Amongst the festivities as Channel Master released Sling TV to DVR+ during CES, the over-the-air entertainment company shared some interesting market data.
After two years of success with DVR+ and building a strong customer base, we are pleased to be able to share some insights about our customers, their needs and habits. […] we think you may find some of these facts surprising because they are in contradiction to what many of us have been led to believe about cord cutters.
The most fascinating portion of the analysis indicates cord cutting isn’t all about broke millennials. And, as I’ve argued all along, the motivation to drop traditional subscription television doesn’t appear to be solely financial. Rather, it’s likely about perceived value.
Our customers skew toward Gen X and Boomers. While we have Millennial crossover, the majority of our customers are age 35 and up with significantly more disposable income than Millennials, and they still don’t want a pay-TV service.
Of course, this might just suggest that broke millennials stick with Roku and Netflix, while more well-off generations invest in DVR+ — starting at $250, with a more familiar and traditional television presentation. But still interesting.
My 72yo mother would be a cord cutter (as I manage her tech) if Sling TV’s UI wasn’t so crazy… perhaps emphasizing us older folks are still largely tied into a linear television approach, while the whipper snappers may consume media in an entirely different fashion.
“while the whipper snappers may consume media in an entirely different fashion.”
Yup. Recent surveys show that folks under 38yo consume over 80% of their media exclusively via Peach.
Conversely, folks over 38yo consumer over 80% of their media exclusively via get off my lawn.
Interesting demographics.
Of course, more seriously, cable-subs are still essentially flat in the face of continuing lousy macro trends – aka lousy household formation and lousy middle class incomes.
So maybe Peak TV is one of those things like smart phones w data plans. Folks will pay for perceived value no matter what.
(Also, Dude, “cord cutters” is not the preferred nomenclature. “Cable-sub cutters” please.)
My 15 year old rarely watches TV of any kind, but when she does, it’s mostly Netflix. She usually spends her time, that she isn’t snap chatting, watching YouTube and Vine videos, etc. I won’t say that is the sole source of entertainment for that age group, but it is for her and her friends.
I cut the cord just a couple of months ago and I’m a Gen-X’er. I setup an OpenElec/HDHomerun Connect box (but then again I’m fairly knowledgeable about computers). There are plenty of good, free (not-illegal) video streaming plugins for Kodi/OpenElec.
Everything else like Netflix and other streaming services I do with my Roku.
Bricketh, my 14 year old niece seems to behave similarly – she watches a lot of YouTube and Snapchat too. She also likes Netflix… when her parents let her watch it. I guess it’s a bit antisocial since the Netflix is on her phone or a non-common TV. But I know there’s also some food, home, lifestyle cable shows she likes – not sure if on-demand (like everything her youngest brother watches) or live.
We want to cut but haven’t figured out the sports thing. Most of the time it’s Netflix in our house. There are a zillion channels we watch maybe 5 with any regularity. We both get news and information from our devices. I agree about perceived value, that’s our biggest complaint too much $$ for little value.
I considered it before I got my Tivo, but sports is the big draw for cable. Each year it gets easier to do as more content moves online. To get the soccer channels I want, I have to have one of the higher packages. I can afford it, but spending $4 a day when the tv isn’t on at all a couple of days a week is crazy.
If I didn’t live with my wife, I’d be a cord cutter for sure. There’s enough entertainment, both (online) video and other (Xbox gaming, Internet, Kindle), that I’d be fine. And, in fact, I rarely watch television these days – just shows we binge, many on Netflix, Amazon, Hulu, and others I’d be willing to buy if they weren’t. But my wife does get value from having cable around and I assume when the baby is older, she will too.
I agree with you, Dave, about complexity and older people. My mother would enjoy much more TV, if devices had interfaces and remotes that were easier to use. She needs 3 functions only: On/Off (all devices at once); Channel up/down; and volume up/down.
Unfortunately, even default TV remotes have way too many buttons. Some of these even make it possible for a bad click to disable the device setup or remote setup. I found a simple remote for her that has only the above functions (6 buttons), plus one more unfortunate button for “setup”, which when hit removes the remote programming, rendering it useless. Once a week, I need to come back and reprogram the remote. This is still better than the 50 button remote that she had.
There’s an un-served market for senior-friendly devices of all kinds. For TV, I could envision an easy-to-use menu screen linked to a very simply remote with only a few buttons.
“We want to cut but haven’t figured out the sports thing.” and “I considered it before I got my Tivo, but sports is the big draw for cable.”
Yuperoo. In my example, I’m actually not a sports fan. I watch zero sports, but with one major exception: I’m an NBA junkie. And that makes it impossible to not have a cable-sub and get my fix.
If I cancelled my cable-sub and just did NBA League Pass broadband, here’s what I’d lose:
– My two local teams due to blackouts.
– Nationally televised ‘marquee’ games due to blackouts.
– The entire playoffs, which is where the real action takes place.
So unless I want to kick my habit, which I don’t, I’m pretty much locked into a cable-sub.
Bud, My mom’s condo has a deal with Comcast and she’ll be upgraded to X1 in a month or three, for no extra cost (at one television, anyway). Supposedly, according to Comcast, seniors have been doing well with the voice control remote. Will be interesting to see if she uses that feature to comfortably change channels. She’ll never use the in-home streaming, which was part of their sales pitch, or the DVR.
Chucky, wonder if we’ll ever get rid of these draconian sports blackout policies. Bad on so many levels. When I was a kid, the Dolphins wouldn’t always sell out (or whatever percent/threshold was required) so mom and I couldn’t watch the game on TV… despite community bankrolling their stadium and such.
Dave, when your baby is older, she wont get value nor like cable. Go ask my 4 and 2 year old about the rage the feel when a commercial interrupts Paw Patrol.
or why Paw Patrol doesnt come on after Paw Patrol. Linear TV is horrendous to them.
“If I didn’t live with my wife, I’d be a cord cutter for sure.”
Yup. Families are another big draw. (Which is why the content companies forced Sling TV into being so micro-targeted toward snake people.) I watch certain stuff. My SO watches certain stuff. There’s some overlap, but nowhere near total. Add in kids, and a broad package starts to make lots of sense.
And fergawdsakes, I harp on the “cord cutter” vs “cable-sub cutter” distinction not to play semantics or be pedantic. You’re still paying the same damn company for that cord. And even with cable-subs essentially flat, bandwidth caps are already being rolled out. Imagine a world where cable-subs start to really drop: do we actually think the MSO’s wouldn’t roll out draconian bandwidth caps to correct the trend? And that’s not even getting into a situation like yours, where your MSO’s pricing makes not having a cable-sub not a particularly cost-cutting maneuver…
Yes, I’ve made that argument as well… just trading one cable for another and it’s not like the incumbents will roll over or walk away from this business.
“Chucky, wonder if we’ll ever get rid of these draconian sports blackout policies. Bad on so many levels. When I was a kid, the Dolphins wouldn’t always sell out (or whatever percent/threshold was required) so mom and I couldn’t watch the game on TV… despite community bankrolling their stadium and such.”
There’s actually a move with some momentum in Congress to kill the broadcast TV blackouts for non-sellouts, with the revocation of anti-trust exemptions as the stick.
But that’s a totally different thing than the League Pass style blackouts. The NBA receives absolutely massive payments from Disney and Time-Warner. In fact, the (correctly) socialist Salary Cap is set to skyrocket in an unprecedented manner this offseason due to the huge new national TV contract coming into effect. And since the teams receive 55% of those dollars, they’re not going to undercut their core revenue stream to kill League Pass blackouts. Add in the fact that teams in major markets have been inking multi-billion dollar contracts with regional cable nets, and that there’s revenue sharing to small market teams, and those blackouts are sacrosanct as well.
So, in short, no way in hell will those blackouts go away.
Just cut the cord and I am a Gen X. As article points out, it wasn’t that I couldn’t afford it but rather I don’t like throwing money away. Sports had always held me back, but now with Sling having ESPN, TNT and TBS I get enough coverage along with local to get almost all events I want. And with ESPN3 now coming to Sling that will include even more games. Still if college sports a deal breaker for you and need something like Big Ten Network still an issue. I also just purchased a TabloTV and run it using my Rokus and it so far has been great whole home DVR experience. Combine that with Sling, Netflix and Prime and good to go. I also love now how if you can’t live without shows like Homeland or Game of Throwns you can sign up directly with those networks with no commitment. Overall great time to be a cord cutter.
Salaries are flat for the middle class but net incomes are LOWER given dramatically higher health care costs and college costs. Middle class because are Middle Class because of college, so we like to send our kids there too. I pay as much in health care as I once earned as a salary! (ok, I was in grad school at the time, but still, my health care costs then was $800 a year). These items aren’t factored into inflation as too volatile, as if college costs and health care have ever done anything but go straight up!
I cut cable because I have nothing left to cut. I prefer my cable programming much more than Network: AMC, SHO, HBO, FX — it is the golden age of cable content. Now I wait a year and get *some* of it over Netflix or Amazon Prime, and then use an antenna with the Tivo to record *poorly* the rest. Unless you live in a city, antenna reception is spotty. Downton Abbey looked like a motion sneeze the other night. My 2 TB Tivo records 3 shows a day. Sigh.
The current ablity to “cut cable” to save money is only temporary. When enough people drop TV, you’ll see cable companies simply raise the rates for Internet to cover the lost revenue. Given that today in the US most people have little choice of Internet providers, there will be no way to avoid the higher Internet costs or caps.
“Cable cutting” is not really that – that cable is still needed for Internet. They’ll get you money one way or another.
I’m not so sure cable companies have that much power. This is the beauty of capitalism and innovation. Think about Blockbuster before Netflix and how they felt pretty good until innovation caught up with them and Netflix figured out a lower cost more attractive business model. Look at what T-Mobile is doing by not charging data when streaming I think Hulu and other steaming services. Speak with your decisions and don’t fear the inevitable as history has proven someone will figure out how to reach customers with a product they want and force the other companies to change.
Yep, I fit that demographic, over 35 with significant disposable income. I don’t sweat the cost of cable TV, I just don’t see any value in it.
@Bud: They are already trying to leverage their internet service to combat cord cutters. That’s why Comcast has usage caps. It isn’t due to limited bandwidth/capacity. They actually admitted that. Additionally, many ISPs are trying to allow “fast lanes” and/or not counting usage towards the cap for their own video products and those of their partners.
That’s net neutrality, and ultimately that battle will be fought in the courts and congress.
“Salaries are flat for the middle class but net incomes are LOWER given dramatically higher health care costs and college costs.”
Yup. That’s why I call middle class incomes “lousy”. Which, along with lousy household formation, makes essentially flat cable-subs so impressive to me.
“Unless you live in a city, antenna reception is spotty.”
I live in a city, and antenna reception is non-existent due to physical impediments. I’ve read that over a third of the households can’t get decent OTA reception. Even back before the digital transition, which made things worse, I lived in a mid-sized city, without physical impediments to OTA reception, and the larger city 30 miles away that served the market felt no need to put repeater transmitters near our mid-sized city, so non-existent OTA…
Regarding Sports Blackouts, I know that the NFL already dropped local market blackouts during the 2015 season, and it had no significant detriment to their ticket sales. I don’t think it affected NFL Sunday Ticket, for whatever reason, but that is not related to local blackouts, rather it is to prevent Sunday Ticket from taking viewership away from the local affiliate stations that are showing the games.
A boomer cord cutter here. I’m old enough to remember when cable was great — CBS Cable, Night Flight, a channel called Arts & Entertainment that actually had both of those, plenty of others. Now it’s just a ghetto of reruns and formulaic cooking, home design, and contrived competition shows. I have no idea why I’m supposed to care about why some strangers chose one house over the other, why one cake looks nicer than another, why Anthony Bourdain thinks he’s interesting. (Although I’ll re-up if he kills and eats Guy Fieri.)
I also cut the Netflix cord half a year ago. I wanted streaming Netflix for movies and that’s the last thing it wants to show me now. Instead, I’m supposed to care about comic books and more reruns of cable TV shows. Although I got my Tivo S1 in early 2000 and loved it enough to get the hinsdale upgrade for it, my current S3 will likely be my last, with either the recently announced Magnavox OTA or the equivalent Xbox One tuner/DVR combo replacing it.
“I’m not so sure cable companies have that much power. This is the beauty of capitalism and innovation.”
You seem to forget that the vast majority of households in the nation are served by a monopoly MSO. When you’re dealing with a monopoly, the rules of “capitalism and innovation” simply don’t apply. It’s basic economics, from Adam Smith until today.
“history has proven someone will figure out how to reach customers with a product they want and force the other companies to change.”
“Someone” can’t reach customers unless they’ve got a cord going into the home. All the examples you cite are non-monopoly situations, where normal “capitalism and innovation” do apply.
Dropped back to “broadcast only” cable ($7/month) in 2006 when I got a used Series 2 Tivo, since it was cheaper to buy the cable shows I wanted from Amazon’s new-at-the-time Unbox service, commercial-free & pushed down automatically to my Tivo.
Dropped cable altogether for nearly 7 years when I won a Tivo HDXL & then bought my first HDTV.
Switched back to cable last spring for a triple-play promo @ around $100/month (after taxes/fees/CableCard rental) since cable broadband offers 30MBps down & my increasingly flaky AT&T DSL was stuck at 5.1MBPs down (phone+DSL was $90/month.)
I agree “cord cutting” is a misnomer. But regardless of the limitations of the name, many people will see substantial savings from dropping cable.
However, I do have dark ruminations about the future of cord cutting too, even though I have done it.
* Content is king! Netflix if you recall doubled its rates a few years ago when they required a separate subscription for discs and streams. That dramatically undercut my ability to get new movies and HBO, so losing disc was no small loss. There is nothing — other than competition that is — to keep them from raising rates again. And the better their content gets, the more they can demand from us. They aren’t there yet.
* Broadband caps. I don’t have them now, but doesn’t mean they won’t hit me with them. As people start to stream more HD and 4K content, the more broadband companies (cable companies for the most part!) will come up with ways to rake in more money. Fees. Utility like cost model. And broadband is not very competitive when you consider it is typically tied to cable company monopolies. (DSL is a joke these days. Stop telling it!)
* Ala Carte bundle redux. Everyone talks about ala carte being cheaper, but that is only if you can get the channels/content you want from a relatively small number of sources. It is very easy to come up with a bundle of streaming services and ala carte season passes that cost way more than what the cable company charges for the same. This worries me, too.
Chucky, I just don’t believe broadcast companies are highly motivated to provide the highest quality/widest coverage for OTA. They ARE highly motivated to get contracts with cable companies to carry them.
It took a major $ investment (and trying out what is now my third antenna, deep fringe) to just get 4 of the 6 OTA networks reliably, and a 5th on a good day. It is very rocky here in CT and the transmitters are far and few between. I am absolutely sure the broadcasters are aware of that. Cha-ching!
I have given all hope of ever getting CBS again because there is just one CBS station “nearby” at 30 miles away serving the entire western half of the state and it is located 500′ lower than the other transmitters nearby. And I am in fight to keep watching Downton Abbey on PBS despite 2 “good” OTA signals that glitch constantly and then look perfect for 2 days straight.
When it comes to OTA, to use a cliche, the Foxes are in charge of the Henhouse and they invest just enough for the cable-free city folk and to get around government mandates and no more and hope that the rest of us just give up in disgust and get a cable subscription. Cha-ching!
Chucky nailed it. Most of the US has only 1 or 2 choices for broadband. (I have zero…).
Lack of competition eliminates any chance of “free markets” ensuring lower prices.
Big telcoms and cable companies spend millions on lobbyists to pay lawmakers and local governments to ensure that their monopolies in the last mile are not disturbed and that OTA options remain limited.
What is technically feasible and what is allowed to happen are very different. Money talks.
“I have zero”
What does this mean? I’m taking it to mean, “I have only a satellite monopoly to choose from”. If so, that’s profoundly worse than even a wireline monopoly, since the price/service equation tends to be much worse. Which is why monopoly wireline customers don’t really have a second choice…
“Most of the US has only 1 or 2 choices for broadband.”
– First, to be more precise, an overwhelming majority of US households have only 1 choice for a wireline MSO.
– Second, the real difference is between 1 and more than 1. For example, I have 4, but 2 are minor alt MSO’s. The real thing that makes a difference in my life is having more than 1.
Every two years, I get to have a bake-off between the 2 major wireline competitors in my market for a contract. Each have a department that is both dedicated to ‘keep our cord lit’ and ‘get our cord re-lit’. Once you know the drill, it’s easy to get past 1st line customer service and get to that department.
Once you’re there, if you’re willing to do some prior web research, you can actually do some rational non-monopoly negotiation with rational agents with agency.
For example, in my market, I do have a preference for one MSO over the other. I first call the special department in my non-preferred MSO, and get an offer below the rack rate. Then I call the special department in my preferred MSO, tell them the other offer, and honestly tell them I’m willing to pay a specified percentage premium over the competition for their service. They do the deal, I force them to send an email confirming terms, and we’re done.
Once every two years, and I get paid an hourly rate more than a white-shoe lawyer for my time.
That’s the beauty of being an educated, non-monopoly consumer. But I’m well aware that the vast majority of the nation’s households don’t have that option, since they are in monopoly situations.
Chucky, I’m going to hire you to handle my negotiations next go around. I don’t have the patience for it. (Which may be odd considering how well I’ve mastered, or at least think I’ve mastered, buying cars.) Although if I were real smart, I’d abuse my ‘world famous blogger’ title for some preferential rates.
“Chucky, I’m going to hire you to handle my negotiations next go around. I don’t have the patience for it.”
Dude. When I say I earn “an hourly rate more than a white-shoe lawyer for my time” on my personal efforts, I mean it. That’s what I’d charge you. White-shoe lawyers get paid an outrageous hourly rate. Thinks about it.
“Which may be odd considering how well I’ve mastered, or at least think I’ve mastered, buying cars.”
Very odd. I learned this in buying a car. I currently live inside civilization, where we don’t need to own a car. But last time I bought a new car, I did my homework. Found dealer cost, waited until end of model year, called 3 dealers, zoned in on a rational seller, and paid 1% over dealer cost. Only 2 in-person very short meetings, and remarkably little effort for the pretty large savings over the proffered ‘offers’.
“Although if I were real smart, I’d abuse my ‘world famous blogger’ title for some preferential rates.”
Maybe. But seriously, the folks in the ‘retention’/’win-back’ department are really rational, as long as you’ve done your homework. Less than an hour of web research, either 2 or 3 calls, and you get that very same preferential rate. They’ll sell you quite close to cost as opposed to having the cord dark. And sometimes they’ll even sell you under cost.
The hardest damn part of the entire process is getting them to email you terms of the deal while you’re still on the phone with them. They’ll swear up and down and on their sainted mother’s grave that it’s technically impossible to do so, right up until the moment you’re ready to hang up with them, and then, voila. Every. Single. Time. It’s the only part of the rather rational ‘retention’/’win-back’ department negotiations that get all Persian bazaar on you.
Chucky,
By “zero” I really do mean zero, none, zip, no choices for broadband.
And I don’t live in the boonies. I live 40 miles from the White House and 10 miles from the Ashburn VA locations of the UUnet Internet hub and the big datacenters for Amazon, Yahoo, AOL and others. 15 years ago, Loudoun County VA gave exclusive contracts to Comcast and Verizon that allowed them to cherry pick where they provided service. This left half of the county without service. The only options are for low speed satellite or fixed wireless ($100 per month for 1 mbs, if you are lucky enough to have line of sight to a tower). Complaints to the county result in statements that they are looking to a “public-private partnership” to solve the problem. They’ve been “looking” for 15 years, with no progress. Comcast and Verizon lobbyists are more than happy to provide campaign contributions to county elections.
Dave, you’d be better off hiring me to make sure the new Deadwood thing actually happens. Can’t guarantee results, as I don’t have any real influence, but it’d make you feel good about yourself…
“Comcast and Verizon lobbyists are more than happy to provide campaign contributions to county elections.”
Yup. The whole thing is incredibly corrupt. My favorite part of the corruption are the widespread successful efforts to get states to ban municipalities from creating ‘public utility’ MSO’s. Utterly non-sensical from a public policy perspective, but lobbyist dollars talk far louder than good public policy.
(My city worked out an excellent contract with FIOS, getting them to guarantee access to a very high percentage of households. And FIOS simply blatantly violated the contract, cherry-picking profitable targets, and essentially said to the city, who cares? Cut us off, if you dare. Or take us to court, and we’ll lawyer you into the 23rd century.)
“I live 40 miles from the White House and 10 miles from the Ashburn VA locations of the UUnet Internet hub and the big datacenters for Amazon, Yahoo, AOL and others.”
Well, there’s your solution. Easy-peasy. Sneak into one of datacenters late some moonless night with bolt-cutters, and run fibre directly to your home. Problem solved. (I hear the NSA gets the highest speeds, so that’s probably your primary target.)
“ESPN survey is brutal. 56% say they’d drop ESPN to save $8. 85% say they wouldn’t subscribe to it OTT.”
1) Well, this is why ESPN negotiates essentially must-carry contracts with MSO’s.
2) While I can’t read the report behind the paywall/registration system, just from the twit conversation, the methodology seems insane to me.
It’s surveying individuals, not households, as per the male/female breakdown the author notes in a twit. That seems profoundly misguided to me. You only need one sports fan in the household to make ESPN seem worth paying for. (If folks had a choice in the matter, which most obviously don’t.) If you surveyed individuals about whether they’re willing to pay the non-trivial amount for all the cooking/food channels they get, I assume you’d get a relatively low male number and a far higher female number, which similarly wouldn’t tell you the slightest thing about household preferences.
So while ESPN obviously has issues moving forward, I’m not sure this survey really has any meaning whatsoever, beyond what we already pretty much knew…
Like Chucky, I’m very fortunate to have more than one local broadband provider and I also switch back and forth for the best price. Yesterday marked the end of my one-year contract with AT&T Uverse and the expiration of a bunch of discounts, so I switched over to Comcast to take advantage of a new customer discount that will last for 12 months, contract-free. (As long as you haven’t had service in your name at a given address in the past 120 days, you’re “new” to Comcast.) Hopefully Google Fiber will have arrived in my neighborhood by 12 months from now. They’re currently building out their network here in town. My parents in a different state, however, aren’t so lucky. For them, it’s Comcast or nothing (OK, satellite and maybe fixed wireless internet).
I’m all for free market solutions but, given the unholy intertwining of big corporations and big government now, and the high infrastructure/cost hurdles to entering a market as a new broadband ISP, I definitely think we need more municipal or local co-op run ISPs. There are just too many residences in the US that will either never have broadband or can only get service from a local monopoly provider who can essentially charge whatever they want.
“I’m all for free market solutions but, given the unholy intertwining of big corporations and big government now, and the high infrastructure/cost hurdles to entering a market as a new broadband ISP, I definitely think we need more municipal or local co-op run ISPs. There are just too many residences in the US that will either never have broadband or can only get service from a local monopoly provider who can essentially charge whatever they want.”
At the core, monopoly power is the great evil.
Many remedies:
– Legalize and ease the path for municipal ‘public utility’ MSO’s, as you mention.
– Proper regulation of local private monopolies, as is done with other such entities.
– Mandated virtual MSO’s, as was very successfully done during the ILEC/CLEC era of one copper line into every home.
– Net neutrality and complete vigilance against zero rating. Oversight over arbitrary device authorization. Oversight over data caps used to advantage higher margin products.
– Proper FCC oversight of the industry, which covers all the above points.
And there’s more!
When you’re dealing with monopoly conditions, you need public remedies, of one sort or another. Nothing wrong with granting a decent profit for investing in infrastructure, with bonuses for duplicating infrastructure to avoid monopolies. But when monopolies exist, limits must be set on monopoly power.
(Hell, someone should be like Eisenhower with the Interstate Highway System and implement a federally funded FTTH program.)
Always amazes me how much you guys get it.
Spend so much time schooling overenthusiastic Silicon Valley Kool-Aid drinkers about things like Broadband Monopoly, the MVPDs ability to raise broadband rates to make up for falling pay-TV revenue, the fact that they can use that to kill Apple TV the way Raid kills roaches, the cord-cutting family doesn’t save money and gains hassles, there are two cords and they’re both attached to the same company, etc..
And now none of this matters. The MPVDs have seen the light and are slowly but surely striking deals with Netflix, Hulu et al to sell all the streaming apps/services to sell subscriptions to their broadband-only customers.
This is a win all around as Streamers get free salespeople, free marketing, free fee collection and the ability to email millions of potential customers. The MVPDs get all these cutters/nevers/shavers locked into their ecosystem where they can continue to try and upsell them, and consumers get a single bill, a program guide and the ability not to switch inputs.
As for broadband monopoly/duopoly, the only way that will get broken up is by government fiat a la Ma Bell. Amazon, Google, FB and Apple would love to see this happen as they know they are f-ed re: TV if they can’t control access to the internet.
“Always amazes me how much you guys get it.”
It’s cuz we read you, Alan.
“As for broadband monopoly/duopoly, the only way that will get broken up is by government fiat a la Ma Bell.”
Well, already sorta ‘broken up’ by fragmentation, no? It’s not one single nationwide MSO monopoly, like Ma Bell.
What do you think of my solution of mandated virtual MSO’s to replicate the ILEC/CLEC sharing of the single twisted pair copper wire going into everyone’s home? Seemed to work pretty damn well for consumers…
Chucky, are you proposing something like how Earthlink can sell DSL over someone else’s phone line? What we really need to do is treat broadband as a utility. But the lobby is too powerful…
“Chucky, are you proposing something like how Earthlink can sell DSL over someone else’s phone line?”
Not 100% sure how the Earthlink situation works. But I do believe Earthlink is acting as a CLEC in that situation. Regardless, the whole ILEC/CLEC thing has been massively phased out and crippled in the past decade. Whatever Earthlink is doing, it’s much more minimal that what used to happen.
Here’s your backgrounder. It goes all the way back to 1985, but really takes off after our beloved TCA of 1996. At that point, any CLEC could pay a wholesale price to an ILEC for the infrastructure, and run a consumer’s twisted pair copper wire as a ‘virtual phone company’.
To update for the current era, a mandated ILEC/CLEC solution would allow any company to run a ‘virtual MSO’ by paying a wholesale price to the incumbent for use of the coax or fibre infrastructure.
At the height of the ILEC/CLEC era, it worked great for consumers, and worked just fine for the ILEC’s, (who would be the incumbent MSO’s today). While the CLEC’s eventually got over-saturated and many went bust, that was no great loss.
So politically, it’s still a heavy lift. But all the tech and content companies would be behind it, and it would allow the incumbent MSO’s to still do just fine, although they’d obviously fight it.
I was thinking that the government would nationalize all the broadband and treat it like a utility as Dave mentioned. BUT… it’s a passel of different companies, many whom have spent billions building out the infrastructure (FIOS) and who will not let go of that easily and it is unfair not to compensate them for their expenditures.
The municipal broadband thing is good thought but it’s going to be way too expensive to put in the sort of wires capable of handling high bandwidth. (Though Australia is trying to do it on a nationwide scale, so who knows.)
So, tough call.
What will likely happen is someone will invent wireless 6G or 7G which will be just as fast as wired and there goes the whole monopoly/duopoly.
“… government would nationalize all the broadband and treat it like a utility… ”
That ain’t gonna happen, because politicians need money to get elected and much of that money comes from lobbyists on behalf of the companies making money off of the current monopolies. Money rules.
You are correct that it will take breakthroughs in wireless to end the need for wiring large areas by a single entity and thus eliminate the high cost of entry to the last mile business. I guess spectrum ownership becomes the next political football… A large industry based on controlling the last mile will not go out of existence quietly!
“I was thinking that the government would nationalize all the broadband and treat it like a utility as Dave mentioned.”
Well, Alan, just a few comments ago, you were talkin’ about breaking up Ma Bell as the answer…
Personally, I’d be great with nationalization, along with compensation to the current MSO’s, but I think it’s a total political non-starter.
But let’s go back to the Ma Bell breakup. Then you ended up with all the Baby Bells. But, of course, that didn’t end regional monopolies. In fact the similarities between the Baby Bells and the current MSO’s are very striking. And the solution to the problem was the TCA of 1996, which set up “virtual phone companies” through the ILEC/CLEC structure. Which, again, worked great for consumers, and just fine for the ILEC’s – aka the Baby Bells.
So that’s why I see mandated “virtual MSO’s”, with a new ILEC/CLEC structure as the answer.
Politically, it could work just like the TCA of 1996. Tech and content get behind the bill. Consumer interest, for whatever that’s worth, is behind the bill. The incumbent MSO’s are opposed, but given that they’re not being taken to the cleaners – remember that the Baby Bells did fine – perhaps their opposition can be softened with a few goodies.
Still a hard climb, but seems the only really politically viable way to get something useful accomplished, barring some sudden political revolution toward wise public policy for its own sake…
“What will likely happen is someone will invent wireless 6G or 7G which will be just as fast as wired”
I’m not up on how fast wireless technology is progressing, so I could be absurdly wrong.
But, I’m incredibly dubious about wireless being able to transmit both 4K and high speed internet at anything like the speed/reliability/cost of a wired connection anytime before driverless cars get here…
I haven’t used OTA for years, and now when I cut the cord I noticed the HD OTA options available to me are less, not more. Not that I care, the local subcarrier channels are mostly crap anyways.
Thank god for Netflix and Hulu…
“The current ablity to “cut cable” to save money is only temporary. When enough people drop TV, you’ll see cable companies simply raise the rates…”
Bud is 100% correct. This is a temporary debate since we are in somewhat of a transition period or crossroads if you will. Right now, the debate is between traditional cable (set stop box with linear channels provided by the cable company – we’ll call it UTT, under the top) and OTT stuff like Sling TV, Netflix, Hulu, etc. (the idea being that cancelling UTT and going with OTT will save money). Right now that may even be true. However, UTT vs. OTT is simply the WAY content is delivered to the home. Let’s assume for purposes of argument that Sling TV and similar OTT services take off and become very successful. In fact so successful that UTT goes the way of the landline phone. Ok, then so what? That’s simply a way to DELIVER content. Now flash forward X years into the future and there is no more UTT…only Rokus and similar streaming services. Once OTT takes over UTT as the content delivery system, the prices will surely adjust. Cable companies will renegotiate with content providers and you will still have to pay at the same levels as you did with UTT (minus the set top box rental)…only the delivery method will change. Prices will adjust. You’ll still have Sling that will offer fewer channels for a lower cost but you’ll also still have the cable companies and you’ll still need the cable companies’ login credentials to access their OTT Roku channel and streaming services. Same business different delivery method. Also, since many cable companies are also ISP’s that enjoy monopolies over certain areas of the country the can and WILL raise their internet rates to make up for whatever losses they incur from “cable cutting” (“cable sub cutting” or whatever). Nowhere to hide folks. Furthermore, I don’t think cable companies should be allowed to raise internet rates to subsidize losses on the cable TV side of their business. In fact ISP’s and cable TV providers should be kept separate (this would solve a lot of issues). But hey…they have a strong lobby.
“They are already trying to leverage their internet service to combat cord cutters. That’s why Comcast has usage caps. It isn’t due to limited bandwidth/capacity. They actually admitted that. Additionally, many ISPs are trying to allow “fast lanes” and/or not counting usage towards the cap for their own video products and those of their partners.”
Rodalpho is right. Although bandwith is limited, this is absolutely not the reason why Comacst introduced the caps…those caps were set with cord cutters in the crosshairs. Look at Time Warner Cable…they don’t have caps (yet). However they tout their own OTT sevice (their own Roku app that functions like Sling). They even say in their ads that you can use it to add their cable service to any TV in the home without getting another set top box. Thy sound really worried about their bandwith huh?
“Chucky, wonder if we’ll ever get rid of these draconian sports blackout policies. Bad on so many levels. When I was a kid, the Dolphins wouldn’t always sell out (or whatever percent/threshold was required) so mom and I couldn’t watch the game on TV… despite community bankrolling their stadium and such”
Couldn’t agree more Dave. The blackout policies exist to keep regional sports networks (MSG in New York, NESN in Boston) in business. This is why even if you sign up for something like NHL Gamecenter your local team is blacked out…they want you to fork it over to your regional sports network. They won’t let you get around that with NHL Gamecenter.
MJ – don’t forget not only are the cable companies the broadband companies, but in some instances, they’re also the content owners… like Comcast’s NBC.
Dave, yep that’s true as well!
“MJ – don’t forget not only are the cable companies the broadband companies, but in some instances, they’re also the content owners… like Comcast’s NBC.”
Well, that’s only instance, no?
And, obviously, Comcast’s purchase of NBCUniversal should never have gotten past the Feds. Goes against the entire direction of Federal policy all the way back to 1947 when they forced the movie studios to divest themselves of the theaters; keep content and distribution separated. GE played a very wise game when they shifted MSNBC to be all-Dem post-2006. They could see the political winds shifting, and realized they’d have goodwill to bank on in the future, they were able to cash in when a Dem administration approved the NBCUniversal sale to Comcast, who was willing to pay far more than anyone else.
(Also, while I assume you fully know this, Dave, beware of trivializing it as “NBC”. NBCUniversal is a content behemoth, with a bunch of cable channels, lots of programming it makes for other cable channels, and a damn movie studio to boot. In terms of revenue, it’s bigger than Time-Warner. And that’s entirely separate from the financials of the nation’s biggest MSO by far, of course.)
“The blackout policies exist to keep regional sports networks (MSG in New York, NESN in Boston) in business.”
As I note upthread, that’s only half the reason.
For the example of the NBA, the national contract dwarfs the cumulative local contracts. And the blackout policy gets heavily involved with national games.
Cablevision’s assets:
https://en.wikipedia.org/wiki/List_of_assets_owned_by_Cablevision
“Cablevision’s assets”
Thank you, kind sir! I learn something new every damn day.
(And I suppose you could retroactively count Time-Warner before they (smartly) divested Time-Warner cable. But both those are midgets compared to the Godzilla-sized giant of Comcast/NBCUniversal…)
—without recounting in detail, what Chucky lays out re: ILEC/CLEC could work. My understanding is that GAFA (Google/Apple/Facebook/Amazon) would all love to see the broadband monopoly broken and that’s part of the reason net neutrality has been getting so much play– they see it as a way to increase awareness in DC that broadband is a monopoly.
—yes, upon reflection, the Ma Bell break-up left us with local monopolies versus one national one. Kids learning about it in 50 years will be shocked that people back then thought landlines mattered.
—don’t know much about how cellular tech works either, but I do know that people are working on creating solutions that make wired connections unnecessary. No idea how realistic those plans are or how close anyone is.
— I *love* UTT, MJ and plan to steal that. Calling it “linear” was never great because that also means programming that’s watched in real time (vs DVR). And no one knew what QAM meant.
—agree that Comcast/NBC deal was not good and establishes bad precedent
—why are we the only ones who seem to get the power the MVPDs have to stop cord cutting via bandwidth caps, etc. This is doubly true now that they are all rolling out their own “cord cutter” products like Stream and Sling and Go90.
“why are we the only ones who seem to get the power the MVPDs have to stop cord cutting via bandwidth caps, etc.”
Cuz in the clickbait economy, sexy wins out over smart, every single time. And OTT / cable-sub cutting is sexy. So that’s what folks write about, and that’s what folks read.
(The ILEC/CLEC solution has been a hobbyhorse of mine for a while now, and no one seems to get it. No one seems to even be aware of it happening the first time. I know it was 15 – 20 years ago, but that’s not ancient Rome. Only way it happens is if the tech and content companies, in alliance with goo-goo’s, actually figure out that it’s the optimal solution, and start pushing.)
I thought that court rulings and FCC rule changes pretty much eliminated CLEC access to the “last mile” of wiring and pretty much killed that business. I know, for example, that MCI had a pretty good consumer business going until the rules changed on ILECs being forced to lease lines at low rates. MCI ended up being sold to Verizon.
“I thought that court rulings and FCC rule changes pretty much eliminated CLEC access to the “last mile” of wiring and pretty much killed that business.”
More or less completely correct, as I understand it. And the whole ILEC/CLEC structure from the TCA of 1996 was all about twisted pair copper and ‘virtual phone companies’, not about coax / fibre and virtual MSO’s.
So, we need new legislation along the lines of the TCA of 1996 that applies to the last mile of the current era. My point is that it’s politically viable for the same reasons that the TCA of 1996 was politically viable, and that it’s a good example of how the last mile can be ‘shared’ in a way that benefits both consumers and innovation.
“Cuz in the clickbait economy, sexy wins out over smart, every single time.”
Yeah, I’m a pretty bad blogger…
“Yeah, I’m a pretty bad blogger”
If I may suggest:
– What Time Is The Netflix?
– The 17 Ways You Wouldn’t Believe That Prime Video Is Transforming the World.
Just the fact that so many of them seem convinced that cord-cutting on a massive scale is already happening. They don’t even question the truth of that and just move on to “given that consumers are abandoning pay TV in droves, what happens to….”
This, despite the fact that the largest drop we’ve seen is something like 0.5% in a quarter.
This does not tell us who the “cord cutters” as a whole are. It just confirms that older generations prefer the legacy BOX DVR that connects directly to their TV, just as they have always done with VCR’s and DVD Players, et al. with whic they they are most familar, and that would be CM DVR+ and TiVo. Meanwhile, they younglings take to Tablo or other “techy” solutions far easier. The younger generation just can’t conceive of getting another big box with a big HDD so they can time and place shift programs. Such legacy products like a degree of elegance for these kids, and they are right. I know this from personal experience, and it makes sense. There are still legions who don’t really use Amazon to its fullest, but almost always go to brick and mortor for just about everything they buy. Anytime I try to explain the Tablo like devices to people of later generations as an option alternative to the DVR Box, their eyes become glassy and they stare theat long stare, and then interrupt me in mid-sentence,” NOPE! Too complicated.” I have a hard time getting family to use my Slingbox at home to view shows at their home because of the whole experience of using the app and mobile device to send it to the TV, etc. They just wait for me to bump off a DVD so they can play it back becausse they know how to playback DVD’s using the legacy device that is a smaller box also connected to their TV’s. Point made?
My two teens only watch YouTube on their phones. Occasionally we watch Premier League on cable. I can see then never bring cable subscribers.
For me, despite all the useless channels, cable is a great value. There’s something to be said for the convenience of it. I don’t like the current Balkanization of content. Big headache.
“My two teens only watch YouTube on their phones. Occasionally we watch Premier League on cable. I can see then never bring cable subscribers.”
Perhaps. Hard to tell if tech shift will really change things or not.
Maybe I’m an outlier, but here’s my pre-web-video youth experience:
– Was a TV junkie when I was a kid.
– By the time I hit 15, I essentially completely stopped watching TV. Only exception was rentals from the video store.
– When I moved out at 18, I didn’t even have a TV for the next 7 years. And by that time I was a full-on movie freak! (Of course, it helped that I lived in places with excellent repertory cinemas to get my fix.)
– And then I turned into a regular cable subscriber, with only a brief period of a few short breaks when I’d substitute Netflix DVD service for cable.
So, maybe it’s a tech shift. Or maybe it’s normal youth behavior. Or maybe I’m just an outlier.