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Reader Mail: The Future of Cable TV

March 30, 2012 | Author: Ibex Marketing

I get a lot of email from readers, and occasionally I share our exchanges here. This week, I got a particularly interesting message about this week’s post about “Online Streaming Grows“:

You close with the statement that a cable or satellite TV service should be figuring out what to do when their current business falls apart.

There is one big hidden assumption that you seem to be overlooking here, namely the idea that all the users of these services have a fast enough Internet connection to be able to all be streaming at the same volume of TV watching.

I live in Southern California, just outside of LA, in what would otherwise be considered a fairly large community (125K people, growing >10%/year), and I am in the central, long built-up area of town. But the best Internet connection that I can buy would not support HD streaming to all the TVs in the house, what I am currently paying >$100/month for is only 1.5Mb down. People who are in more remote areas are in even worse shape.

The broadcast method of delivering the same content to many destinations is fantastically efficent and is unlikely to go away. Cable and Satellite providers do not have enough bandwidth to be able to provide each subscriber with enough bandwidth to have them all simultaneously streaming.

Having said all this, I’ve had a Tivo for over a decade, and I seldom watch live TV. When I do it’s typically to have something going in the background. I could see there being much heavier use of DVRs and having the more popular shows being broadcast once per day (instead of 2-10 times between repeats and different time zone slots) with the DVRs recording the shows the first time they air for viewing later. This would free up a significant chunk of the available broadcast bandwidth for ‘special requests’, which could get streamed out to everyone as well. Recording all of this stuff would be fairly inefficient, but drive sizes are getting large enough that it’s no longer impossible.

And here is my reply:

Thanks so much for sharing your comments. I think you’re right on target in many respects, but I also believe that your analysis and mine not only survive side-by-side, they are probably inevitable.

There are always remote outlier areas of just about any population, especially in the U.S. There are regions where terrestrial broadcast does not reach, for example. In some cases, those areas can be rather well-populated such as the valleys of Vermont. Terrestrial broadcast can’t reach these viewers, so alternative approaches have a window of opportunity, such as digital broadcast satellite (DBS).

Moving to the issue of Internet access, the same problem of sparse population and long distances can make it not cost-effective to build out higher capacity transmission systems. It is likely that it will be a long time — if ever — before it becomes feasible to provide high speed service to remote areas.

So far, we’re right in sync. But here’s how I see it going forward. I believe that “watching what I want, when I want it” will trump linear programming, and that other solutions will be offered to viewers with lower bandwidth. For example, they would simply create a queue of programming that they would like to watch (just as they do now with Netflix, Hulu, or TiVo), and the content would be trickled to temporary storage onsite. (Terabytes are amazingly cheap, and still getting cheaper. I saw a 2 TB external USB drive for $100.) You can move a show up in priority, and it will be ready to watch sooner; the system could even alert you when it is “ready” even though the download is not complete, and you can “chase” the show while the rest of it downloads.

This would have minimal impact on the viewing experience of the user, while delivering almost the same benefits that a high bandwidth subscriber would get. I think that this would be a much more likely scenario than trying to use the terrestrial broadcast system to deliver the content.

I believe that something like this is likely the best-use case for the existing cable infrastructure, and that with the exception of maybe a couple live channels, linear programming is likely to simply go away. Not tomorrow, not next year, but I think it’s the logical outcome of the current trajectory.

Thanks again for writing.

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