Companies woo consumers as cable alternatives expand

by August 19, 2013
cable television

Photo by Ian Broyles

As the season of self-indulgence draws near to a close, many consumers who splurged over the summer start to  hitch up their belts and take stock of the household budget going into fall.

One area where sticker shock seems to prevail is the monthly cable television and Internet service bill, which in many communities is well into triple digits for service that cost a fraction of that just a few years ago.  Indeed, in 2011 various reports noted that the average cable bill had tripled over a decade, and last year market researchers at The NPD Group found that the average bill for pay TV alone was $86 a month, with that expected to creep up to $123 by 205 and $200 by 2020.

I’ve been wanting to post about cable rates and alternatives for a while, so it really caught my eye last week when various outlets reported a surge in sales of over-the-air TV antennas as a result of a change in Time-Warner’s channel lineup in the New York area.  The cable titan and CBS are at odds over payment issues; about 1 million Time-Warner Cable customers are going on their third week without cable access to the broadcast network.

I can’t help but wonder how many owners of those new antennae – which may be had for less than the cost of one month’s cable bill and which can pick up stations from as much as 150 miles away — might figure between what they can get for free, over the air, and what they can stream for a few bucks over their computer, that the monthly pay-TV bill is looking a little steep.   (Here’s a great primer on HD over-the-air antennae, from electronics mail-order firm Crutchfield, in case you need info for a graphic.)

Here’s a recent Forbes article on the growing appeal of smart TVs that can talk to computers, accept Wi-Fi signals and otherwise make themselves amenable to streaming services.  And PC Magazine just reported that sales of devices like Roku, that can stream data to ordinary TVs,  are expected to top 330 million by 2017.  Clearly, traditional cable television is getting a run for its money from various directions, from Netflix’s original series to Amazon Instant Video.   Forbes reports that recent figures for “subscriber defections” are alarming for cable operators, and points out that the real numbers of wanna-be cable TV droppers might be worse if those patrons weren’t convinced to keep television service by promotional Internet/TV bundles that artificially boost TV subscribership.   And TIME just reported that despite the recent uptick in home building, which one would think would boost the market for pay TV, orders for new service aren’t forthcoming.

Clearly this topic is in the zeitgeist now.  Since your community’s cable operator likely reported earnings recently, why not talk with executives about subscriber numbers and trends, their thoughts on the bundling vs. a la carte controversy, which even Congress is looking into, and how they plan to stay viable.  Before you call, this piece from The Atlantic, “If cable, is dying, why is it still making so much money,” is a must-read – companies are cashing in on Internet and phone services, and by renting modems and other equipment.

(If you do a personal finance angle or sidebar, be sure to include alternative to cable-operated landline phone service — which basically is subleased from the major phone companies anyway —  including products like Google Voice to phone number parking services such as NumberGarage.)