Compared to the slew of new media delivery solutions that have developed over the past few years like  iTunes (Etilities Forum), Netflix (Etilities Forum), Hulu (Etilities Forum) or Joost (Etilities Forum), Cable TV seems a bit like a dinosaur.  Along with radio, it is one of the older content delivery services, and it shows.

Research group Parks Associates released a study in late October explaining that Cable TV has customer satisfaction issues compared to Satellite TV and IPTV providers.  Although the details of the study are not publically available, my thought is that this is primarily due to a shift in how much control consumers expect to have on what they watch and when they watch it.  The old, familiar model is that you need to tune in to the right channel at the right time.  You arrange your schedule around the TV network schedules and hope you don’t get interrupted.  What products like Tivo (Etilities Forum) and the Apple TV have introduced is the ability to make your own entertainment schedule.

The answer to this was Digital Cable, specifically Video On Demand (VOD) offerings which let you select movies, TV shows or documentaries out of a library of media that your subscription gives you access to.  But there are still problems.  First, VOD tends to have a more limited selection than the alternatives listed above.  Second, the interface is often sluggish and poorly designed.  Lastly, and perhaps most importantly, this offering still rides on a service that is very expensive: according to the FCC, cable prices have more than doubled over the last decade!

The main thing Cable TV has going for it is that it has a very large established consumer base, and old habits die hard.  But Cable providers should probably realize, for their own good, that we are in the middle of the danger zone: a tough economic downturn that makes everyone try to save money.  Once enough people realize the alternatives out there, Cable TV will need to make a choice: adapt or wither.

©2008-2009, Gallop Services, Inc. All rights reserved.

You may have been following the recent news regarding the broadband monthly usage caps that providers like Comcast (Etilities Forum) and Frontier Communications (Etilities Forum) have been implementing.  This article does not debate the relative merits of these policies but simply examines ways to monitor your usage.  This way, you can avoid accidentally exceeding whatever cap you may be subject to. We’re going to take a look at how to do this, whether you only have one computer at home or several of them behind a router (the latter takes a bit of elbow grease).
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©2008-2009, Gallop Services, Inc. All rights reserved.

Phone company Frontier Communications (Etilities Forum) recently received a good deal of media attention when they announced that there would be broadband usage cap above which users would pay by the gigabyte (GB) used per month.  This would turn the current broadband model (unlimited usage for a fixed fee) into the cell phone model, in which the base monthly fee covers a certain amount of usage (minutes for cells and gigabytes for broadband), but any usage over that “soft cap” incurs a cost-per-unit, often at a higher rate than that of your base allowance.

Frontier’s limit will initially be set at 5GB per month.  The heart of the problem is that this number can be both very high and very low – it completely depends on who you talk to.  I know that I am not alone in that I can go through that much bandwidth in just a day or two.  As a matter of fact, anyone watching more than 2 or 3 movies a month with a streaming device like the Apple TV or Amazon (Etilities Forum) Video-on-Demand service would easily clear that threshold.  As explained previously, recent industry trends toward delivering content online rather than on traditional hard media will place an increasing number of customers into the category of “heavy downloaders.”  Yet at the other end of the spectrum, customers who only browse a few web pages and send a couple of e-mails each day wouldn’t reach a 5GB limit in a year.  Given the clear movement toward using the Internet as a content delivery mechanism, though, I suspect that the latter group of consumers will decrease in numbers very quickly.

Clearly, there is a need for pricing models that allow greater granularity in determining reasonable fee-for-usage: it’s understandable that a customer using one hundred times more than another should pay more.  Frontier, however, plans to charge $1 per additional GB used.  Since the average movie downloaded through iTunes (Etilities Forum) Movie Rentals is around 2GB, the total cost of that $4 rental comes to $6 – a 50% increase in cost to the consumer!  Clearly, Frontier will disgruntle their power users faster than it takes to say it, and those bandwidth-hungry consumers will either switch back to hard media or (more likely) change providers.

What will the end result be for Frontier if they stick with the current 5GB cap strategy?  They’ll be left with only their light-duty users, who, by nature, will generate less revenue and be less profitable once pricing models mature to reasonably and affordably bill based on usage.

©2008-2009, Gallop Services, Inc. All rights reserved.