TV’s Future: A Nasty and Growing Fight

Cable cut (© steheap - Fotolia.com)It has been regarded as a sure thing that the cable TV system is approaching the end as television distribution moves onto the internet. Many reports say it’s going to happen soon. But the the latest evidence shows us the events moving the world of network TV are going to be slow, complex, and filled with some confusing fights.

The latest is odd and seems to have no real effect with the cord-cutting future. Verizon announced FiOS Custom TV, a $60 a month service for subscribers that allows the basic service–a collection of 49 local broadcast stations and a weird bunch of channels from CNN to The Church Channel–plus two “channel packs.” These choices include entertainment, kids, lifestyle, pop culture, news and information, sports, and sports plus. Additional channel packs could be added for $10 a month each.

The whole thing seemed like a minor pricing move but set off an explosion from horrified key network operators. ESPN, a unit of Disney, announced the service violated its contract with FiOS. NBCUniversal and Fox rapidly jumped in with actions of their own. Verizon says it’s entitled to the deal and the whole thing may end up it court.

The jostling of many players. What is really going on appears to be the jostling of many competitors in the fight for the future. Verizon is an odd player. FiOS is a relatively small cable TV carrier; it offers fiber television and internet service to parts of 12 states and the District of Columbia. But Verizon is a massive provider of network service and it’s no surprise it is more interested in expanding content sent out over the network than caring much for the long term about what moves over the cable. (AT&T, with a somewhat similar U-verse cable service, has been staying out of the fight.)

Comcast, the largest TV cable company and one of the biggest internet service providers (though its effort to acquire Time Warner Cable appears to be failing because of federal antitrust plans) has a very different position. Although Verizon is a very large grown child of the old AT&T and has its mind set in the telecommunications business, Comcast was born in the early cable business. Although it is nominally running its own company, Comcast seems to be taking orders from its own subsidiary, NBCUniversal. And it would be tough for Comcast to imitate FiOS when NBCU is keeping its content off FiOS Custom.

Toe dipping. ESPN has actually dipped a toe into the idea of making content available on the internet instead of cable by adding content as an add-on feature of Sling TV’s programming. But Disney is making its feelings about FiOS Custom clear: It has told ABC, Disney, and ESPN to reject ads for the new service. NBC uses the internet–web pages and mobile apps–only through programing with highlight selected programs. CBS is offering a half-hearted on-line service of its network content for $6 a month and available on mobile apps, PCs, and Roku. It’s called CBS All Access, but shows are only available the day after they have been broadcast and most sports events are blocked by their leagues.

The fact is the movement of TV content to the internet is going to be a slow affair. Netflix and Amazon Prime may have the new shows but the market is tougher for networks depending both on broadcast or cable. But they want to keep it a fight and at unless you are willing to accept a limited offering, it will be a while before you are ready for cable cutting.

Published by

Steve Wildstrom

Steve Wildstrom is veteran technology reporter, writer, and analyst based in the Washington, D.C. area. He created and wrote BusinessWeek’s Technology & You column for 15 years. Since leaving BusinessWeek in the fall of 2009, he has written his own blog, Wildstrom on Tech and has contributed to corporate blogs, including those of Cisco and AMD and also consults for major technology companies.

13 thoughts on “TV’s Future: A Nasty and Growing Fight”

  1. The TV platform is changing-AND it’s for the good. Im one of those individuals who last month got fed up with the high cost of cable TV and realized that WE DECIDE what we watch, not companies like Comcast.

    The problem is that in many places throughout this country we have duopolies and those incumbents also abuse their market positions.

    Case in point :

    I’m on AT&T’s DSL internet. I’m supposed to get 6 megabytes speeds. I’m lucky if I’m able to even reach 5 megs and that is on a normal day or evening where the traffic is less. On top of that, AT&T has a data cap of 150 gigabytes PER MONTH and for every 50 gigs a subscriber goes over, they charge an additional $10.

    Cord cutting is also happening. Traditional cable TV will be going the way of the dinosaur.

    Add the numbers up. Got to http://www.stopthecap.com and take a look. I’m one of those individuals that fully supports the FCC in classifying the all ISPs as Title II carriers. The fact is ISPs are slowing Internet speeds (raised Internet speeds only come when a competitor like Google Fiber pops up – and ONLY where they pop up), increasing consumer prices (including pricing Internet Only more than Internet+TV to keep people from cutting the cord; also setting caps and overage fees to artificially raise the price of streaming) and hampering infrastructure development (How’s that FIOS roll-out going? Oh, right. It’s not because they want to ditch wired access. How’s that rural roll-out going? Oh, right. It’s not because rural is not as profitable.). Complaining that all of this will happen because of net neutrality regulations is disingenuous. All of this is ALREADY happening with the companies left to do whatever they please.

    As an ISP subscriber I certainly am not benefitting from those investments. The way I see it, then, ISPs have one of two choices: They can either live with the FCC’s net neutrality rules and continue to enjoy their positions as de facto regional monopolies, or they can rid themselves of net neutrality rules and embrace changes that will open them up to more competitive pressure. They cannot, however, continue to soak up monopoly rents while claiming they have the right to intentionally degrade users’ favorite apps and services. You will find that many people are disgusted by the status quo duopoly that exists in MOST areas of the United States REGARDLESS of where they stand politically.

    1. The way they want about de-monopolizing Telecoms/ISP in France (all of Europe used the same pattern I think) worked quite well:
      1- a “cost+” price was set, at which the incumbent was forced to lease physical lines (last mile and backbone) to any competitor who asked
      2- standards and prices were also set for mandatory shared hosting of active equipment in the existing rooms, ie new entrants could either lease active equipment+backbone from the incumbent, or setup their own next to the incumbent’s.
      3- actual phone numbers were made “portable”, so you could switch operators while keeping your number.
      4- switching fees are by law diminishing over time (2yrs I think), so lock-in is low.

      That allowed new entrants to get a foot in cheaply on the coattails of the incumbents, then build their own local infrastructure when they reached critical size in a market. And explains why unlimited ADSL is $25-ish, Fiber about twice that (including unlimited calls and basic TV). And that model was mostly duplicated for Wireless, so again $25-ish for unlimited 3G (voice, texts, data, and some foreign countries), a bit more for 4G (sometimes nothing more). We’ve got 4-5 players nationwide.

      I’m guessing US politicians are too attached to Big Telecoms’ donations to make any such move against them, unless it’s in favor of Google and their relentless lobbying.

        1. So, basically, the new entrants got a chance to exist, and the old monopoly was not allowed to extract rent for eternity on infrastructure amortized several times over already.

        2. “So basically the lazy built on the backs of the ones who had already done the work?”

          As for calling new entrants “lazy”; that’s untrue, irrelevant, judgmental and idiotic.

          Most customers who remember those times would rather call the old monopoly “lazy” (it could take 2 months to get a new line installed or an existing one fixed), or rather “complacent” and “overpriced”: there were set-up fees of a few tens of $$, long-distance/international call prices were higher than in the US, local calls weren’t even included in the subscription; internet deployment in general and broadband in particular were lagging…

          New entrants were not “lazy”, just weren’t allowed to exist before and needed a fair chance. After an initial flourishing of players, about 4 national ISPs remain (there was a bloodbath after the initial euphoria, so… no cakewalk, no mister) over a combination of copper, cable and fiber. Broadband adoption is OK now, transition to fiber is going along fine. Part of the deal (as for 2/3/4G mobile networks) was having to commit to covering remote areas, so my parents in a very remote neck of the woods now have a better connexion than citified me, and better Mobile too (there’s a funny plastic tree a couple hundreds yards away, hiding a mobile relay).

          Prices have gone down, availability has gone up, and service is very good. The free market at work for the benefit of everyone, fed by the tears of those who’d rather have monopolies, but French corporations aren’t people and campaign contributions and spending are strictly regulated, so the moneyed incumbents don’t get to stack the deck at the expense of new entrants and users.

    2. I am not able to get Verizon FIOS in my neighborhood. In my neighborhood utility wiring is all underground. Comcast was smart enough to lay down the cable when the development was being built 14 years ago. Verizon FIOS was not a service back then. Verizon (understandably) refuses to pay for the cost of repairing the roads and sidewalks after they rip those up to lay the fiber. So … no FIOS. No competition.

  2. @joevillanova:disqus

    5 megs on an “up to 6 meg” service plan is very good performance. You have nothing to complain about.

    Have you actually, ever, paid an overage charge to AT&T?

    If cord cutting is happening, whom will you get your broadband connection from, if not the cable company, since you despise telco?

    Broadband/internet service from the duopoly today is a remarkable value – we’re getting 5X the bits for the same $ as we did a decade ago, and it only improves each and every year, despite the “lack of competition”.

    If we left matters to the government and regulators, as you would have it, we would not only be paying twice as much, we’d only have one choice, instead of two or more, and speeds would be dismal.

    Stop the hate.

  3. The TV business is an awful tangle of rights, ownership, and turf battles, and that’s why Steve is right when he says movement to the Internet will be slow. Reed Hastings (the CEO of Netflix) said the change will take 20 years to complete.

  4. What I hope the ESPN (and other network/tv delivery spats that occur) will demonstrate is that, as much as we love to vilify cable (and I am right there with those people) they are not the only one’s trying to dictate how and what we see. As much as the internet is disrupting cable/satellite companies, it is also disrupting the networks. It is a hope for the actual producers of the work. Just as with music, the internet becomes a possible direct distribution point at the same time it is also difficult to match the marketing and distribution the networks and cable companies can provide. EVERYONE is trying to protect their piece of the puzzle and their place in the process.

    Joe

  5. Here’s something no one seems to be commenting about:

    Did Verizon truly believe that they had the right to kick ESPN out of the basic tier? Or is it just industry practice now to forego negotiations and discussions and simply move straight to lawsuits?

    For all of us that have been on the inside of the TV biz all these years, it’s been a standard, top-of-mind concept in channel carriage that programmers want to be part of the basic tier. What this means, and I’m speculating from the outside, but to me, it is clear as day that Verizon’s move was a highly calculated and intentional action. Maybe it’s just an observation, but to me it represents a level of hostility & cynicism that even I would not have imagined.

    If there are lawyers reading this – what’s your take? Is Verizon at any additional risk if it’s found to have willfully and blatantly violated its agreement with ESPN?

Leave a Reply

Your email address will not be published. Required fields are marked *