Comcast Prepares For Market In Which They Can’t Be Comcast Anymore
Comcast has made it more difficult than ever for their customers to dump cable TV.
Last year, the cable behemoth slapped one-terabyte data caps on its broadband internet service in most of its markets, then zero-rated its own streaming video service so that it wouldn’t count against those caps. Comcast customers could get unlimited internet and not have to worry about streaming more than a terabyte, but that would add $50/month to their broadband bills.
That billing scheme makes anyone considering cable alternatives like Sling TV and PlayStation Vue start doing math — and realizing that Comcast has set it up so that those alternatives would end up costing more than Comcast’s TV offering. Those data caps are an anti-competitive scheme designed to prevent its customers from dropping Comcast TV service in favor of other online TV services. AT&T institutes a similar scheme with its DirecTV Now service.
Never mind that the video market is shifting toward streaming and away from pricey cable bundles. Comcast, like most cable companies, is often the only real broadband internet service provider in the areas it serves, so it can institute these billing schemes on its customers and keep many of them tied to traditional cable for fear of higher cable bills. This scheme is made easier by the fact that FCC boss Ajit Pai is very friendly to big cable corporations and won’t call them out on this anti-competitive behavior.
Comcast Corp. has acquired rights from cable network owners to offer their channels nationwide, according to people familiar with the negotiations, giving the biggest U.S. cable operator a backup plan if rival online-TV services catch on with consumers.
The rights allow Comcast to sell video service for the first time outside its regional territories, which include Chicago, Boston and Philadelphia, said the people, who asked not to be identified discussing private information.
In most cases, Comcast acquired the rights through “most favored nation” clauses in contracts, which let the company sell channels in the same places as new online distributors. Since Comcast doesn’t sell traditional cable-TV service in markets like New York and Los Angeles, the rights mean the company could presumably offer a package of channels as an online-streaming service in those cities.
So here’s a cable company whose CEO claims the economics of streaming TV “are unproven to us”… gathering up streaming rights from major TV networks. Here’s a company using its broadband monopoly power to squash nationwide streaming TV services… starting the process of creating its own nationwide streaming TV service.
Gee, it’s almost as if the most hated company in America is preparing for the day when it actually has to compete in an open market. Comcast is currently trying to close off that open market to its own customers in order to bolster its own bottom line. You can picture Alanis Morrissette writing a new verse for this now.
That market is crowded, too. On-demand streaming services like Netflix, Amazon Prime Video, Hulu, and YouTube are huge and still growing. Facebook and Twitter are getting into live streaming. Former cable-only services like HBO, Showtime, and Starz all offer streaming services independent of cable now. Cable alternatives like Sling TV, PlayStation Vue, and DirecTV NOW are already available, while Hulu and YouTube are expected to launch their own live streaming TV services later this year. Dozens of other niche channels — many of which could not exist in the traditional cable bundle — have popped up along the way and found audiences, too.
With all these video options on the open market, why would video customers turn to Comcast — again, the most hated company in America — for their streaming TV? Why would customers willingly sign up for service from a company with a long history of screwing over customers?
Perhaps that explains why Comcast just hired former Amazon video exec Euan McLeod as its new vice president of IP video engineering. The man who helped build Amazon into a video powerhouse with an honest-to-goodness a la carte TV service in Amazon Channels just might be capable of turning Xfinity Stream into a service that customers might actually want.
It also suggests that Comcast understands this favorable political climate won’t last forever. After all, Comcast owns NBCUniversal, which owns MSNBC, which lambasts the current GOP-dominated executive and legislative branches on a daily basis — even though that executive branch appointed an FCC chairman that will bend over backwards for Comcast, and that legislative branch is awash in Comcast campaign contributions.
That political environment, combined with the fact that Comcast isn’t expected to negotiate streaming rights deals with CBS and Disney until their current contracts are up for renewal in 2020, means Comcast won’t be in any hurry to stop being Comcast. As Matt Strauss, Comcast’s executive vice president for video services, was quoted as saying:
“There is significantly more upside and profitability in going deeper and deeper into our base first versus following a video-only offering OTT.”
“Going deeper and deeper into our base” is as graphic a description of Comcast’s treatment of its customers as anyone needs.