Wednesday, March 18, 2015

Yes to Apple Internet-TV? Maybe!

Assuming a new Internet-TV offering by Apple happens AND it bundles NBC’s content with that from CBS, ABC, and FOX, should I finally cut the cable cord?  Well, it depends!



Today, I pay Verizon…
If Apple…
TV Bundle
$64.99 for Extreme HD (367 channels)
$40
Devices
$39.99 for multi-room DVR – 3 rooms
*
Internet
$55 for 50/50
$70 (still needed – assume no contract or bundle discount)
Contract/Bundle Savings
-$15.00 (-$10 for Internet and -$5 TV) through 9/15

None expected
Surcharges
$10.95 (includes $2.42 for Regional Sports Networks)
??? (some savings)

Taxes (State and Local)
$2.60

TOTAL
$158.53
approx.  $120 + one time fees
One-time fees
None
*$150 for 2 Apple-TV devices (already have 1)

Monday, March 16, 2015

Is a push back to higher programming costs possible?

In a filing with the FCC last week, the American Cable Association (ACA) argued video programming costs have doubled over the past eight years, yet ISPs have been limited in their ability to pass along higher prices to customers because of an increase in competition from alternative video outlets like Netflix and Amazon and customer push-back in the form of cord-cutting and cord-skimming.  But, maybe the bigger picture is how cable prices have risen relative to the average increase in general prices in the economy over the same time period.



Comcast argues that a merger with TWC would allow it to more effectively negotiate programming deals with non-affiliated content providers for its 33+ million video/broadband subscribers.  But, what about the remaining 70 million customers, many of whom are in rural communities?  How do they get to stem the rise in these costs?


The Vertical Concerns of a Horizontal Merger

Programming Affiliations (at least 5% ownership)

National
Regional News
Regional Sports
Comcast
50
3
23
Time Warner
4
40
24
 Source: FCC Annual Competition Report, 2013

Comcast’s owns or has strong ties to valuable programming – the suite of NBC-U programming, both produced content and live events, and regional programming, both news and sports.  TWC has strong vertical ties too.  Will the merged firm use its significantly larger size to extract higher programming prices or withhold programming from non-affiliated ISPs?   Will the firm use its larger size to negotiate more favorable programming terms from non-affiliated content owners like CBS and Viacom?  As a result, will these non-affiliated vertical firms, ISPs and programmers be harmed?  What will it do to the already weak competitive environment in most communities? 


Today, as a Verizon FIOS customer in the Philadelphia metro market, I do have cable and broadband provider choices, namely Comcast, Dish, and DirecTV.  And, if the Comcast-TWC deal goes through, the number of provider choices I have will not change.  But, what will happen to the size of my Verizon TV bill?  I already pay a $2.42/month surcharge for the Regional Sports Networks provided by Comcast (that I don’t watch).  Will Verizon be able to effectively compete on price and service going-forward?  Or, will it be a matter of time, before Verizon exits the market like it has done elsewhere?  

Sunday, March 15, 2015

At the State Level, Income Matters Most to High Speed Broadband Access

Relating % Availability of Broadband Download Speeds (25 and 50) @ the State Level with Median Income ($) and Population Density

Dependent Variable: % of State with DL speed > 25

                      Coefficients
        Standard Error
Intercept
41.789
15.414
Median Income ($)
  0.001*
0.000
Population/Sq. Mile
0.020
0.012
Adj. R2: .25                                                                      * significant at 1%

Dependent Variable: % of State with DL speed > 50

                     Coefficients
       Standard Error
Intercept
40.869
19.358
Median Income ($)
 0.001*
0.000
Population/Sq. Mile
0.031
0.015
Adj. R2: .21                                                                       * significant at 1%

Thursday, March 5, 2015

Is this what we want?

We’ve been asking for it for decades…let us pay for only the content we want to view.  Add to that, anytime, anywhere.  Slowly, we are getting it...kind of. 

This past week, NBC Universal announced plans to launch a comedy web-subscription service for a few dollars a month.  When available, it will join other small bundle offerings by Sling TV and CBS.  We’ve been warned that we could end up paying more than we currently do as cable subscribers. 

Today, as a Verizon FIOS customer with a TV/Internet bundle that “gives” me 320 channels and 50/50 broadband speeds, I pay about $110/month (excluding a small contract discount and fees/taxes).  I also have Netflix for $7.99/month.  For me, the NBCU comedy offering is not appealing.  But, I’m not the target market. If provided the ability to choose, I, as a media consumer over the age of 50, would buy the broadcast channels (including their live coverage of sports), ESPN and its sister channels, CNN, and CNBC.  That’s it.  I would keep Netflix and maybe add HBO Plus.  How much would that cost me?  I’d have to think that it would be less than what I pay now, but I’m not so sure.

Monday, March 2, 2015

Oh right...it's all about the costs!

















* Includes California and Iowa

While many applauded the FCC's actions last week to preempt the restrictions on municipal broadband in North Carolina and Tennessee, the biggest remaining issue or more a question is --- why are communities in states with no or low administrative hurdles not building broadband networks?

Sunday, March 1, 2015

The real game-changer could be…preemption of state restrictions on municipal broadband

Coincident with last week’s decision to classify broadband as a utility service under Title II of the [1934] Communications Act so as to ensure net neutrality compliance by ISPs, the FCC preempted state restrictions on municipal broadband in two states -- Tennessee and North Carolina. 


If an increase in broadband competition is going to happen, it most likely will come from taxpayers deciding that they are willing to fund entirely or partner with private enterprises to build/buildout networks in their communities.  The decision (vote) should be theirs.  Why should there continue to be legislative obstacles in some states preventing those discussions from taking place?

"Thickets of Red Tape"

Last week’s FCC decision to classify broadband as a utility service under Title II of the [1934] Communications Act will not improve broadband speeds or lower their prices.  If the FCC wants to encourage competition in broadband to improve consumer welfare, regulation was not the way to go about it.

Nothing will change, for now.
1) Broadband providers who have been complying with net neutrality principles, like Comcast, will continue to do so.
2) New regulatory oversight and its associated compliance costs and possible fees will not encourage entry.  For sure, the number of competitors per market (1 in very remote areas to maybe 3 or 4 in urban areas) will certainly not increase.
3) There is a reason why there are so few broadband competitors in rural markets – the cost of building and operating a network.  Regulation certainly doesn’t lower those costs.

Down the road, things could change if
1)  the FCC backs away from its promise and begins to regulates broadband rates, and/or
2)  utility-type fees are added to broadband bills.


Then, what?