Is Pay TV Pricing Itself into a Corner

It has recently occurred to me that the Pay TV operators may have made their services too expensive. I have to confess that I have not used Pay TV services for the last 5 years. I have an older house without a functional coax plant and cancelled my Comcast service because I did not have a cable connection where I wanted to put my TV.

The last couple of years I have been watching digital terrestrial over the air stations. I am quite close to the transmission tower, so I get excellent reception with a good Terk indoor antenna. I just bought a new Vizio 42" HDTV and am very happy with it. It is better at pulling in a full range of stations than my older Sharp 32" set. The Vizio even has a functional electronic program guide that lets me see all of the programs in the next several hours on a channel by channel basis. It also has great HD reception and presentation. I can really see the difference with the 1080i broadcasts on the Vizio compared to the 720p broadcasts on my 32" set.

My only disappointment has with the over the air digital was when my local PBS station moved PBS Life and PBS Kids from San Francisco to San Jose, which is too far for me to receive. We had become hooked on both and would love to get them back. I am not a big sports fan, so I do not miss ESPN.

It would cost me between $60 and $90 per month for a good range of digital basic and premium programming. From what I can see, I don't think that what I would get from such a subscription is just not worth the price. I would subscribe to ATT's U-verse, because of my interest in IPTV, but ATT has given up on trying to offer it in San Francisco. The city would not accept the VDSL cabinets on its sidewalks. Frankly, I think the city is right. The boxes are just too big and wood impede pedestrian traffic. I see a lot of two wide baby strollers around that just would not be able to get by one of these boxes.

What intrigues me is bringing over the top Internet content to my TV. I can do that through Netflix, Amazon, and a number of other sites. The new Cisco home media devices that have just been introduced, among others, look like a great way to go. I am pulling in my belt this year to get through the tough economic times, so I will not do anything this year, but prices should go down and functionality should go up next year. We will see then.

Please make your comments. I would like to see if I am alone or not.

Zeugma Publishes Broadband Survey

Zeugma published the results of an IDC survey of U.S. 787 consumers that was conducted in August 2008. The survey produced the following conclusions:

On Premium Bandwidth Services:

• 94 percent of respondents saw value in broadband services that dynamically allocate premium bandwidth for certain types of traffic, such as video, VOIP, gaming, and telecommuter VPNs.
• 54 percent would actively seek to change service providers if another offered this service; 26 percent would be willing to pay additional fees for premium bandwidth services.

On Bandwidth Capping and Metering

• 81 percent do not like the idea of establishing a bandwidth cap and charging for use above the cap.
• 51 percent would try to change service providers if their provider imposed bandwidth caps. Interestingly, light and moderate users are even more opposed to capping and metering than are heavy users.
• 83 percent either do not know what a gigabyte is or have no idea how many they use.
• Only 5 percent said unequivocally that “those who use more should pay more

There is a growing gap between the broadband providers and their customers. The Telcos and the cable companies look at the issue from their perspective and are trying to limit traffic growth by punishing power users. This is bad business and policy. Why alienate your best customers?

There is a hidden agenda here. While these caps will not affect many data users, they significantly limit the amount of TV content that can be delivered over the top. The Telcos and cable companies want people to use their own TV services rather than viewing over the top content. This will become a major issue when it becomes apparent to people who want to watch Netflix or CinemaNow content regularly on their TV.

Netflix to Make Videos Available to the Microsoft Xbox 360

Netflix will make a library of more than 10 thousand movies and TV episodes available when it launches on Xbox Live toward the end of 2008. This is an extension of the Netflix Live service that provides the ability to watch videos on a PC today. The Xbox Live service will provide the ability to watch the Netflix videos on TVs.

This is an interesting announcement because it brings over the top Internet TV to the TV set rather than the PC. I think that this is where commercial video content needs to go to really capture a significance audience.

The key will be the quality of experience. It is likely that most U.S. broadband users will get a good SD experience on their TV but will not be able to stream HD. This will show up the bandwidth limitations of most U.S. broadband services.