Posts Tagged ‘Cable TV’

Selling TV By The Byte

A recent article on the Fierce Video Web site suggests that smaller cable TV system operators like Cable One and Mediacom might be better advised to let cord-cutters walk away and switch their service offerings toward straight broadband access. The two companies have lost 10.3% and 5.5% of their subscribers Y-Y and in fact, Cable One has stated that they lose money on every pay TV subscriber now.

Given the increasing number of television homes that access premium content via streaming (and that includes yours truly), it’s looking like cable MSOs might be better off simply providing fast Internet service at multiple tiers, letting consumers decide what do with their access.

This model isn’t unlike that of your local electric utility – they simply charge by the kilowatt hour – or even your mobile phone service provider, who stopped charging for minutes and texting and now bills you for how many gigabytes of data you use every month.

What about the big guys, like Comcast, Charter, Cox, and AT&T? In the article, analyst Craig Moffett of research firm MoffetNathanson states that none of these companies are likely to give up on pay TV bundles any time soon, but “…If Verizon Fios and Cox—we suspect they would likely be the first two—and then later Altice and Charter, decide to stop even trying to stem the bleeding, well … then the bleeding will get worse.” Moffett goes on to say that Comcast would probably be the last MSO to drop pay TV packages because of its ownership of NBC and Universal.

Things are even worse in the satellite TV business. Moffett estimates that Dish Network, which is pushing Sling TV as an alternative to Dish, is losing almost 11% of its subscribers Y-Y. And AT&T is trying to switch DirecTV customers to cable and broadband delivery.

From my perspective, moving away from expensive TV bundles, which are largely underutilized by customers (the average pay TV customer watches 17 channels at most) and not popular at all, to a model of delivering megabytes and ultimately gigabytes of data, makes a lot more sense and is considerably easier to service and maintain.

Just about every TV you can buy today comes with some sort of on-board intelligence, an operating system, and an Internet connection (wired or wireless). Content providers Amazon, Hulu, and Netflix have set up large server farms across the country to stream content more reliably to the home, and major cable companies like Comcast have added Netflix and Amazon Prime apps to their IT-based sidecar boxes.

So, the groundwork is being laid as I write this to adopt a simple “pay as you go” broadband delivery system. Will it happen soon? My guess is that you’ll see such a transition within the next decade, especially with companies like Apple getting into content creation and delivery and more customers dropping pay TV bundles in favor of streaming.

Moffatt’s firm states that the cost of delivering video content would likely increase and prices for fast broadband prices would also increase as fewer subscribers opt for double-play and triple-play packages. However, that would improve operating margins since pay TV is more expensive to operate than broadband.

My own experience with Comcast is that they’ve set a target dollar figure they want to get from households each month, and they apply more aggressive discounts to bigger bundles (and fewer discounts to smaller bundles) to achieve that number, which appears to be north of $200/month before taxes and fees. I would suspect that target would hold with cord-cutting households that opt for a “single play” of fast broadband.

It’s no wonder that Comcast and other MSOs are venturing into services like home security and mobile phone service to try and prop up revenues, de-emphasizing video. Even Comcast Cable CEO Dave Watson was quoted in the article as saying “…his company’s strategy is centered on broadband and packaging in video only where it makes sense.”

Cord-Cutting: A Slow And Steady Drip, Drip, Drip

An interesting study was just conducted by consulting firm cg42 and it claims that pay TV service providers stand to lose as much as $1 billion in revenue over the next 12 months. The reason? Cg42 says that as many as 800,000 customers are likely to ‘cut the cord’ in an attempt to save money on pay TV packages and bundles.

Cg42 surveyed 1,119 customers online this past summer and calculated that pay TV companies could lose as much as $1,248 per lost subscriber on an annual basis. In their survey, they found that the average pay TV subscriber spends about $187 per month for cable TV, phone, Internet access, and video streaming subscriptions.

In contrast, ‘cord nevers’ – people who have never subscribed to pay TV services – spend about $71 per month on broadband access and video streaming subscriptions. The streaming part of that amounts to as little as $15 per month.

Cg42’s survey revealed that both cord-cutters and cord-nevers don’t care much for traditional TV programming, and 83% of cord-cutters said they can access most or all of the content they want to watch without a pay TV subscription. (87% of cord-nevers said the same thing.)

Perhaps more ominous for companies like Comcast and Time Warner, the satisfaction of watching TV without paying for cable or satellite services increases the longer these viewers remain away from pay TV subscriptions.

The most popular streaming service is still Netflix, which 94% of respondents subscribe to.  And number 2? YouTube’s free video channels, which offer selected clips from late night talk shows and musical performances.

Surprisingly, many respondents get their sports fix by going to bars or restaurants to watch games. The survey didn’t mention how many people also watch sports on free over-the-air TV, which of course includes NFL games, selected baseball games and the World Series, the NHL playoffs, and the NBA playoffs, plus the Olympics, golf, tennis, and NASCAR/Indy Car racing.

Surveys like these aren’t anything new. We’ve seen analysts forecasting the end of traditional pay TV packages for several years now. However, there is a real concern about the cost of these monthly services, and whether they’re worth the price.

I’ve advised numerous folks on how to get free over-the-air television and supplement it with streaming services to save money – and in fact, later today, I’ll be visiting someone nearby to do an RF site survey and see how well he can receive the local Philadelphia stations at home (upward of 50 minor channels).

Couple that with broadband service and there’s no real reason to stay with pay TV, especially now that you can subscribe to HBO and Showtime online without a pay TV service.  You can also do without landline phone service if you have a mobile phone, further reducing your monthly expenditures.

I said this a few years ago in several columns: The future of cable TV is providing broadband service. Just like mobile phone companies charge you only for data (phone calls and messaging are basically free now), so will cable and satellite companies. They will look more like the electric company, charging you for however many gigabytes you used that month.

And how you use the data will be up to you: sending and receiving photos, streaming video, emails, and voice-over-IP. That’s the real future of Comcast, Time Warner, Charter, Bright House, and other MSOs. The question is, have they accepted it yet?

Is Cord-cutting Hurting the Pay TV Market? — by Ken Werner

In a recent report, Strategy Analytics (www.strategyanalytics.com) tries hard to make the case that cord-cutting is not hurting the pay-TV market. The company directs its report, “North America Digital Television Forecast: 1H’12,” at the digital part of the market, and forecasts that digital subscriptions will increase from 114M in 2011 to 129M in 2016, for a five-year CAGR of 2.36%. SA defines the digital TV market as consisting of digital cable, digital satellite, and IPTV.

The cable part of the pay-TV market is declining, says SA, although digital cable subscribers are expected to grow from 49M in 2011 to almost 54M in 2016. We can assume that much of this growth is due to the mopping-up operations in which many of the remaining analog cable providers convert to digital. (Cablevision is doing this in parts of New Jersey now.) Since the overall number of cable subscribers is declining, it’s obvious that cable providers are failing to convert all of their remaining analog subscribers to digital. Where are they going?

SA predicts that subscribers to IPTV services will increase from 8M in 2011 to 20M in 2012. Lumping IPTV in with digital cable and digital satellite neatly obscures the fact that if you use IPTV you are sourcing your programming from the Internet and you are cutting the cord, in whole or in part, to a cable or satellite provider. Let’s subtract SA’s 2011 and 2016 numbers for IPTV subscribers from their numbers from total digital TV subscribers. Then (neglecting the possibility of overlap between IPTV and cable/satellite subscribers), the number of digital cable and satellite subscribers barely increases from 106M in 2011 to 109M in 2016.

Beyond that, SA bases its conclusion that cord-cutting is not affecting digital TV on their conclusion that the number of digital TV subscribers is still increasing, but seemingly does not try to evaluate the number of cord-cutters directly. Other analysts have dug deeper.  In a 2011 study of worldwide TV programming pipelines, “Pay-TV Subscriber Market Data,” ABI reported, “Cable TV still maintains the largest market share; however, its relative share of subscriptions dropped from 72% in 2009 to 69% in 2010. Cable TV operators in Western Europe and North America in particular faced subscriber losses in 2010 as new television services such as telco TV and online TV replaced traditional cable TV services.”

Early this year, the accounting firm Deloitte, in their sixth “State of the Media Democracy” report, said “A number of Americans have already cut, or are exploring cutting their pay TV connection entirely. Deloitte’s survey found that 9 percent of people have already cut the cord and 11 percent are considering doing so because they can watch almost all of their favorite shows online. An additional 15 percent of respondents said that they will most likely watch movies, television programs, and videos from online digital sources (via download or streamed over the Internet) in the near future.  Moreover, the number of people citing streaming delivery of a movie to their computer or television as their favorite way of watching a movie rose to 14 percent from 4 percent in 2009.”

So, is cord-cutting hurting the pay-TV market? Although Strategy Analytics disagrees, the answer is a clear “yes.”

 

Ken Werner is Principal of Nutmeg Consultants, specializing in the display industry, display manufacturing, and display technology.  You can reach him at kwerner@nutmegconsultants.com.

 

 

Biting The Hand That Feeds You

If you haven’t tried the Mohu leaf antenna, it’s quite the handy gadget. Basically, it is a single-bay UHF TV collinear antenna made out of flexible conductors, and sealed in a waterproof thin plastic shell that resembles a placemat from a diner.

 

I’ve had the Leaf for a few months now and can say that it works very well for UHF TV reception – certainly no better or worse than any other collinear antenna system I’ve tried – and does a passable job on highband VHF DTV stations, if they are strong enough.  It’s reasonably priced at $45 and includes free shipping, so you really can’t go wrong with it.

Mohu's Leaf UHF antenna is super-thin and waterproof.

And here's a picture of the Leaf in action, mounted underneath a kitchen cabinet. (Not the way I would have done it, though!)

Now, here’s where things get hilarious. Apparently Mohu tried to run a thirty-second ad on Time Warner’s cable TV systems in Columbus, OH and Kansas City, MO; touting the benefits of free, over-the-air television. And TW said, “no!”

 

A resulting press release from Mohu reads, “The planned Leaf thirty second spot actually states that customers do not need “expensive cable service to watch HD programs” and that “most top-rated shows are broadcast free, over the air in full high definition.”

 

Hmmm. Think that had anything to do with Time Warner’s refusal to run the ad?

 

We may never know the whole story, but you can see the Mohu commercial here on YouTube – http://www.youtube.com/watch?v=RNtll-4fiis.

To the Federal Communications Commission: STOP! Enough, already!

I don’t normally get worked up by much that comes of out Washington, DC these days – it’s apparent that politicians have no limit to the levels they can sink to.

But the Federal Communications Commission’s ongoing effort to reclaim broadcast TV spectrum in an attempt to ‘solve’ a so-called ‘wireless broadband crisis’ has reached absurd levels. And it is time to call them out on it.

Let me first set the table by stating that, a long, long time ago in a country far, far away, the FCC was actually a respected organization that had some actual engineering expertise. The FCC was created in 1934 to replace the Federal Radio Commission. As part of the 1934 Act that birthed the FCC, it was charged with “..regulating the airwaves in the public interest.” Not in the interests of big corporations like Verizon, AT&T, Qualcomm, or Google. In OUR interests.

The interpretation back then was that the radio spectrum (television hadn’t made its debut yet) belonged to the citizens of the United States. And the FCC would regulate how it was used to the benefit of all.

As new communication modes came into existence, the FCC was there to test-drive them and ultimately approve them for everyday use. FM broadcasting, television, Doppler radar, satellites, cellular phones – all became an integral part of our lives after thorough vetting by the FCC’s engineering staff, many of whom (like me) also held amateur radio licenses and could ‘walk the talk’ then it came to the latest technical terminology.

The FCC also regulated ‘common carriers,’ i.e. telephone companies. They approved tariffs and made sure rural areas had access to service. When television took off in the 1950s, the FCC had the foresight to add more channels in the UHF spectrum, and when TV manufacturers were reluctant to add tuners to their TV sets to enable viewing of those channels, the FCC simply made them do it with the All Channel Receiver Act of 1962. Otherwise, the nascent UHF television broadcast service would have died a premature death.

I got my first amateur radio license in 1970 after playing around with pirate AM and FM stations in high school. Back then, you didn’t mess with the FCC, and the appearance of one of their dreaded unmarked gray vans in your neighborhood meant they were on to your illegal radio station – so you pulled the plug, and fast.

In short, the FCC was the perfect umpire for our nation’s spectrum. They knew the technology inside and out, they tried to balance the needs of big corporations with the little guys, and they made sure everyone responsible for a single radio emission knew what the hell they were doing, and were held accountable for it.

Today? The FCC is a joke. I never thought I’d say that, but they have become a laughing stock. They are purely a political organization that is rapidly losing its best engineering talent, and exists merely to identify more spectrum that can be auctioned off to private interests so that Congress can continue to fill its insatiable appetite for money. (It turns out, we do have the best politicians money can buy, as Mark Twain once pointed out.)

Need proof of how low the FCC has sunk? How about the two rounds of ‘white space devices’ testing that the Office of Engineering Technology undertook a few years ago? (White space devices are low-power gadgets for wireless connectivity of media players, TVs, and other goodies in the home, and are intended to work in the UHF TV band.)

All of the devices failed both rounds of tests. Many did not detect strong active digital TV broadcasts on the same frequency! Some took an eternity to scan for active channels.

In short, these devices clearly weren’t ready for prime time. The old FCC would have sent their manufacturers packing in a hurry.

But the ‘new’ FCC? Why, they approved the concept,saying in effect, “Even though none of these gadgets ever worked correctly, you all seem to be nice people and pretty smart, so we’ll assume you can fix the problems.” This, after virtually every manufacturer of wireless microphones, lobbyists for theme parks, Broadway show producers, TV networks, the NAB, church groups, and professional AV associations lined up against white space devices.

So now, just two years after the completion of a difficult transition from analog to digital television – one that has brought us better picture quality (well, in most cases) and free HDTV to communities all over the country, and one that gave up channels 52 through 69 to public safety agencies and private interests, like Qualcomm’s failed FLO service – the FCC wants to take away another 120 MHz (20 channels) of UHF TV spectrum for its manufactured wireless broadband crisis.

To do that, over 600 TV stations currently operating in the UHF TV band will have to relocate. Unlike the analog to digital TV transition, there will be no opportunity to ‘simulcast’ on a new channel while winding down operations on the channel to be given up. These stations will simply have to shut down, install new transmitters and antennas, run coverage tests, and only then light up again.

In a classic case of Orwellian language, the FCC is saying that broadcasters will be invited to participate in a ‘voluntary’ spectrum auction and decide if they want to give up their UHF channel in return for financial considerations. (Look how far we’ve come from the Federal Communications Act of 1934: The FCC is now offering  bribes to get broadcasters to move, or shut down!)

Anyone who has ever dealt with the government knows that the term ‘voluntary’ is meaningless. If the FCC doesn’t get enough broadcasters to move, then they’ll simply change the rules to get those channels one way or another. It’s a sham.

How will this affect free, over-the-air TV viewers? Well, if you live in Syracuse NY, ALL of your digital TV channels are UHF. Ditto for all but channel 7 in Boston and San Francisco , Huntsville AL, most channels in Denver, Portland ME, most channels in New Orleans, all but one channel in Salt Lake City – well, you get the idea.

The question no one is asking is this: Why not look somewhere else for new broadband spectrum? What about the old analog cellular phone band around 800 MHz? What about the hundreds of MHz the government has allocated to itself on a primary basis for whatever purpose?

You see, the UHF television band used to go all the way to channel 83. But it’s been whittled down several times since the 1950s, and in fact broadcasters have already given back 192 MHz of spectrum for other services in the past 40 years. In my eyes, they’ve done their part already, several times over.

The UHF TV band is better suited for digital TV for a number of reasons. It penetrates into buildings better than high-band VHF channels 7 to 13 (forget trying that with low-band VHF channels 2 through 6). It is easier to design compact, high-gain antennas for UHF digital TV reception. And antennas for the new portable MH digital TV receivers are quite small – only 5 inches is needed for a quarter-wave antenna @ 600 MHz, right around channel 35.

Did you know that ALL TV broadcasting moved to UHF channels in Great Britain in the 1970s after the move to color TV? UHF TV channels were deemed to be much more suitable for the regional broadcasting services. Made plenty of sense then, and makes plenty of sense now.

But there’s no use explaining any of this to the FCC, particularly its chairman, Julius Genachowski. To me, he is the consummate political animal and bureaucrat. He is bound and determined to go after TV broadcasters once again and chop off another limb to satisfy his friends at CTIA and the big telecoms. And you will suffer for it.

One of the few really good deals left to recession-weary Americans these days – who are being nickel-and-dimed to death with monthly service fees for cable, satellite, broadband, and mobile phones – is free, over-the-air digital TV and HDTV. Many of you who have ‘cut the cord’ or are contemplating doing so, relying on a mix of OTA TV programs and Internet video, are going to get screwed if this so-called ‘voluntary’ spectrum auction and re-allocation goes through.

Apparently the FCC doesn’t care about saving Americans money, or supporting a diverse, 1700 station-strong free digital TV ecosystem that provides local news, weather, entertainment, sports – again, much of this in HDTV – without costing a dime. Nope, we desperately need more channels to fix our wireless broadband crisis!

Did you know that, in a candid moment last year, the head of Verizon said they weren’t using all of their channel capacity for wireless mobile phone and data service?

Did you know that the UHF TV spectrum is not the best choice for a wireless broadband service? (No, let’s instead move UPWARDS in frequency a few hundred megahertz.)

So, what are you going to to about it? Do you live in a TV market with mostly or all UHF channels? Do you enjoy watching free HDTV programs? Do you realize the disruption this FCC action will cause?

Then get on the phone, or email or write to your congressional representatives in the House and Senate and tell them to put a short leash on the FCC. Tell them to have a full spectrum inventory conducted and made available for public inspection.

Ask them why they would allow the FCC to take away one of the few good deals left to Americans during this time of economic stress, a TV service that more than 15% of the population relies on exclusively (over 30% among Hispanic households).

Ask them why the telecommunications industry gets what it wants, but the average John and Jane Doe – who were the supposed beneficiaries of the Communications Act of 1934 – are usually left holding the bag.

And tell the FCC this: STOP! Enough, already!