In recent years, a lot of media and telecommunications executives dismissed the idea that Americans would stop subscribing to cable and satellite TV services. But the cord-cutting phenomenon can no longer be ignored.
American cable and satellite companies collectively lost more than 600,000 subscribers in the second quarter of this year, the biggest decline the industry has ever seen. Analysts expect the trend to accelerate as more people replace cable with Internet-based services like Netflix, HBO Now and Amazon, which are much cheaper than the traditional TV package offered by companies like Comcast and DirecTV.
On the whole, cutting the cord with cable should benefit consumers. It will help people save money and gain more control over their entertainment by allowing them to pay only for what they want to watch. Many Americans chafe at having to pay about $67 a month for dozens of TV channels they never use so they can watch a handful of shows. The price of cable and satellite TV service has roughly doubled over the last 20 years, rising about twice as fast as inflation, according to data from the Bureau of Labor Statistics.
That said, many people won’t want to cut the cord, while others simply won’t be able to, at least not completely. Families with children may want the broad selection of channels traditional cable TV packages offer. And most consumers will still need a high-speed Internet connection to use online services like Netflix. Although Americans now have more choices than ever for how they watch TV, about seven in 10 American households can only get broadband Internet service from one or two providers, usually cable and phone companies.
That’s why it is important that Congress and the Federal Communications Commission push for more choices in the broadband market. Among other things, they should override laws that some states have passed that make it difficult or impossible for municipalities to invest in broadband networks. State and local officials could also help by streamlining rules that make it hard for newer businesses to string fiber-optic cable on utility poles or below ground in order to compete with established cable and phone companies.
Media companies willing to offer shows, movies and sports outside the confines of a cable TV package can offset the revenue they lose from cord-cutters by tapping the market for online entertainment. They could also experiment with new formats that appeal to young people who spend much more time watching videos on their smartphones and computers than on televisions. Some companies are already moving in that direction. NBCUniversal, a division of Comcast, recently invested $200 million in BuzzFeed, the digital media company.
Customers are clearly saying that they want to watch and pay for TV in a different way. Regulators and media executives ought to heed and respond positively to that message — policymakers by encouraging more competition in the broadband market, and media businesses by making more of their content available online.
FROM AN EDITORIAL IN THE NEW YORK TIMES