Your Next Cable TV Provider Could Be Google or Apple

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GoogleSomething big is going down in Kansas City. Google (GOOG) is offering lightning-fast Internet -- and television -- at ridiculous prices.

For $120 a month, Google Fiber customers can get Internet access at speeds 100 times faster than today's average, and a TV service that includes most of the major channels. A Nexus 7 tablet doubles as a remote control and the included DVR can record eight shows at the same time. Or, for just $70 a month, they can get only the super-fast Internet.

If those prices seem high, consider that industry leader Comcast's (CMCSA) video customers are shelling out an average of $148.57 a month for a far slower -- and in many regards, inferior -- product.

For now, the cable giant and its rivals can stay calm: Google Fiber has no immediate plans to expand beyond Kansas City. However, the disruptive nature of the world's largest Internet company infringing on Comcast's turf has to be worrisome.

Remote Vitriol

Comcast has a serious problem keeping its customers happy.

That became unavoidably apparent to me last November, when my original Why Comcast Will Never Be Great Again piece attracted more than 1,100 reader comments, with most of those chiming in fed up with Comcast's poor reliability and escalating prices.

But you don't need to lean on my anecdotal evidence. The numbers show Comcast really is having trouble with customer loyalty.

Comcast closed out its latest quarter with 22.1 million video customers, 176,000 fewer families than it served just three months earlier.

This isn't a fluke. Comcast may be increasing its broadband accounts and making inroads in business services, but its video customers have been cutting the cord for years.

Comcast closed out 2011 with 460,000 fewer subscribers than it had when the year began. It also surrendered 757,000 net video accounts in 2010 after losing 623,000 customers in 2009.

Changing Channels

Where are Comcast customers going? Many are finding cheaper platforms, largely in the form of AT&T's (T) U-verse and Verizon's (VZ) FiOS. However, there are also many people getting rid of their cable bills entirely.

Cable bills creep higher every year, and not necessarily due to greed on the part of Comcast and its smaller rivals. Networks and professional sports leagues demand higher payments, and Comcast has little choice but to pass those fees on to its dwindling base of subscribers. It doesn't seem to matter that most people couldn't care less for more than 90% of the channels in their cable packages. They still have to pay up, because there isn't a single satellite or cable television provider that will let customers cherry pick and pay for only the channels that they want to see.

Networks are the ones that call the shots. They're the ones bundling crappy channels with their popular ones. Realizing its own model's vulnerability, Comcast got into the content game by acquiring NBCUniversal two years ago.

It won't help.

Apple to the Rescue

It's really just a matter of time before Apple (AAPL) disrupts the television market the way that it has revolutionized the music industry and redefined the smartphone market. Before he died last year, Steve Jobs told his biographer that he had "finally cracked" the TV problem.

Apple is reportedly running into resistance from cable networks. Google ran into the same brick wall. However, sooner or later, logic and the consumer's freedom of choice will prevail. Comcast and its peers will never be the same once that happens.

The cord cutting trend is just starting to gain real momentum. It's not just the broader availability of streaming: Consumers have real financial decisions to make. Times are tight. Smartphone data plans aren't cheap. If you think most people would be willing to give up their phones before telling Comcast to take a hike you may be misreading how dependent this country has become on its smartphones.

Television is a $150 billion industry once you bake in monthly subscriptions and advertising, but it may not be that way for long once consumers get to mold it into the product that they want. Comcast's total revenue climbed just 6% in its latest quarter, and analysts see the company's top line growing by just 2% next year.

The trend is unmistakable.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Google and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Google. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.



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7 Comments

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hlair

I
Model that's missing on link below- saw lots of nerds and not cable cowboys at Google Fiber - need targeted ads to offset content costs
https://sites.google.com/site/cuoirent/news-releases/behavioralbasedsocialmediasystemforthecabletvmarket
Behavioral Based Social Media System for the Cable TV Market
posted May 19, 2011 8:09 AM by Herb Lair
Cable has long history of failing to develop 1-1 target marketing. Canoe Ventures (latest MSO venture) was touted as the Holy Grail of targeted advertising and is reportedly less than a success at this stage.



http://tech.fortune.cnn.com/2011/01/03/the-56-billion-ad-question/



Excerpt from above link on January, 2011 Fortune.com –

“Advertisers will spend $56 billion putting ads on TV this year,...The cable industry thought it would be a big opportunity too, but its efforts have fallen short. Canoe Ventures, a two-year-old project of the six biggest operators, has launched just one notable product…”



http://www.businessinsider.com/jason-kilar-here-are-my-thoughts-on-hulu-and-the-future-of-tv-2011-2



“Advertisers have weighed in heavily on the future of TV, with both their thoughts and their considerable wallets. Advertisers are increasingly expecting to present their advertising messages to just their desired audience…and not to anyone else. For over 60 years, video advertising could only be bought via a TV show’s projected audience, which served as a blunt proxy for a certain target audience. The result has been many wasted impressions and an often irrelevant experience for consumers. In the near future, advertisers will demand the ability to target their messages to people rather than targeting their messages to TV shows as proxies for people.”



The obvious alternative, with the least cost to implement is an independent Cloud CRM solution designed to cross index cable subscriber households with their corresponding social network interests. The current regulatory and privacy issues experienced by cable TV operators gathering unauthorized data from set-top boxes could be minimized, by validating subscriber and even eliminated by essentially having an opt-in plan (provided conveniently by the social media). Access along with profile and interests of households would be controlled by the subscriber’s social media platform of choice. Facebook has high consumer acceptance and could be used for household profiles, product interests, social interests, and viewing entertainment interests. There would be incentives to the subscribers to opt-in including notification and reminder of viewing favorites, Groupon type ads, and specific ads matching interests with infomercial type group discounts and urgency to buy.



The current design of target marketing advertising ventures is fundamentally flawed. They focus on demographics, and fail to identify the individual behavioral current and future household interests.

October 23 2012 at 4:41 PM Report abuse rate up rate down Reply
jhrooney

When google fiber gets out of the test bed, if and when, they will have the same problems as Comcast, Verizon, etc.
A low volume trial is one thing, scaling up is a different matter that google doesn't have a clue about. They are still in the mentality of you draw a cloud and magic happens.

There is alot more to the cloud than google or microsoft ever dreamed about.

October 07 2012 at 11:07 PM Report abuse rate up rate down Reply
Leo

your right.....95% of the channels I do not watch. I would get rid of Comcast and their high billing in a minute if I could find someone who would provide me just with the channels I want at a MUCH lower cost !!!!!!

October 07 2012 at 11:34 AM Report abuse rate up rate down Reply
1 reply to Leo's comment
Bill

You might try getting rid of the entire 100 percent by dropping cable entirely like I have. Yes, there are times when I wish I had cable but on the whole I don't miss it and I save $100 dollars per month. I get by ok with the over-the-air stations.

October 08 2012 at 2:52 PM Report abuse rate up rate down Reply
mlanzi300

please god let this be true, I am sick of time warner cable

October 06 2012 at 5:23 PM Report abuse rate up rate down Reply
anthonygolfbones

I have been paying AT&T for high speed internet which really isn't much faster than dial up where I live at. I have Direct Tv and asked if I could get service from them but they have an agreement with AT&T in my area and won't help me. I would love to see some competition in my area, I tried Comcast but they use AT&T access so that was no better and cost more .

October 06 2012 at 10:43 AM Report abuse rate up rate down Reply
YOGI

Brighthouse in FL. is insane, New price increase is take it or tobad. I'm gond soon.

October 06 2012 at 2:34 AM Report abuse rate up rate down Reply