Cord Cutting's Not-So Imaginary Any More: One Fifth Of Consumers Could Ditch Cable TV Next Year

from the not-just-a-river-in-Egypt dept

While cable industry executives are still intent on claiming cord cutting's either a mass hallucination or a fad, data suggests that ditching traditional TV for Internet video is gaining steam. A new study by PwC (PricewaterhouseCoopers) indicates that while traditional TV customers get 194 channels, they only watch, on average, about 17 of them. And while the study found that 79% of US consumers subscribe to some form of traditional pay-TV, 23% said they engaged in "cord-trimming" in the past year (reducing their overall package where they could), and 16% said they had unsubscribed from pay-TV services in the past year.

And there's no mystery as to why this is happening. The full PwC study notes that cost (pdf) is the primary reason:

"Cost is an unavoidable aspect of consumer decision making—and the most important factor for cord-cutters. 57% of cord-cutters say they choose not to subscribe to cable because “the monthly costs are just too high."

Behind cost, also unsurprisingly, comes annoyance at the lack of control and flexibility in most cable packages:

"When asked what would entice consumers to re-subscribe to pay-TV, 56% identified “being able to customize my package to exactly the channels that I want” as their number one motivator. And this sentiment is not exclusive to cord-cutters: 45% of current pay-TV subscribers said they most preferred an “a la carte” package of channels that they could customize themselves."

And that's nothing new. Consumers have been begging for more flexible and cheaper programming options for fifteen years or more. Historically, the cable industry's response has been that a la carte TV is impractical because it would demolish the existing pricing model, cause higher rates, and force less-watched channels off the air. But all of that's happening anyway. And while a la carte TV was portrayed as a bogeyman, the industry was busy fighting off any pricing innovation of any kind. In fact, it has taken fifteen years of sustained bitching just to get a basic channel bundle without ESPN in it.

The end result is obvious. The PwC study notes that last year, 91% of consumers said they could see themselves subscribing to cable in the following year. This year, that figure dropped to 79% as a growing number of Internet alternatives began to emerge. In other words, the firm believes that one-fifth of consumers could ditch their cable subscription in the next year now that they have some alternatives to switch to. A similar study last week by eMarketer makes the same point with a slightly longer timeline, claiming that one in five homes will no longer subscribe to traditional television by 2018:

"In 2015, there will be 4.9 million US households that once paid for TV services but no longer do, a jump of 10.9% over last year. And that growth will accelerate in the coming years, with the number of cord-cutting households jumping another 12.5% in 2016. In fact, by the end of next year, the number of US households subscribing to cable and satellite will drop below 100 million."

While the slow and steady pace of the shift is what fed industry denial, it also means there's still plenty of time to do something before Internet video starts really demolishing legacy TV revenues. And it's not rocket science: offer just a little more flexibility at a notably better price point (and maybe try sucking at customer service just a little bit less). Instead, most cable and broadcast execs simply mumble something about the great value cable provides while keeping their heads buried deep in the sand, confident they can lean on broadband usage caps to counter any lost TV revenues down the road.

Filed Under: broadband, cable, cord cutting, internet, tv

Presidential Hopeful Marco Rubio Defends AT&T's Right To Write Bad State Broadband Law

from the this-outrage-was-brought-to-you-by-AT&T dept

While it was overshadowed by the net neutrality debate, the FCC's decision last February to attack state protectionist broadband laws was notably more important. For fifteen years, companies like AT&T, Comcast and Time Warner Cable have used groups like ALEC to pass laws in more than 20 states hindering or outright preventing towns and cities from building their own broadband networks -- even in cases of pure market failure where incumbent ISPs refused to. In some states, towns are even prohibited from striking public/private broadband partnerships.

In the FCC's February 3-2 decision, the FCC took specific aim at two such laws in Tennessee and North Carolina, after municipal broadband providers there stated they were unable to expand due to these laws. By the FCC's logic, the laws (which by any definition are pure protectionism) run afoul of the agency's authority under Section 706 of the Telecom Act to ensure even and timely deployment of broadband access. Since again, these laws protect nothing but the pocketbooks of giant, lazy telecom incumbents, it was a good and overdue call, and largely overlooked by the press.

Of course standing up to lobbying powerhouses like AT&T comes with a price, and ever since the FCC's vote it has been attacked by ISP-funded allies in Congress like Marsha Blackburn, who breathlessly assailed the FCC's decision as an assault on states' rights. You'll notice that nowhere is concern expressed by folks like Blackburn about how states were quite literally letting the highest bidder write the god-damned law.

Fast forward to this week, when Presidential hopeful Marco Rubio and seven other state freedom lovin' Congressmen wrote a letter to the FCC (pdf) scolding the agency for daring stand up to AT&T. In the letter, Rubio and friends accuse the FCC of "choosing winners and losers" in the broadband race:

"...The FCC is promoting government-owned networks at the possible expense of private sector broadband providers -- both incumbents and competitors -- who have made strides to deploy networks throughout the country. Municipal broadband networks not only run the risk of overbuilding existing private networks, they could also result in the loss of limited universal service funds for carriers who are delivering broadband to rural Americans. The FCC should not be in the business of choosing winners and losers in the competitive broadband marketplace."

Of course that's nonsense. The only one picking winners and losers here are ISP lobbyists, who are preventing towns and cities from making local infrastructure decisions for themselves. And it's worth repeating that these towns and cities wouldn't be considering building their own networks (or begging private partners like Google or Tucows to do it) if they were happy with the broadband service they receive from the nations pampered incumbents. While there's pockets of competition, by and large US broadband is a story of regulatory capture and market failure, and community broadband is a very healthy, organic response to that.

And while Rubio, like Blackburn, pretends to be worried about broadband coverage and states rights, The Intercept highlights the Rubio campaign's very close ties to none other than AT&T:

"Rubio’s presidential campaign has relied heavily on AT&T lobbyist Scott Weaver, the public policy co-chair of Wiley Rein, a law firm that also is helping to litigate against the FCC’s effort to help municipal broadband. As one of Rubio’s three lobbyist-bundlers, Weaver raised $33,324 for Rubio’s presidential campaign, according to disclosures. Rubio’s campaign fundraising apparatus is also managed in part by Cesar Conda, a lobbyist who previously served as Rubio’s chief of staff. Registration documents show that Conda now represents AT&T."

Funny, that. In other words, Rubio took time out from campaign fund raising to defend AT&T's right to write horrible state broadband law that not only makes U.S. broadband worse -- but strips local communities of their rights. Being able to decide for yourself what your community should and shouldn't be able to do is a very non-partisan idea. Unfortunately, like net neutrality, municipal broadband has been quite intentionally polluted by partisan bickering in an attempt to stall progress for the sole benefit of a few, deep-pocketed companies. Companies that wouldn't be facing a grass-roots broadband revolution if they were motivated and willing to offer faster, better broadband service in the first place.

Filed Under: broadband, marco rubio, municipal broadband

Comcast CEO: It's Not A Broadband Cap, It's A 'Balanced Relationship'

from the semantic-manure dept

Comcast continues to play semantic patty cake as it defends the company's broadband usage cap plans. With about 12% of the company's customers now capped (and growing), Comcast insists the 300 GB monthly usage cap (with $10 per 50 GB overage fees) is simply a "trial" of a new, "balanced" relationship. You see, Comcast isn't just taking advantage of a lack of broadband competition to cash in on Internet video, it's simply experimenting with "flexible data consumption plans" that bring greater choice and freedom than ever before to customers of the least liked company in America.

Speaking at a conference last week, Comcast CEO Brian Roberts added more insult to injury by insisting that imposing such limits on broadband makes sense, because broadband is just like gasoline and electricity:

"Just as with every other thing in your life — if you drive a hundred thousand miles or a thousand miles you buy more gasoline," Roberts said during Business Insider's Ignition conference on Tuesday. "If you turn on the air conditioning at 60 versus 72, you consume more electricity," he said. "The same is true for [data] usage, so I think the same for a wireless device — the more bits you use, the more you pay."

Except that's nonsense. Unlike gasoline and electricity, Comcast's cost to provide broadband is fixed. It costs Comcast the same to deliver 10 Mbps as it does to deliver 50 Mbps, and while the company does incur capacity costs overall, generally they're easily offset by modest network investments like the upcoming upgrade to the DOCSIS 3.1 standard. Any ISP earnings report will show you that with bandwidth costs generally dropping, flat-rate broadband profit margins are incredibly healthy, and it's the cost of service and support (which again Comcast is literally the worst in the country at) that tend to be the biggest expenses.

Roberts knows this, but his attempt to distort what the company's doing has been par for the course so far. Roberts also trotted another favorite Comcast claim -- that what the company is doing isn't a bandwidth cap:

"They're not a cap," Roberts told attendees. "We don’t want anybody to ever not want to stay connected on our network." Comcast is, the CEO claims, "just trialing ways to have a balanced relationship."

Except again, there's nothing "balanced" about what Comcast is doing. Users previously on unlimited (and already expensive) data plans not only face caps and overage fees, but they have to pay $30 to $35 if they want the same unlimited usage they enjoyed yesterday. Surely there's a planet where the populace thinks a mammoth rate hike of no benefit to the consumer can be considered "balanced," but it's certainly not this one. Remember, Comcast's own support documents have shown that these caps are in no way technically necessary. They're a rate hike to protect Comcast's TV revenues from Internet video.

It's clear Comcast brass hopes that by moving slowly, and framing the caps as a "trial" that offers "flexibility," it will keep the public and regulators slack-jawed and docile. But the company needs to tread carefully. ISPs have whined incessantly that they shouldn't be regulated like utilities despite being so eager to bill like them. And despite a lot of hand-wringing over "utility regulations" during the net neutrality fracas, so far regulators have complied, refusing to apply most of the specific utility regulations during the recent ISP reclassification to Title II.

But eventually consumers, the press and a few politicians will realize that unlike gasoline and electricity, nobody is objectively working to ensure that broadband usage meters are accurate. The result has been meters that at times have logged usage even when the modem's off or the power is out, problems that will only grow as caps expand. As such, broadband ISPs eager to cap may be inviting the kind of price controls and price caps (sorry, balanced relationships with regulators) that gives any good duopoly ISP executive nightmares.

Filed Under: brian roberts, broadband cap, data cap
Companies: comcast

AT&T Has Fooled The Press And Public Into Believing It's Building A Massive Fiber Network That Barely Exists

from the fiber-to-the-press-release dept

A few years ago, AT&T realized something amazing: you don't have to build a cutting edge, fiber to the home broadband network, when it's relatively easy to fool the press and public into believing you're building a cutting edge, fiber to the home network. So as AT&T was actually busy reducing its fixed-line broadband spending and quietly walking away from DSL users it didn't want to upgrade, it launched a service it calls "U-Verse with Gigapower." Basically, AT&T's delivering gigabit speeds to high-end housing developments, then pretending the upgrades are much, much larger than they actually are.

Case in point: AT&T this week breathlessly announced that the company was deploying gigabit fiber to 38 more markets, bringing the grand total of its gigabit fiber deployment to an amazing 56 total metro markets:

"AT&T announced today it is planning to expand the availability of ultra-fast speeds through AT&T GigaPower to homes, apartments and small businesses in parts of 38 additional metros across the United States – which will total at least 56 metros served. With the launch of our ultra-fast Internet service in parts of 2 of these metros today – Los Angeles and West Palm Beach – AT&T GigaPower is now available in 20 of the nation’s largest metros.

Note a few things about the announcement, however. Nowhere does the company state when these connections will be delivered. Similarly nowhere does the company make clear that it's targeting mostly high-end housing developments where fiber is already in the ground, making costs negligible (the only way you could technically accomplish a deployment of this kind and magically have your CAPEX consistently drop). And while AT&T claims these improvements will reach 14 million residential and commercial locations, AT&T gives no timeline for this accomplishment. That means it could cherry pick a few hundred thousand University condos and housing developments per year and be wrapping up this not-so-epic fiber deployment by 2040 or so.

Nowhere -- now or ever -- will you see AT&T specify precisely how many users have, or will be able to get gigabit speeds from AT&T. That's because, in reality, users in these "launched" markets will almost always find it difficult if not impossible to sign up for this gigabit service. And, in some cases, by a "launched" market AT&T actually means a few dozen homes sitting on a hill in a single housing development.

Now take a minute and look at the press coverage of AT&T's announcement, and try to find one news outlet that could be bothered to note the limited nature of these launches. Whether it's the Shreveport Times or the pages of the Milwaukee Journal Sentinel, AT&T's convinced the entire country that it's on the cusp of getting gigabit fiber that -- for the vast majority of them -- is never going to actually arrive. Even technology news outlets that should know better (if they'd spent five minutes studying AT&T's history on this front) are busy bandying about quotes how AT&T is "outpacing every other competitor."

To be clear, some AT&T customers will certainly get fiber. If you live in one of the few areas where AT&T has to actually compete thanks to Google Fiber, or in locations where it's possible to upgrade to fiber with the least amount of effort and cost possible, you may be upgraded -- eventually. Granted it won't be cheap, and you'll have to pay a steep premium if you don't want AT&T to spy on you, but you'll get fiber. More likely than not, however, you live in a DSL or U-Verse (FTTN) market that AT&T not only won't upgrade, but may be walking completely away from in order to focus on more profitable (read: usage capped) wireless.

The press and public aren't the only ones being conned. AT&T has consistently used its phantom fiber deployment as a carrot on a stick with regulators, at one point threatening to stop making these barely-there investments unless regulators walked back net neutrality. AT&T backed off the claim when the FCC asked for hard data, but this kind of telecom theater works exceptionally well in state legislatures. Last week AT&T claimed net neutrality prevented them from innovating, and this week they're portraying themselves as the innovator of the century (even though the only actual innovation here is in misleading PR).

And AT&T's not alone when it comes to bogus gigabit bravado. Most of the major phone and cable companies have similarly responded to Google Fiber by cherry picking the nation's most affluent housing developments for gigabit deployment, then pretending they're keeping pace with the nation's broadband needs. Even Google Fiber has made a habit lately of getting oodles of press attention for fiber deployments that may or may not actually happen. In reality however, two thirds of homes lack the choice of more than one ISP at speeds of 25 Mbps or greater. And as AT&T and Verizon walk away from unwanted DSL markets, cable's monopoly power is going to grow, making broadband less competitive than ever in many markets.

None of this is to pooh pooh the actual gigabit fiber deployments that are occurring. While it only has an estimated 100,000 subscribers now, there's every indication Google Fiber's going to eventually have a major disruptive impact. There's a lot of interesting stuff going on at the grass roots level, whether it's municipal broadband, or companies like Tucows taking the reins and upgrading small towns, one at a time. But on the meta scale, an uncritical press is contributing to an epic case of delusion when it comes to the pace of broadband progress.

That's why we're not living in the age of fiber to the home -- so much as we're living in the age of fiber to the press release.

Filed Under: competition, fiber, fiber to the press release, gigapower, journalism, net neutrality
Companies: at&t