Cutting the Cord?

Recent changes rolling out from local cable TV provider Spectrum, is causing some frustration from customers. I have heard from many people about their opposition to changes in TV plans and the scrambling of channels, resulting in the need for a cable box for each TV in a home. In recent years, I have had a growing number of people ask me if a competitor will enter the market. So what does the future hold for cable TV and the possibility of competitive forces in more markets.

Millions of people each year are cutting the cord and moving to a streaming service. There is growth in the streaming market with several options now available and more people purchasing an over the air antennae. Streaming services continue to improve, but they are far from perfect. There is an upfront expense for devices that allow streaming on your TVs and at times, the very frustrating bouts of buffering occur. Antennas must be placed in a strategic location, picture quality can fluctuate and if your lucky perhaps you can view 30 channels.

As we see in many areas of the economy, the future trends in some measure depend on demographics. Research firm eMarketer forecasts by 2021 cord cutters will total 40 million, while what they call “cord nevers” will represent a larger group at 41 million. The firm has applied the name cord nevers to people that have never subscribed to cable TV. The nevers represent a younger demographic and if the forecast is true, it represents a significant disruption to the cable industry. They didn’t grow up with cable TV and likely prefer other options. So what does a company like Spectrum do when faced with these declining trends in their customer base? Likely focus on core products that will remain relevant and alter products that will inevitably not be a growth segment of the business. I do not foresee Spectrum altering the way cable TV is delivered, but they have introduced streaming options to augment your standard cable TV.

I have remained in contact with Verizon over the years, to inquire if there were any plans to expand service in our area. They are responsive, but have given the same answer time after time. We allocate a certain amount of capital and Clifton Park is not in the immediate plans. I am paraphrasing and certainly do not intend to negatively represent their response, because it is obviously the case. Any business or organization has a certain amount of capital to invest and a plan to execute. This area hasn’t been included in the plan, yet. Verizon has FIOS(Fiber Optic Service), where a signal s transmitted across fiber optic cables. Installing the fiber optic cable is very expensive. If Verizon, as one example, were to install FIOS in a large area already serviced by an established competitor, it would be a challenging venture. Verizon, like any company, would need to assess the return on investment of the large capital outlay required to expand the service. The established competitor is already in place with a base of customers. The question is–will a company be able to attain enough customers at a profitable price point to ensure a suitable return on investment? Additionally, from a distribution standpoint, how does a new service area fit in the overall scope of the company’s service reach? What is a municipalities population density? More housing units in a smaller geographical area requires less infrastructure to be installed and more opportunities to garner customers. I don’t know the answers to those questions. Nor do I pretend to be an expert in the industry. However, when analyzing the basic business questions that can apply to almost every situation, we may find the answer as to why FIOS is not in our area.