Space Ramblings

Online Video and the Cable Monopoly

Over on cable street the thinking goes something like this, “We’ve got a virtual internet monopoly now. Broadband is it. Price points for now are keeping dial up customers where they are, but we don’t need them much anyway. Dial up is just like the rabbit ears crowd, it would cost us more to get them than it’s worth. We’ve got a monopoly, but what do we do with it?”

The answer of course is to ramp up prices and monetize every aspect of the service, from the customer base to the internet sites themselves. As far as cable companies are concerned, they have the monopoly, they have the lobbyists, which means they also have the power. Welcome to cable city. With broadband as the default standard, cable companies now face the threat of online video. As TV networks drift toward the internet, this undermines the drawing power of cable, which offers clear visuals, and with both legitimate and pirated cable programs appearing online, undermines the need for cable TV plans.

Cable internet is not the biggest moneymaker for cable companies. That’s why cable companies routinely try to roll it into some sort of package deal. And the internet, the little brother to big cable, is threatening to undermine their TV cable business. Of course cable companies are not going to let this stand.

The answer on both ends is to introduce tiered pricing, set with the perfect access limits to insure that the only online video customers will be watching is cats meowing on YouTube for 45 seconds, maybe twice a day. Regardless of whether customers want TV cable or not, as far as cable companies are concerned, they’re going to be paying for it. And so will the sites themselves. Collecting more money from both customers and sites which choose to pay to get accelerated customer access means cable companies can collect from both sides and make money coming and going.

While the top tier of access limits will squeeze out the more obnoxious terrabyte bittorrent users, the devils in the cable companies customer base, the remaining customers will be profiled into a few categories, from basic access, to middle of the road, to virtually unlimited. What cable companies don’t realize though, is that their biggest threat isn’t the impotent net neutrality or some sort of state or federal action, it’s the simple reality that customers have grown used to watching online video and a tiered plan will open the door for Verizon and telecom and even power and satellite companies to begin grabbing chunks of their customers. And with the squeeze on the internet, dot.coms and even media coms will be on board to help move them to alternatives. Big cable companies are getting ready to put the squeeze on, but they’ll discover that they are biting off more than they can chew.

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