By Robert C. Kenny | October 16, 2014
The average American consumer spends nearly three hours each day online, including a half-hour devoted exclusively to watching video.
Not surprisingly, recent studies confirm a strong relationship between television viewing and online video streaming – showing that the nation’s most prolific Internet users also watch the most TV. Furthermore, an overwhelming majority of consumers strongly value television programming and the ability to watch it on multiple digital platforms.
Broadcast TV remains among the most popular programming in America on every digital platform. According to Nielsen, the vast majority of video being viewed is professionally created content, like the shows commonly viewed on traditional broadcast TV networks.
These consumer trends present pay-TV companies and content providers – including broadcasters and cable networks – with new opportunities and challenges. Due to tighter household budgets, however, many subscribers find their options for TV severely limited. They have to either sign up for cheaper programming bundles or cut the pay-TV cord altogether. This puts the ball squarely in pay-TV’s court to do more to help consumers going forward.
Coupled with the deployment of revolutionary broadband technology across the nation, these economic pressures are driving rapidly changing viewing preferences. High-speed broadband services have empowered Americans to “cut the cord” and watch the shows they enjoy the most via a combination of free, over-the-air broadcast TV and online services — without being saddled with a $100-plus, per month, cable or satellite TV bill.
With tens of thousands of consumers cutting the pay-TV cord each year, Nielsen has characterized subscriber declines as a “real phenomenon.”
Moreover, a new trend known as “cord-shaving” has emerged among pay-TV subscribers, where consumers opt for smaller bundled programming packages – including affordable online access to specific content. Based on the latest data, it is clear that a growing number of consumers are signing up for cheaper bundles that cost between $10 and $50, on average, to lower their monthly pay-TV bills. In fact, $20 basic cable plans that include little more than broadcast and public access channels now account for 12% of pay-TV subscriptions nationwide, up from 8% just a few years ago.
These recent developments have heavily impacted the video marketplace. For example, the top 40 rated cable networks have collectively lost 3.2 million traditional pay-TV subscribers since 2010 due to cord-cutting and cord-shaving. Something has to give, right? No doubt this growing trend imposes significant pressure on pay-TV providers to adapt to this evolution of the video marketplace, not only with regard to subscriber-targeted marketing, but also in efforts to secure precious local advertising dollars in competition with TV broadcasters.
This may help explain why cable lobbyists are trying to persuade Washington lawmakers to eliminate broadcast TV from the lifeline basic service tier, which is the most affordable cable programming package now accessible to subscribers. The basic tier is not the enemy and, in fact, should be embraced by the pay-TV industry.
The basic tier is vastly important, guaranteeing cable subscribers’ access to local broadcast TV news and programming, weather updates and emergency alerts. Eliminating this provision would be extremely detrimental to cable subscribers and ultimately hurt the long-term sustainability of local TV stations in smaller markets that must fight as stand-alone operations against a consortium of big pay-TV companies for advertising sales.
Congress created the lifeline basic service tier to protect consumers’ access to local broadcast TV on cable systems. Given cable’s continued dominance in the majority of local television markets, and the fact that millions of cable subscribers now seek cord-cutting or cord-shaving as a way to lower their monthly bills, now, more than ever, the preservation of broadcast TV stations on cable’s basic tier remains a public necessity.
Instead of focusing on fighting the basic service tier provision on cable systems, the pay-TV industry should instead look inward, and develop new policies and protocols that establish transparency in monthly billing practices and mitigate erroneous charges.
If pay-TV providers were to implement improvements in billing practices, it may actually result in considerable cost savings on customer service expenditures over time, especially if upfront protocols are implemented that effectively identify and correct billing errors on behalf of consumers in the first place.
Hopefully, cable and satellite TV providers are up to the challenge and will move forward with others in Washington to help reshape America’s media landscape for the better. I am sure the American consumer would like to bank on it.
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Robert C Kenny is the Director of Public Affairs for TVfreedom.org, a coalition of local broadcasters, community advocates, network TV affiliate associations, and other independent organizations; he formerly served as Press Secretary at the FCC.
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Please visit the TVfreedom.org YouTube web page to watch consumer-friendly videos aimed at pushing back on the pay-TV industry’s gamesmanship in the marketplace and the ongoing abusive billing and business practices hurting consumers.
