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The Future of Internet Cable, Part II

Emerging legal battle between cable TV and ISPs.

In the first installment in this series, I described how advances in internet technology have made it possible for cable TV subscribers to cut the cord. Consumers who choose to do so almost never go back. Yet while the yearly number of people abandoning cable has outnumbered those joining since 2013, the exodus so far has been slow.

Cable TV present advantages over streaming video services

Cable continues to offer important competitive advantages:

  • It still provides the greatest the depth and range of entertainment content.
  • Despite the high cost, most consumers prefer the convenience of packages combining broadband, television and telephone service.
  • Cable networks are keenly aware of how Apple’s iTunes upended the music industry. They are too powerful to allow the ‘Spotifying’ of TV without an epic fight. Together, they will present a formidable, unified front against next-generation Internet Service Providers (ISPs).
  • Older Americans watch more TV than any other demographic group. They are more than willing to pay for the wide range of cable choices on advanced cable platforms like Comcast’s Xfinity. In addition, they are much less likely to be early adopters than younger consumers. –In short, cable is not going away anytime soon.

bi_graphics_video-streaming-industry-chart

 

Technology advantages are beginning to level the playing field

It all began with the great popularity of YouTube, now available as a paid subscription service, YouTubeRed, since last year.  According to one projection, 80-90% of all internet traffic will be from video by 2019.

The following tech advancements are preparing the stage for an epic political battle between cable and ISPs likely to play out in the courts in the 2020s–

  • Bandwidth consumption has increased 50-fold in the past decade. Growth in capacity will continue as server hardware and other costs decline. Some argue, however, that we will reach bandwidth capacity by 2020. I will explore this possibility in a future Insights article.
  • Streaming TV series like Netflix’s critically acclaimed “House of Cards” and Amazon’s “Transparent” have been big hits. As a result, Over the Top (aka OTT) providers like these two companies are spending billions of dollars a year on exclusive subscription content. They are also providing 4K transmission well ahead of their cable competitors.
  • As mobile device video streaming grows, ‘linear viewing’ will decrease. Millennials and others pressed for time are spurring this trend of watching what they want, when they want.
  • Connectivity is exploding, for good and bad. Our digital devices give us immediate access to limitless life-enhancing communication and entertainment from around the world. Unfortunately, internet video has also been the single greatest catalyst for spreading the deadly virus of international terrorism.

In my final installment of this article, I’ll explore the coming political and legal battle that will determine how we consume TV and other internet services.

More Insights