Broadband Communities

JUL 2016

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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12 | BROADBAND COMMUNITIES | www.broadbandcommunities.com | JULY 2016 NEW WORLD OF VIDEO Cable Cord Cutters Will Prevail – Or Not What subscribers say they'll do and what they actually do are very different. By Michael A. Kashmer / Digital Broadband Programming Consultant T he cable broadband press is buzzing about the possibility of thousands of dreaded cord cutters causing havoc with cable subscriber growth projections – and, in fact, the total number of U.S. cable subscribers fell by 1 percent in 2015, a loss of about 383,000 customers. Walmart recently launched a "cut the cable" product promotion featuring digital antennas, smart TVs and OTT devices. e plan is to help Walmart customers drop their pay TV. e ads ask, "What better way to save money on your cable than by getting rid of all of it together?" Not to be left out, Warner Bros. Entertainment created a new unit to make shows aimed at cord-cutters. e unit will focus on online video entertainment to appeal to consumers who don't pay for cable. Its parent company, Time Warner Inc., initiated a broader strategy to expand beyond its traditional pay-TV business as the number of people subscribing to cable and satellite starts to decline. Polls show customers want to clip the constant rise in programming charges, box charges, outlet fees, multiproduct charges, taxes, regulatory fees and (my personal favorite) sports surcharges. What is a fed-up subscriber to do? Well, he or she can threaten to unsubscribe, but operators hear that song dozens of times a day. According to a recent article by Mike Snider of USA Today, customers are quick to say they will cut the cord, but few actually see it through to completion. ere is a big difference between what subs say and what they wind up doing. About 25 to 32 percent of subscribers say they will happily cut the cord and switch to net-based entertainment. ere are plenty of net services out there – Netflix, Hulu and Amazon, among others. But a very small number of subscribers who wanted to cut their multichannel service actually did so, according to Nielsen Research. Most subscribers complain and fuss but will not do anything to start cutting and save some money. e Leichtman Research Group found that a certain percentage of subscribers always said they would disconnect cable over the next several months, even when few viable alternatives existed. Customers feel constrained by a monopoly franchise system that appears, in some areas of the country, to get away with whatever adds to its bottom line. e data simply don't show that consumers are prepared to jump ship. To answer a poll or speak up at a barbecue or cocktail party will win some techie points with the neighbors, but actually "making the cut" is a different story. POWER AND PRICES Given big cable's tremendous legislative power, which has become stronger over time, can U.S. consumers ever expect to see the conditions that might actually induce them to cut the cord – namely, cheaper internet prices and more TV-based web services? Not long ago, the Charter/Time Warner Cable deal was reported to be in jeopardy because of cord cutting and its effect on the cable business model. Will New Charter be able to alter the future of streaming by keeping the most popular programs safely in the cable bundle? In other parts of the world, things are different. I recently visited the Far East and was very interested in the services that were available and how they were received by the local population. ere is not much discussion about the quality or cost of services. Some people I met in Singapore don't even know who their cable provider is – because there are no pricing issues, onerous fees or contentious histories to have bad feelings about. In addition, the government regulates cable and satellite closely. Consumers are just super pleased with the fast internet speeds available everywhere – at home, at work, on the bus, on the subway. I was able to access the internet on my Apple 5S everywhere. Same thing in Nagasaki, Japan, and Busan, Korea. At spots that host younger crowds, such as Starbucks and McDonalds, patrons weren't charging their cell phones and computers as they do in the United States. Plugs were available, and I saw a few customers using them, but by and large, it appeared they didn't feel the need to charge while out and about. Could that be because consumers get their business done faster with easier access? v Mike Kashmer has worked in cable TV for more than 30 years in distribution, finance and programming. His experience includes network startups and foreign-language programming. Mike can be reached at mikekashmer@aol.com.

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