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We May Be on the Verge of a Cord-Cutting Boom

Mar 30, 2017  •  Post A Comment

The cord cutting that has taken place so far may be nothing compared with what we’re about to see. The latest word from people who know about these things — specifically, SNL Kagan and its forecaster Tony Lenoir — is that cord cutting may be about to see a boom.

The New York Post reports that a new report out Wednesday from Lenoir and SNL Kagan reveals that 13% of U.S. households now have broadband but no pay-TV package. In the fourth quarter, 400,000 homes cut the cord, bringing the total for 2016 to 2 million homes.

The number of “broadband-only” homes as of the end of 2016 stood at 15.4 million, according to SNL Kagan.

“Kagan projects that the number of broadband homes without pay-TV packages will grow to 28 million by 2021 — although company analyst Tony Lenoir said that forecast may not be aggressive enough,” The Post reports.

Said Lenoir: “That forecast could end on the conservative side given the speed at which the TV ecosystem and the U.S. broadband landscape are evolving.”

Lenoir suggested that the end-of-2016 data “should settle the debate” about whether cord cutters, along with “cord nevers” — younger consumers who never climb aboard traditional pay TV at all — should be of concern to the cable industry.

Deadline.com notes that Lenoir said the popularity of broadband-only subscriptions “appears to be on the verge of a break to the upside.”

There’s good reason to think the trend might accelerate, according to Deadline. “For example, the FCC is encouraging broadband providers to expand in rural America,” the Deadline report notes.

Adds Lenoir: “Unserved zones gaining access to high-speed data is likely to perturb established video-delivery dynamics in those areas.”

6 Comments

  1. The FCC may be “encouraging” broadband providers to expand service to rural areas, but I wouldn’t hold my breath. Let’s hope it’s not the same kind of “encouragement” the government gave providers in the past. The type that came with a “requirement” that providers do so when they were given funds for that purpose… and then failed to do so after they took the money.

  2. Broadband providers will never expand out into rural areas. It just isn’t profitable enough for them to do so, and the upfront costs to expand into underserved areas will discourage them from even attempting it.

  3. Broadband providers HAVE been expanding into significantly rural areas for decades. The government, for decades, has been handing out GRANT money to telephone broadband providers for that exact purpose. In the area where I live, the government was providing GRANT money to telephone companies to overbuild privately owned businesses like cable companies and provide phone, internet, and video services to directly compete with the same cable companies supplying the same services. This has been occurring for at least 30 to 40 years. I have worked for cable companies (privately owned) that had government funded telephone companies (meaning they received grant money) come in and overbuild the cable company with FREE money, of course, paid for with taxpayer dollars. In some cases, these same telco companies would eventually force the privately owned cable company out of town, if not, eventually, out of business. This occurred repeatedly within existing city limits in rural communities where some privately owned cable operators had operated previously for decades.

    It is called the Universal Service Fund (USF).

  4. Let’s not miss the point that traditional cable and direct satellite TV have priced themselves out of the rural markets. People in rural areas (where I live) don’t have the extra money to hand the cable company/satellite provider $150 to $200+ each month, and so they have no choice but to cut the cord. Many have found that there’s this little thing called “over the air television” that the cable companies told them went away in 2009… Not true, and now the cable companies are paying for their lies. In fact, OTA has even more channels available now then were ever available in analog. Those who can afford it have some kind of internet connection and Netflix/Hulu/Amazon subscription. The Netflix et al subscriptions are way cheaper than cable and are more user friendly than cable. So, with local news, weather and sports from OTA, and about any movie or TV series they may ever want to watch via the internet, why wouldn’t viewers cut the expensive cable and satellite TV subscriptions? After all, as I’ve heard many people say… “You can only watch one channel at a time… Why pay for 500?”

  5. Actually, to a large extent, the programmers have forced providers to price themselves out of many markets. Over the air television used to FREE to cable providers like it is to consumers that still use antennas. Not any longer, cable operators are now charged somewhere between $1.50 to $2.00+ per off air channel, per month, per subscriber. So, just a half dozen off air channels now cost cable operators somewhere between $10 to $20 per month, per subscriber that is payed to ABC, CBS, NBC, Fox, etc. and/or the companies that own these stations.

    Satellite providers like ESPN aren’t any better. ESPN alone, (1) channel, costs cable operators somewhere around $6.50 per month, per subscriber and it keeps going up. Think about that. If one of the larger cable operators has 14 million expanded basic subscribers, that means they may pay ESPN, per month, $91 million. That is $91M per month X 12 months = $1.09 Billion per year to ESPN for (1) Channel and this is just one company. Dish providers, I assume, pay similar amounts. ESPN2 is another $1 per month, per subscriber on top of that. TNT = $2 per month, per subscriber. Nickelodeon = $1.75. Disney = $1.30. USA = $1.40. I have now told you where $14 of your monthly bills goes to for just (6) channels. Just about every channel charges something. Only shopping channels and religious channels are generally FREE. These rates typically and contractually increase every year.

    Finally, programmers typically and contractually force cable operators to offer “suites” of channels, meaning just about every channel they have to offer. Cable operators can not pick and choose what channels they want to offer. Cable operators and dish providers will never be able to offer a la carte because programmers like ESPN/Disney, Viacom, Fox, etc. contractually won’t let them. If Congress would get involved (not that I am a big fan of government intervention) and break the contractual stranglehold that programmers have over cable operators and dish providers, then you might actually see prices come down or certainly you might have more and cheaper package offerings. A la carte might actually be within sight if that ever happens. If not, then the prices will continue to go up year after year. Most, if not all cable operators, anymore, are just trying to keep their heads above water and consumer rate increases are just cable operators passing on their annual contractual rate increases by these same programmers. It is what it is and the future is rather bleak, at this point. Something has to give at some point otherwise cable operators will eventually and contractual price themselves out of business. That is why Netflix, Hulu, Amazon, etc. and their $10 per month offerings are so appetizing anymore. Throw in all of that Original Programming they have to offer and they look like a fantastic and cheaper alternative. Also, new comer services like Sony Vue are attempting to enter the cable market by offering smaller and cheaper streaming packages. They are probably having to tiptoe through the contractual minefield to keep their prices down. Or maybe they have the Corporate Muscle to tell some of these programmers what they will and won’t offer.

  6. I cut the cable years ago in Houston, TX. Over the air there, I had over 100 different stations available to me just using an internal “batwing” antenna, and just like with cable, I didn’t watch at least 85% of them. I’ve just moved to St. Paul, MN, and the place where I site the batwing just doesn’t work well. So, tomorrow, I’m having a rooftop antenna installed. Here, apparently, there are only about 45 channels, so I probably won’t be watching 37 of them!

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