Is the AT&T and Comcast fight to maintain monopoly on set top boxes a bad move for the Cable Industry?

Is the AT&T and Comcast fight to maintain monopoly on set top boxes a bad move for the Cable Industry?

It may seem like maintaining tight control on who supplies Set Top boxes as being a good thing for the Cable companies but really is it or would moving customers onto using their own streaming media boxes like the Apple TV, Roku, Amazon Fire TV etc be better for their business model?

There may be some that live in a liberated country where they get a fee from their cable company for TV and that is what they pay.  Sadly in the USA for the larger part you are quoted in advertising and in pricing for their TV products one price but by the time you are forced to lease their set top boxes the amount you pay each month and double or triple and in some cases quadruple.  

Back in the day before I cut the cord I was using Verizon FiOS.   I had three set top boxes, one in each bedroom and one in the Living/Family Room.   Including Internet I was paying almost $200 every month, I think it was $189.  $30 of it was just the DVR in the living room.  My TV service was listed as $39 a month, Internet was listed as $59 a month.  The rest was the fee’s for the leasing of the set top boxes, I had purchased the router up front so I didn’t have to pay a leasing fee.

My charge just for the set top boxes that were required because, worse still I didn’t watch that much TV.

 The companies are making money from the long term leasing of these boxes but the boxes only have a limited operational life.  In fact during the three years that I had used Verizon (the first time round), they had shipped out three different replacement models for the DVR and were just starting to pester me to switch over to their new all singing all dancing whole house DVR which would have increased the cost of set top box leases even higher.

Some opt for equivalent hardware or have the ability built into their TV to lease a cable card from the Cable company for $5 or so a month for each card to allow them to access through Tivo’s and similar devices but the cost again and the subscription to those services sometimes defeats the whole point of getting rid of the set top boxes.

So sure they get an income.  Trouble is, this is also the reason that many people cut the cord and start sourcing televised entertainment from elsewhere and in 99% of the cases stream it.  Sure I tried an Antenna.  I spent a fortune on all different antennae only to find out that I would have to have some multi-thousand dollar 150 ft antenna mast build in the back yard, requiring planning permission and all sorts of special permits just to receive channels.  I could receive on and off the CW, and occasionally CBS but that was it and it was intermittent.  The cost and hassle was prohibitive so I resigned myself to just Netflix, youtube and if the option was there streaming from various TV company’s app’s.

How many of us, if we could just get our TV service streamed in total from the Cable company through the internet be willing to pay a little more for the service, pay far more for internet to get a boost in speed to avoid buffering and even pay a subscription for the actual app that we are using in our little streaming media box?

As more and more products move to the cloud, doesn’t the DVR set top box seem antiquated?  It stores it’s data locally on a hard drive,  it’s fairly noisy.  Have you heard them at night when everything else is turned off, and if you had to replace the DVR you lost all the various channels that you had subscribed to.

Now imagine it being an app where you had normal channel guide and selections and schedules but if you missed a show or wanted to record a show it would be available for a set amount of time, just like a DVR would (unless you asked it to keep it forever), and be able to catch that show the following day if you didn’t set a recording to find the show as if it was in the ‘on demand’ section then be able to watch it.

In fact you could get everything that you could with a normal DVR but it was all operated remotely.

What would the advantages of this for a Cable operator?

We all know the hassle when TV doesn’t work through a cable company or the set top box doesn’t work we have to place a support call,  they end up sending a technician out to try and fix the issue and sometimes switch out the equipment that is not working correctly.

Not only that, trying to recover set top boxes etc that were leased by customers that don’t pay.  Not only are you trying to get paid for the service but you then have to cut the feed to the house followed by trying several times, many times unsuccessfully to recover the debt but you also have hundreds of dollars of hardware that you know that you may end up writing off as a loss unless someone brings it in saying it was found.

That hardware also becomes dated that you have installed and sure you have recovered the value of the hardware in leasing costs but it is capital expense to keep replacing this hardware with newer better models to keep customers happy and the remotes that you end up never reusing that come in from customers etc is all costs and losses that you have to write off.

Imagine just giving customers their first Streaming stick to plug into their TV and letting them pay installments on any extra they wish.  The device comes preloaded with your software or your staff when they are setting up the internet for the home installs the Cable Operator’s streaming App.  For example the cost of the Roku & Amazon streaming sticks is negligible these days compared to the cost of a DVR or set top box and something that doesn’t require cables, gets it’s power from the TV or a small power supply and the roll out of updates to the company’s software is relatively easy, if it goes wrong it is easy to fix and if someone chooses not to continue with service you are not chasing your tail trying to recover the hardware,  it is cheap enough that in most cases they have paid off the cost of the hardware before they cancel and many people already have streaming hardware and won’t want to purchase more or have any hardware at all and they just need to install the app.

Sure there is room for those that still don’t have HD style TV’s for the old style set top boxes but equally so this number is declining and most received very basic cable through the Coax with no set top boxes and there is no reason for this to not continue.

So just in savings in operating costs and losses.  In fact the ability, as soon as they don’t receive the payment for TV to install deny access to service and the saving that is made in Coax Cable replacement and repair.  Only one single Coax to the cablemodem would be necessary and only one cable to maintain.  Technician call out costs would drop.  Most people quickly learn how to set up and operate a streaming stick even the oldest of people tend to grasp quickly how to use one.

What would this mean?

It would make the Cable Companies leaner, more efficient and they’d get better revenue both from those that previously cut the cord that would now subscribe to a TV app on a streaming box, but also those that would then pay more for faster internet packages, yes we know you upsell on internet packages pushing faster speeds, worried that they would suffer buffering and by having DVR in the cloud you don’t have irate customers with DVR’s that failed to record something because only one copy of a show is needed for every single customer on the whole network rather than every person having to record their own copy of the show locally.

Sadly, and unfortunately true!

Yes it’s sad and very true that the Cable companies would rather utilize these capital expenditures on hardware, the cost of losing the same hardware and the unpaid bills to fudge accounting and utilize the tax system to make their businesses look far less profitable when it comes to tax reporting while they have large financial returns for investors which is why both AT&T and Comcast are fighting the FCC over allowing people to buy hardware and easily use it to access services through any cable company.

Link: Bloomberg: AT&T, Comcast Oppose U.S. Plan for More Set-Top Box Competition