Old School TV Gatekeepers (AT&T, Comcast), Struggle With Modern Streaming Gatekeepers (Amazon, Roku)

(Mis)Uses of Technology

from the meet-the-new-boss... dept

In years past, incumbent broadband and television giants like Comcast and AT&T enjoyed life from a comfortable position of dominance. If you want to subscribe to broadband, such companies are often your only option. If you wanted to subscribe to television service, you were required to rent a locked down, highly proprietary cable box courtesy of the industry’s cable hardware monopoly. Want to have your cable channel in a conspicuous position in the lineup? You could also expect headaches.

As such, it’s interesting to watch how these giants of yesterday are now struggling to adapt to a new era in which their interests are not the end all, be all of negotiations.

As AT&T tries to reverse the tide of TV customer defections, it has turned to the launch of yet another streaming service: HBO Max. But the company’s efforts haven’t gone as planned, with the service unavailable on two of the most dominant TV streaming hardware platforms (Roku and Amazon) due to contract disputes. AT&T, a government pampered giant that traditionally enjoys playing the role of the politically powerful bully (remember net neutrality?), hasn’t been able to break this logjam despite HBO Max having launched a month ago:

“But streaming is an entirely new battlefield, with platforms like Roku and Fire TV becoming the main distributors. And legacy media companies like WarnerMedia and Disney are streaming newcomers with everyone seeking to challenge Netflix. None of the three companies would comment on the state of talks or say what the current impasse is over. Analysts agree that it probably harms HBO Max as it seeks to find its footing more than Roku and Amazon, which have built their businesses and subscriber bases over the past few years.”

Comcast, despite all of its money, political influence, and power, is running into the same problem. The company’s upcoming new streaming service, Peacock, also won’t be launching on Roku (39% market share) or Amazon (30% market share) streaming hardware. It’s a disadvantaged position AT&T and Comcast certainly aren’t quite used to:

“Combined, Roku and Amazon have around 70 percent of the streaming TV-specific hardware market. Both companies have leveraged their market dominance to try to secure distribution deals on terms that are favorable to them. Those deals include data-sharing agreements and the right to sell subscriptions to streaming services to viewers natively through Roku and Amazon?s operating system, according to individuals familiar with the matter.”

There are different negotiations hangups for both AT&T and Verizon. The AT&T and Roku standoff purportedly centers around AT&T being unwilling to let Roku customers who’ve already paid for HBO via Roku (who gets a cut) access AT&T’s HBO Max app (read: AT&T doesn’t want middlemen getting a cut). The Roku and Comcast standoff, in contrast, allegedly is focused on a dispute over advertising and access to viewer tracking data. In both instances, dominant monopolists are now being forced to compromise as they attempt to pivot to disruption… and at least so far, it’s not going particularly well.

Filed Under: broadband, competition, gatekeepers, streaming, tv
Companies: amazon, at&t, comcast, roku

AT&T Ditches $15 TV Service It Used As Regulator Bait To Seal Time Warner Merger

Failures

from the history-repeats-itself dept

You may be shocked to learn this, but nearly all of the promises AT&T made in the lead up to its $86 billion merger with Time Warner wound up not being true.

The company’s promise that the deal wouldn’t result in price hikes for consumers? False. The company’s promise the deal wouldn’t result in higher prices for competitors needing access to essential AT&T content like HBO? False. AT&T’s promise they wouldn’t hide Time Warner content behind exclusivity paywalls? False. The idea that the merger would somehow create more jobs at the company? False.

Last week, yet another AT&T promise disappeared without much fanfare or notice. Ahead of the Time Warner merger, AT&T promised regulators the deal would directly culminate in the release of a cheaper, $15 per month TV service dubbed AT&T Watch. This $15 service was highly promoted not only in AT&T filings, but during its court defense of the merger by the CEO himself:

“Watch” will be different because it will not include any sports channels. This will enable AT&T to sell it for $15 a month, compared to $35 a month for DirecTV Now. Stephenson brought it up on the stand in the context of AT&T’s streaming businesses. He testified that AT&T does not want to stop innovation in streaming services and brought up the new skinny bundle.

But with the deal approved, it didn’t take long for AT&T’s discount offering to disappear. By last fall, AT&T had begun backpedaling on the offer, and last week announced it would be discontinuing the offer entirely. Only a handful of reporters in the space (like Jared Newman) correctly called the promotion out as bullshit from the start:

“The whole thing was an obvious PR ploy from the start, and now with the acquisition fading into the rear view, there?s little reason to keep the service going any longer. The company never got around to adding Roku support for Watch TV, and it stopped giving the service away with unlimited data plans last October. Those who want to get a streaming TV service from AT&T can turn to one of its broader and more expensive packages instead?with prices starting at $55 per month.

Irony being that due to incompetence, AT&T’s grand merger ambitions (or its lobbying assault on net neutrality) didn’t even actually help it dominate the TV space, at least not yet. The mergers saddled AT&T with so much debt, the company immediately turned around and imposed rate hikes. Those hikes, in turn, drove TV customers to the exits by the millions, since the whole point of “cutting the cord” is to get away from ridiculously bloated cable TV bills. It’s part of the reason that AT&T CEO Randall Stephenson is now an ex-CEO, somewhere napping on a giant pile of money.

In short, much like the $42 billion tax cut AT&T nabbed from the Trump administration (that resulted in 41,000 layoffs), AT&T made a long list of promises that wound up being completely hollow. This was all laid out to US District Judge Richard Leon during the merger trial, yet Leon still ignored all of the warnings and rubber stamped the deal without a single condition. At absolutely no point did Leon in his absurd ruling recognize the threat of AT&T owning both a monopoly over broadband and a massive media empire in charge of content needed by competitors (who also were quickly subjected to price hikes).

All of this was obvious to anybody that has paid attention to the fact that AT&T has a thirty year history of making all manner of promises in exchange for deregulation, tax cuts, regulatory favors, and merger approvals that almost universally wind up being complete bullshit. But like the last dozen or so times we’ve been through this, absolutely nobody on any level of government will try to hold AT&T accountable, lest they put campaign contributions in jeopardy.

Filed Under: at&t watch, competition, merger, promises, tv
Companies: at&t, time warner

New AT&T CEO Says You're A Moron If You Don't Use AT&T Streaming Services

Say That Again

from the meet-the-new-boss dept

Last week AT&T CEO Randall Stephenson stepped down after his $150 billion bid to dominate the video advertising space fell flat on its face. Stephenson’s tenure was plagued by no shortage of scandals, though it was his failures on the TV front that likely cost him his comfy seat as one of the highest paid executives in America.

After spending $150 billion on several dubious megamergers (most notably the 2015 purchase of a satellite TV provider DirecTV), Stephenson saddled the company with an ocean of debt. So much debt it was forced to raise rates on customers in the middle of one of the biggest transformational shifts in the TV sectors in decades (cord cutting and the rise of streaming video). And while Stephenson deserves credit for at least trying to get out ahead of the trend, his tenure was pockmarked by a long line of dubious decisions that directly contributed to the company losing more than 3.2 million pay TV subscribers last year alone.

But Stephenson’s replacement, AT&T executive John Stankey, doesn’t seem much better. In a profile piece last week, Bloomberg described fairly idiotic and cocky recent comments by Stankey as “blunt.” Among them was the claim that “nobody knows as much about TV as me,” and the insistence that those who don’t subscribe to AT&T’s confusing assortment of discount TV streaming services must certainly be stupid:

“When pitching AT&T?s new HBO Max streaming platform, he told the audience that anyone unwilling to pay $15 a month for the service had a low IQ. At a town hall with HBO employees last year, Stankey said the network had to dramatically increase its programming output, comparing the work ahead to childbirth. Once, when a Time Warner veteran criticized an idea during a meeting, Stankey replied, ?I know more about television than anybody.”

Yeah, sounds like just the guy to right the ship, and earn employee and customer respect. Especially for a company plagued with no shortage of hubris that believed it could just bully, bullshit, and bribe its way to industry domination.

One of the major reasons Stephenson was ejected was courtesy of recently hyperactive hedge fund Elliott Management, which holds a massive stake in AT&T. Elliott complained that Stephenson had become megamerger happy and, despite eliminating 37,000 jobs to recoup merger debt (despite billions in regulatory FCC favors and a $42 billion Trump tax cut) wasn’t doing enough firing. Reports now suggest that Elliott didn’t much like Stankey either, but settled on him after external options proved even more underwhelming:

“Elliott, the hedge fund run by Paul Singer, remains skeptical of incoming CEO John Stankey?s decision-making but has decided his understanding of AT&T?s sprawling assets makes him a better candidate to take over for Stephenson than any external candidate, according to the people…Elliott was skeptical of Stankey?s decision-making as an architect of AT&T?s acquisitions of DirecTV and Time Warner. It advocated that AT&T focus on divesting assets and lowering debt, pushing the largest U.S. wireless company to sell DirecTV, one of the assets Stankey has steadfastly defended.”

In short nobody in this drama seems to know what they’re actually doing. Few were happy with AT&T’s previous leadership. And few seem happy with AT&T’s new leadership, who apparently thinks he’s a TV sector super genius, and you’re a moron if you don’t subscribe to AT&T’s generally underwhelming TV offerings. Surely this will all go swimmingly.

Filed Under: john stankey, randall stephenson, streaming, tv
Companies: at&t

AT&T CEO Steps Down After Bungled, Megamerger-Fueled TV Failure

Failures

from the well-that-didn't-go-well dept

So we’ve noted a few times how giant telecom providers, as companies that have spent the better part of the last century as government-pampered monopolies, are adorable when they try (then inevitably fail) to innovate or seriously compete in more normal markets. Verizon’s attempt to pivot from curmudgeonly old phone company to sexy new ad media darling, for example, has been a cavalcade of clumsy errors, missteps, and wasted money.

AT&T has seen similar issues. Under CEO Randall Stephenson, AT&T spent more than $150 billion on mergers with DirecTV and Time Warner, hoping this would secure its ability to dominate the pay TV space. But the exact opposite happened. Saddled with so much debt from the deal, AT&T passed on annoying price hikes to its consumers. It also embraced a branding strategy so damn confusing — with so many different product names — it even confused its own employees.

As a result, AT&T lost 3,190,000 pay TV subscribers last year alone. Not exactly the kind of “domination” the company envisioned.

Stephenson’s failures on this front were so pronounced, even the company’s investors got angry about how much money AT&T spent on questionable mergers. And late last week, Stephenson himself announced (not coincidentally) he’d now be retiring, though AT&T’s farewell letter understandably addresses none of these recent headaches:

“Randall has done an outstanding job as CEO in transforming AT&T into a leader in communications, technology, and media and entertainment. His strong leadership and strategic investments during a period of unprecedented customer demand for mobile communications and premium entertainment have positioned the company extremely well for the years ahead. We look forward to Randall continuing to lead the Board and working with John to ensure a smooth leadership transition.”

Until now, it’s only AT&T customers and employees who had to pay the price for Stephenson’s missteps. You’ll recall AT&T received a whopping $42 billion in savings from the Trump tax cuts, promising a universe of new jobs and investment in return. In reality though, AT&T has laid off some 37,000 employees and slashed its 2020 CAPEX by some $3 billion as it attempts to dig out from under the mountain of debt Stephenson’s merger ambitions helped create.

Stephenson, who pulled in $32 million in compensation last year despite his TV face plant, spearheaded no shortage of other controversies during his tenure. Like that time his top lobbying and policy man, Bob Quinn, was busted paying $600,000 to Trump “fixer” Michael Cohen to gain additional access to the President. Or AT&T’s lobbying attack on net neutrality, privacy rules, and the FCC in general, which netted AT&T billions in regulatory favors, to be sure, but pissed off the majority of Americans — especially the part involving ample fraud and identity theft by K street firms employed, in part, by AT&T.

Under Stephenson’s watch AT&T has also been: fined $18.6 million for helping rip off programs for the hearing impaired, fined $10.4 million for ripping off a program for low-income families, and fined $105 million for helping “crammers” by intentionally making such bogus charges more difficult to see on customer bills. And that’s before you get to the fines AT&T had to pay for failing to secure sensitive user wireless location data.

Ah, memories! Stephenson’t replacement, John Stankey, is being lauded by the press as “blunt” for statements such as these:

“When pitching AT&T?s new HBO Max streaming platform, he told the audience that anyone unwilling to pay $15 a month for the service had a low IQ. At a town hall with HBO employees last year, Stankey said the network had to dramatically increase its programming output, comparing the work ahead to childbirth. Once, when a Time Warner veteran criticized an idea during a meeting, Stankey replied, ?I know more about television than anybody.”

Great. Good luck with that.

Filed Under: john stankey, randall stephenson, telco, tv
Companies: at&t

TV 'Cord Cutters' Will Be The Majority By 2022

Predictions

from the from-fringe-to-mainstream dept

The broadcast and TV sector spent the last fifteen years trying to claim that TV cord cutting (cancelling traditional TV and going with streaming or antenna broadcasts) wasn’t a real thing, or that it was only something done by losers. But it’s the cord cutters who’ll be getting the last laugh.

A new study (pdf) by the Convergence Research Group indicates that cord cutting, once denied to exist at all by the cable TV sector, is about to get even hotter. According to the report, 36% of US homes didn’t pay for “traditional” cable TV at the end of a particularly bloody year for the pay TV sector. The group estimates that total will grow to 42% of US households in 2020, and finally topple into a majority of consumers (54%) by 2022. That in turn is contributing to a notable drop in revenue from the major cable TV providers, down from $100 billion in 2019 to a predicted $94.8 billion this year.

If you’re worried about major giants like Comcast, AT&T and Verizon struggling, you shouldn’t. While their video profits will erode, their monopoly over broadband means they’ll simply be recouping that lost revenue by jacking up the price of your broadband connection (including usage caps and overage fees) in the massive number of uncompetitive US broadband markets:

“Being caught in the programmer versus independent OTT squeeze play hampers TV access provider revenue & margins, however as TV access providers are also Internet providers there are also benefits to facilitating the rise of OTT. Annual residential broadband revenue has more than doubled over the last decade & we forecast 2022 residential broadband access revenue will X with 2022 TV access revenue. Residential broadband subs surpassed TV subs in 2017.”

Another report by Trade Desk suggests that the pandemic will only accelerate the trend. In large part because one of the last major reasons people cling to fat, over-priced cable TV bundles (sports) are on hold for the foreseeable future:

“The company found that 64% of Americans have either cut the cord, are planning to drop their pay-TV subscriptions, or never subscribed in the first place. Of those households that do still have cable TV subscriptions, 11% plan to cut the cord by the end of the year. Trade Desk surveyed 2,600 Americans for the study.”

?With only a quarter of young professionals having any long-term interest in traditional cable TV, in a few years we won?t be talking about linear or cable TV at all. It will all be online and streaming,? said Brian Stempeck, Chief Strategy Officer, The Trade Desk. ?For broadcasters and advertisers, it?s now all about how quickly they can pivot to where the eyeballs are moving and many of them are already investing heavily in order to succeed in a world of connected TV.?

It’s not like the TV and broadcast sector didn’t have the better part of the last decade to prepare for this trend. But with the exception of a few companies most in the sector just keep pretending this trend didn’t exist, cozy and warm in their bogus belief that traditional TV would be a cash cow they could happily nurse for all eternity without ever having to innovate or (gasp) compete on price.

Filed Under: cord cutters, predictions, tv

US Cable Companies Lost 5 Million Paying Customers Last Year Alone

Failures

from the denial-isn't-just-a-river-in-Egypt dept

For most of the last decade, cable and broadcast industry executives insisted that “cord cutting” (users cancelling traditional TV and moving to antennas or streaming) either wasn’t real or was only something losers did. Many of the analysts and viewer tracking firms (like Nielsen) — which have a financial stake in telling cable and broadcast executives what they wanted to hear — were quick to happily parrot these denials.

Now that it’s impossible to deny the trend, most of those folks have become notably quiet.

This week Leichtman Research took a final look at 2019 earnings reports for the biggest cable companies and it wasn’t particularly pretty for the sector. All told the top pay TV providers in America, representing about 95% of the market, lost about 4,915,000 net video subscribers in 2019–compared to a loss of 1,585,000 subscribers in 2018. Satellite TV providers were particularly hard hit last year.

Among the biggest hit was AT&T’s DirecTV, which lost 3,190,000 subscribers last year alone. Most of those losses were courtesy of the rate hikes AT&T imposed on its customers to pay off the debt it accumulated after spending $150 billion on megamergers in the last five years alone (DirecTV in 2015, Time Warner in 2019). Instead of dominating the space as AT&T had hoped, it “enjoyed” a revolt from customers and investors alike.

But things weren’t much better for the cable sector, which collectively lost 1,560,000 video subscribers in 2019 — compared to a net loss of about 920,000 subscribers in 2018. Or the nation’s traditional phone companies like Verizon and AT&T (who also offers TV service via IPTV), who lost 665,000 subscribers last year — compared to 245,000 the year before. Even the companies that tried to at least somewhat get ahead of the trend (like AT&T) wound up paying the price, even losing subscribers from their new streaming TV platforms due to rate hikes.

It’s always been pretty clear that most cable TV providers intend to ride this cash cow until its last gasp before doing obvious things like shoring up historically terrible customer support or actually competing on price. And to some degree, you can understand why. The traditional pay TV sector is still home to a whopping 86.2 million subscribers with the top seven cable companies still laying claim to 45.8 million video subscribers, satellite TV services 25.4 million subscribers, and the top telephone companies 8.3 million subscribers.

And while streaming will continue to slowly erode these totals, these companies all have an ace in the hole: their growing monopolies over broadband. The lack of US competition means that as margins on TV get tighter, they can simply squeeze their captive broadband customers tighter, something that usually manifests in not just vanilla price hikes, but the steady growth of bullshit fees, usage caps, and utterly arbitrary and unnecessary usage caps and overage penalties.

Filed Under: cable, cord cutting, tv

Cable Sector Likely To Freak Out At New Service That Streamlines Streaming TV Password Sharing

(Mis)Uses of Technology

from the you-made-this dept

Streaming video providers like HBO and Netflix have traditionally taken a lax approach to password sharing. Netflix CEO Reed Hastings has gone so far as to say he “loves” password sharing, and sees it as little more than free advertising. Execs at HBO have similarly viewed password sharing in such a fashion, saying it doesn’t hurt their business. If anything, it results in folks signing up for their own accounts after they get hooked on your product, something you’ll often see with kids who leave home, or leave college and college friends behind.

The traditional cable industry sees things quite differently. Executives at the nation’s second-largest cable company (Spectrum), for example, have called the lax attitudes toward password sharing “insane,” and have frequently (and falsely) claimed that the practice is akin to “piracy.” In response they’ve been trying to build a new coalition tasked with taking aim at what they see as a diabolical menace.

A new service being launched this week should provide some fuel for those endeavors. DoNotPay is a startup that revels in helping consumers take counter-advantage of US corporations’ automated customer service systems, offering users services like a fast-food receipt scanner that will automatically fill out surveys for free food, an automated system for securing refunds for crappy WiFi, or a service that lets you auto-contest parking tickets. Their latest offering is Chrome extension that lets users share their streaming service access without actually sharing your password:

“By installing the startup?s free Chrome extension, you can generate links that other people can use to access your subscriptions. Instead of sharing the actual password, DoNotPay uses cookies to transfer your browsing session to other users? computers, effectively fooling services such as Netflix and Hulu into thinking you?ve just logged in through another Chrome tab. I?ve tried it, and it works as advertised.”

One can already hear the hyperventilation and histrionics coming from the cable sector, who’ll be sure to be write a few legal nastygrams to the company for its latest end-around of automated systems. But the company is simply responding to a growing problem among streaming services we’ve highlighted repeatedly: as companies strive to lock down content into a growing array of exclusivity silos, consumers are finding it harder and harder to find all the content they’re looking for, and afford the number of services needed to do so. As such, they’re more likely than ever to revert to piracy or embrace a service like this one:

“Joshua Browder, DoNotPay?s founder and CEO, says the subscription sharing feature is a response to the proliferation of streaming services that each have their own exclusive content silos.

?It?s ridiculous,? Browder says. ?You shouldn?t have to pay $100 a month just to access what you could get before for much cheaper.?

So while the cable and streaming industry will freak out about this service, they probably won’t spend too much time realizing that they’re the ones responsible for it. To be clear, this isn’t some apocalypse, and, in many ways, streaming has fixed a lot of what’s wrong with the traditional cable sector, delivering greater flexibility at lower cost.

That said, endlessly confusing and ever-shifting licensing agreements, combined with the rise of more than two-dozen streaming exclusivity silos, is still a problem the industry should be paying attention to:

Right now, the industry’s just running to the streaming trough without thinking much of the impact. Eventually however they’ll have to do a better job building more centralized systems with a focus on cost and simplicity, without simply repeating the historical failures of the cable sector.

Filed Under: chrome extension, password sharing, streaming, tv
Companies: donotpay, hbo, netflix

AT&T Can't Get Out Of Its Own Way As It Tries To 'Disrupt' Traditional TV

Failures

from the meet-the-new-boss... dept

So we’ve noted a few times how giant telecom providers, as companies that have spent the better part of the last century as government-pampered monopolies, are adorable when they try (then inevitably fail) to innovate or compete. Verizon’s attempt to pivot from curmudgeonly old phone company to sexy new media darling, for example, has been a cavalcade of clumsy errors, missteps, and wasted money.

Much like that time Verizon tried to launch a “tech news” website that banned reporters from talking about net neutrality or government surveillance. Or the time it launched a Millennial-focused video streaming service nobody wanted to watch. Or the time it bought Tumblr (via Yahoo), banned porn, watched everybody leave, then had to sell the whole thing for a song.

AT&T hasn’t been much better as it has tried to “disrupt” the TV space. You’ll recall the company spent more than $150 billion to acquire Time Warner and DirecTV in a bid to dominate streaming and the online video advertising space. But the deals saddled AT&T with so much debt, it forced the company to raise rates despite rising competition, driving many of these customers to the exits. AT&T also launched a rotating array of video brands (more than 7!) that were so confusing, it even dumbfounded the company’s own customers.

Hoping to right the ship, AT&T this week launched another variant of its streaming video platform. Despite the fact that US consumers are clearly tired of proprietary cable boxes, sneaky fees, and quickly-ballooning promotional rates, AT&T apparently thought it would be a good idea to “compete” in the streaming space by launching a platform that incorporates all three:

“After 12 months paying the promotional rate, you pay the “prevailing rate,” which is double or close to double the first-year base rates before taxes and fees. Under current prices, the $49.99 promotional rate for the entry-level “Entertainment” package would rise to $93 per month in the second year. The promotional $54.99 rate for the Choice plan would double to $110; the $64.99 promotional rate for the Xtra package would rise to $124; and the $69.99 promotional rate for the Ultimate package would rise to $135.

Those prices do not include an $8.49 per-month fee for regional sports networks, which applies to the Choice, Xtra, and Ultimate packages.

It’s just astonishing to watch a company that has been bleeding subscribers by the boatload survey the market, carefully consider its next steps, then double down on all of the annoying shit that brought them to this point:

“Signing up for AT&T TV requires a two-year contract, with an early termination fee of $15 for each month left on the agreement at the time of cancellation. A $20 activation fee is waived if you order online…Each customer gets one Android-powered AT&T TV device and a Google Assistant-powered voice remote included in the plan, but you have to pay $120 for each additional TV box.

Telecom has long proven to be a pretty insular industry, with executives that tend to surround themselves with yes men who applaud every misstep. It’s reflected in the telecom policy analyst and think tank space, and the revolving door regulators that pass from telecom to governance. They literally can’t see how clumsy monopoly dominance has frustrated consumers, broken the market, and resulted in high prices, terrible service, and a cavalcade of bad ideas. As such, they literally can’t see the best way to appeal to these users either, because to them…there’s no problem that needs fixing.

Filed Under: at&t tv, disruption, streaming, streaming video, tv
Companies: at&t

Many of Cable TV's Dumbest Habits Will Make The Leap To Streaming

Predictions

from the meet-the-new-boss... dept

In many ways, the streaming TV revolution is finally delivering many of the things that consumers had been begging for for years — more flexibility, better customer service, and cheaper overall packages. Thanks to increased competition, streaming is finally forcing the sector to adapt and actually listen to customers. At least for now, when a flood of competitors are jockeying for market share.

At the same time, many of the same annoyances that have frustrated consumers for years will also be making the jump to streaming, including a steady parade of price hikes with little in the way of notable improvements for your purchasing dollar. Annoying “retrans disputes” — where a broadcaster and cable TV provider will bicker over programming and blackout out user content (without refunds) in the process — have also come along for the ride. That’s before you get to ISPs abusing their monopoly power over broadband to disadvantage competitors, the whole reason for the entire net neutrality fracas.

As the EFF’s Katharine Trendacosta correctly notes at Slate, in many ways as the streaming sector consolidates into a few powerful players, consumers will slowly find they’ve traded in old cable TV channel bundles for entirely new “vertical” bundles:

“Instead of the old horizontal bundling?in which cable companies packaged a bunch of channels together so that people paid for some things they weren?t going to watch to get what they were?the new bundling is going to be vertical, where you pay for internet and get a streaming service in return. It?s not just Comcast that?s doing this. AT&T owns HBO, and it?s going to give premium AT&T mobile and broadband customers HBO Max (not to be confused, although you could definitely be forgiven for doing so, with the existing HBO Go and HBO Now apps) bundles at no extra charge.”

AT&T owning both the content and a monopoly over internet access creates a universe of problems, most of which were discussed at the Time Warner merger trial, and then promptly ignored by a comically myopic judge. Layer in the FCC’s decision to kill most of its consumer protection and net neutrality authority over these growing giants at lobbyist behest (not to mention the endless rubber stamps for megamergers), and it shouldn’t be too difficult to see how the new streaming sector will slowly but surely start to look more and more similar to the cable TV offerings we thought we were escaping from.

Ironically the flood of choice in the streaming wars to come (in which too many exclusives are siloed behind too many paywalls) also risks driving users back to piracy, something we’ve been noting for a while:

“Now, instead of paying one cable bill for all the channels, the ones we want and those we don?t, we?re paying for countless individual services just for the one or two programs or movies we want to watch on each of them. And that will bring back piracy, which is bouncing back after having been on the decline for years.

The return to piracy is both a bit of a meme and a bit of a reality. And its return is absolutely the result of a market that giant companies have built to intentionally trap customers into either a single-company ecosystem (one ISP, one easy streaming service) or an annoying, expensive patchwork. And while piracy signals discontent with the system, it?s quite unlikely that these companies will react by changing their approach, let alone lowering prices.

If history is any indication, giants will slowly come to dominate streaming through mergers, anti-competitive behavior, and wealth. There are ways America could fix this (stop rubber stamping mergers, encourage more broadband competition, pass some modest net neutrality and privacy rules protecting consumers from monopolistic behavior), but we’re currently doing the exact opposite. As giants like Comcast NBC Universal, Amazon, and AT&T Time Warner consolidate their power, they’ll engage in all the same lessons of years gone by. When consumers revolt and piracy rates soar as a result, they’ll blame everybody (copyright infringers!) and everything (VPNs!) else for the avoidable problems they created.

Filed Under: competition, piracy, price hikes, streaming, tv

Google Fiber Ditches Cable TV While Broadband Effort Remains Stuck In Neutral

Broadband

from the empty-promises dept

When Google Fiber first dropped in 2010, the project was lauded as a game changer for the broadband industry. Google Fiber would, the company insisted, revolutionize everything by taking Silicon Valley money and using it to disrupt the viciously uncompetitive and anti-competitive telecom sector. Initially things worked out well; cities tripped over themselves offering all manner of perks to the company in the hopes of breaking free from the broadband duopoly logjam. And in some areas where Google Fiber was deployed, prices certainly dropped thanks to Google Fiber market pressure.

The party didn’t last.

In late 2016 Alphabet executives made it clear that the company had grown bored with the high costs and slow pace of trying to disrupt the broadband market (if Google can’t afford it, who can?). Employees were fired, the project was effectively mothballed, and all expansion was halted. The company bandied around a few suggestions it would pivot from fiber to wireless, but those efforts never actually materialized. While Google Fiber still offers service, the entire project now exists as a weirdly hollow brand that keeps smiling despite having been lobotomized four years ago:

Meanwhile, Google’s product lineup continues to shrink. The company last week announced it would no longer offer traditional cable TV service because it was, allegedly, returning to basics:

“As we return our focus to where we started ? as a gigabit Internet company ? we?re also ready to challenge the status quo, to finally come right out and say it: customers today just don?t need traditional TV.”

The move itself really isn’t a terrible idea. As the pay TV sector gets dominated by giants (AT&T Time Warner and Comcast NBC Universal) that own both the conduit and the content, the cost of providing that content is only soaring. Many smaller cable TV providers are also getting out of the TV business to focus on broadband because margins are getting tighter. And Google isn’t getting out of traditional TV entirely given it still offers live television via its YouTube TV live streaming service, which will now be upsold to Google Fiber users.

The problem for Google is that its promise to refocus on being a “gigabit internet company” really isn’t true. There hasn’t been a meaningful expansion of the service outside of a few key launch markets for years, and there’s plenty of frustration and annoyance among users who had been on the installation waiting list for years, only to have their installations cancelled. Even Google’s promised pivot to wireless, driven in part by its acquisition of Webpass, has resulted in less actual broadband availability.

All the while, the company’s PR department continues to pretend there’s nothing really weird about any of this, and should you ask them about it, you’ll receive ample claims that everything is continuing normally.

To be clear, Google Fiber did yeoman’s work highlighting a lack of competition in the U.S. broadband market. But the project is a faint echo of its original intent, and it seems awfully likely that sometime in the next few years the entire program gets offloaded to some incumbent telecom giant for a song.

Filed Under: broadband, cable tv, competition, failure, google fiber, tv
Companies: google