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Cable Technology Feature Article

April 01, 2011

Cable: Off with Its Head!

By Juliana Kenny, TMCnet Web Editor

To cut or not to cut? That is the question:

Whether ‘tis better in the home to suffer

The bills and affiliate fees of outrageous cable providers,

Or to take arms against a sea of networks,

And by cord-cutting, end them?

I’m pretty sure that’s what Hamlet meant to say, right? He must have been having some major issues trying to decide whether or not to continue his cable service, paying for access to his favorite shows, or to cut the service and just watch them after they air on Hulu (News - Alert) or Netflix.

The hubbub surrounding the IPTV/cable dispute has been gaining significant traction over the last several months, specifically on whether or not it’s really as big a deal as some purport it to be. Whereas some industry observers warn against the tide of consumers about to give up cable services altogether for online TV only, others insist the change will be slow in coming.

One of the factors is the new generation of TV subscribers. As a member of Generation Y, this reporter has already cut her cable services when she realized that she was paying exorbitant amounts of money per month to watch shows she could get just as easily online for free, albeit the day after they air. Young people are getting more actively frugal these days, and thusly recognized by industry leaders. A few months ago I wrote about how Ivan Seidenberg, CEO of Verizon (News - Alert), warned against the next generation’s choice of cable TV versus online TV. He revealed that he believes it is a real threat to cable companies.

Is Seidenberg right? Is the threat real? TMC (News - Alert) Editor Janice McDuffee is another sheep who joined the cord-cutting flock recently. In an interview, she stated, “I opted for online TV in place of cable primarily for economic reasons. I was already paying for Internet, and most of the programs I watch are available on free sites like Hulu.  I also enjoy old programs running on syndication, and those dated—albeit classic—movies that are available for around $10 a month with Netflix’s ‘Watch Instantly’ feature.  Paying for access to all of those other programs and services that I don’t need seemed like a waste.”

On the flip side of that coin is the opinion that the requirements for “killing” cable are extreme and would take enormous amounts of time, should it happen. Rich Tehrani (News - Alert), CEO of TMC, recently wrote, “if you think the TV industry will be disrupted overnight, don't hold your breath… with Google (News - Alert), Apple and Microsoft all gunning for this market, it will be interesting to see which strategies work to transform TV to TV 2.0.”

This argument is boosted by the idea that cable companies have been leveraging the “TV Everywhere” concept to their customers and going to the content owners with the following, as described by Bill Gurley from Benchmark Capital, “With Internet-connected TVs on the horizon, you can no longer separate the Internet from the TV or the office from the living room. We pay you an affiliate fee to distribute your content to the homes we serve. We understand you have multiple distribution partners. What we don't understand is why you would give content to some of them for free, and still expect us to pay our fees.” Pretty convincing, huh?

But one of the major pieces of this puzzle still remains, and it’s a pretty hefty one: the customer service aspect. How long do you have to wait for Netflix to address your bandwidth issue? Approximately five minutes, at the most, and your video will resume without further interruption. How long do you have to wait for Cablevision to resolve its feud with The Food Network so you can watch Iron Chef again? Maybe months – an absurdly long time in the eyes of cable customers who pay for that service even though they get denied access because of the feud between the cable service and the content provider.

As cable companies are notoriously terrible with their customer service management, online TV providers are forcing them to step up their game. Better customer service for all? Great. Enough to convince me to sign up for cable TV again? Nope.

Juliana Kenny graduated from the University of Connecticut with a double degree in English and French. After managing a small company for two years, she joined TMC as a Web Editor for TMCnet. Juliana currently focuses on the call center and CRM industries, but she also writes about cloud telephony and network gear including softswitches.

Edited by Juliana Kenny