TV to overcharging you for cable broadband, while saving costs on program carriage fees and traditional cable infrastructure.

Filed Under: cable tv, competition, cord cutting, over the top, streaming, tv
Companies: rainbow communications


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  • identicon
    Anonymous Coward, 3 Feb 2020 @ 2:07pm

    I'm hoping Starlink will be the disruptive technology that jerks the rug out from under the traditional cable providers. If what I've read about them is true, the cable companies have to be shitting themselves right now.

    reply to this | link to this | view in chronology ]

    • identicon
      Bruce C., 4 Feb 2020 @ 7:29am

      Re: Starlink

      Supposedly Starlink is initially focusing on rural service, which makes sense: they are underserved and won't consume as much bandwidth.

      I haven't seen stats to confirm the overall bandwidth supported by a Starlink mesh vs. an undersea or overland cable on the backbone, so it's not clear if they could "take over the world" and be competitive in urban areas, or if they'd get too congested.

      reply to this | link to this | view in chronology ]

      • identicon
        dan, 4 Feb 2020 @ 8:52am

        Re: Re: Starlink

        Supposedly Starlink is initially focusing on rural service, which makes sense: they are underserved and won't consume as much bandwidth.

        I work for an ISP serving rural communities. This last line is patently not true. We have a lot of customers that can crush the internet, this is in spite of usage caps.

        We don't like having usage caps, but the fact is most of the communities we serve, transport out of these communities varies between expensive and ungodly expensive.

        For the few communities we serve where transport out is lower, prices and usage limits reflects that.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 4 Feb 2020 @ 9:05am

          Re: Re: Re: Starlink

          What a bunch of nonsense.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 4 Feb 2020 @ 5:56pm

            Re: Re: Re: Re: Starlink

            No, it really is not nonsense. Where I am at Centurylink is the only real backbone connection. They do not want competition in the small cities that they serve up in the mountains.

            I have spoken with the owner of a local long range Wi-Fi provider, the costs for just two redundant 10Gbs is astronomical. These lines have been in place for the better part of a decade for cellular back haul lease yet were never utilized, and reception is still crap in many areas.

            reply to this | link to this | view in chronology ]

            • icon
              BoredSysAdmin (profile), 4 Feb 2020 @ 7:03pm

              Re: Re: Re: Re: Re: Starlink

              Horse poop. My company has not 1 but 2 10g links, They are pricy, but the cost could easily be recouped with few hundreds of subs.
              As for download caps - even worse horse manure - throttle your worse offenders and run some very basic QoS. It's not that hard to do very basic traffic management without caps

              reply to this | link to this | view in chronology ]

  • identicon
    Harold of Wholesome Wallet, 3 Feb 2020 @ 2:13pm

    Cable companies should adapt to the times

    The smaller cable companies should have seen this coming a long time ago. Just like Blockbuster, they will go out of business if they don't adapt to the times.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Feb 2020 @ 2:38pm

    It's a Doggie Dog World

    There seem to be many more ads here these days.

    reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 3 Feb 2020 @ 3:18pm

    lets see.

    Small cable company..
    Gets charged no matter what for all the channels they Subscribe, but also have to take, this and that, and NOT just those they Want and the customers Would watch in the area..
    Pay a fortune also because you a a small company Not a national corp.
    Then have to Pass those charges to the customers...Including channels they Dont want and dont want to pay for.
    Those that like sports number about 40%.. Why do the other 60% want it?
    Also they really dont get money from adverts from the National services, only local adverts.. So, How do you Cut those adverts and insert your local ones? Cant.
    Fun aint it?

    reply to this | link to this | view in chronology ]

  • identicon
    Judd Sandage, 4 Feb 2020 @ 3:13am

    Sports Channels

    I would love to be able to drop the channels I will never watch, like all those freaking sports channels, as I have never watched them, and delete them when I can from normal view, however I still pay for them due to bundling, even if it only saves like five bucks, I dont watch it, why should I pay for it?

    reply to this | link to this | view in chronology ]

    • icon
      ECA (profile), 6 Feb 2020 @ 1:02am

      Re: Sports Channels

      Call the State AG..
      See if the idea that only 40% of people WANT ESPN at over $8 per person, for Everyone...including those 60% dont want it.

      reply to this | link to this | view in chronology ]

  • identicon
    Me, 4 Feb 2020 @ 5:28am

    God Karl Bode is sooooo insufferable. Why does anyone hire him to spout his garbage? He talks out both side of his rear end. ADMITS cable TV margins are nearly non existent yet says cable TV companies are evil for charging such high prices. Ok Karl they should operate at a loss because they are charities not businesses. Maybe this website should no longer have ads too.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 4 Feb 2020 @ 5:43am

      Re:

      "ADMITS cable TV margins are nearly non existent yet says cable TV companies are evil for charging such high prices"

      ... and this alone makes Karl insufferable?

      Where does Karl claim the cable tv folk are responsible for the entirety of the ridiculously high prices being charged for content?

      Wait - now it is about ads? Make up your mind.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 4 Feb 2020 @ 9:09am

        Re: Re:

        Where does Karl claim the cable tv folk are responsible for the entirety of the ridiculously high prices being charged for content?

        He doesn't, but the cable companies have, by bullshit fees, bad customer service, etc., forfeited the ability to be treated as mere middlemen. If they contacted people to say "Disney raised our fees by 30%, do you want to pay 30% extra for that one channel or cancel it?", the customers might be more understanding. And in fact that's what dropping all TV will provide: neither the ISP nor the TV company will be able to blame increases or weird bundling requriements on the other.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 4 Feb 2020 @ 6:24am

    same song

    So instead of paying the local cable monopoly
    -1 fee for internet access
    -1 fee for cable tv
    and then paying the streaming service for shows

    We now get to pay the local cable monopoly
    -1 fee for internet access (increased fee to make up for the loss of cable tv revenue)
    and then pay the streaming service(s) for shows (increased fee to make up for the money that content creators WERE getting from cable tv channels)

    I can't wait for Netflix et.al to start showing commercials. Eventually we'll realize that it's just entertainment.

    reply to this | link to this | view in chronology ]

  • icon
    tom (profile), 4 Feb 2020 @ 7:53am

    When analog TV died several years back, all cable TV became a version of encrypted digital data streaming with no data caps. By killing what is called cable TV, the providers can now impose data caps and overage fees for basically the same service while simplifying their billing and maintenance procedures.

    reply to this | link to this | view in chronology ]

  • icon
    Mark Gisleson (profile), 4 Feb 2020 @ 9:44am

    living deep in the country now

    Last month my very small rural town just got fiber. Local ISP did not charge for installation and tripled my download speeds for $20/mo less than I'd been paying. My upload speeds increased 10x.

    No one at the local office is pushing cable, and they tipped me off to YouTube TV having local sports after SlingTV got shafted by Fox on prices.

    No controversy over any of this, mostly tax dollar subsidized. I can't see a downside for this community.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 4 Feb 2020 @ 12:25pm

      Re: living deep in the country now

      Mark Giselson, you are blessed.
      This is what local ISP competition should look like in every big city and small town USA.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 5 Feb 2020 @ 1:53pm

    Now Google

    One day later: Google Fiber kills TV service, focuses on broadband and YouTube TV

    (Was anyone else surprised that Google started a new cable-TV service in 2012?)

    reply to this | link to this | view in chronology ]


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