The Cable Television Era Comes to an End

By Evolution Shift Archives
Cover image for  article: The Cable Television Era Comes to an End

The failed merger of Comcast and Time Warner and the probable merger of Charter and Time Warner will be looked back upon as significant events. They mark the end of the cable era of television.

In the United States, cable began in the post-WWII years as a way to bring broadcast television to hard to reach areas of the country.  It was a bridge utility largely for rural America.  Then in the mid-1970s it started to reach beyond that with the early launch of such networks as Superstation TBS, followed in short order by CNN, MTV, HBO and ESPN.  By the end of the century there were hundreds of channels available in many households.  Demographic and subject segmentation in television -- something ultimately embraced by advertisers and of course embraced by consumers because of the explosion of choice.

First cable was just about television.  Then it became the dominant way for consumers to jack into the Internet.  Then it took on the phone companies and provided landline telephone service.  We have all been pitched the bundled three-way package to the home.

The MSOs [Multiple System Operators] owned the last mile connectivity to the home.  They also had geographic monopolies awarded by municipalities.  This created an industry with one of the lowest levels of customer satisfaction and service.  Waiting for “the cable guy” became a cliché for bad customer service, second to none in poor ratings. This has always been the rap against the industry.  Now however, with developing alternatives and new media consumption patterns, even though the MSOs have improved service dramatically, the bad taste of poor customer service from the past lingers.

There is no customer emotional loyalty at all.  Not a good place to be at a time of fundamental technological change.

After three decades of explosive growth the tide is turning against them.  Of the “three play” products -- landline phones, TV networks and Internet connections -- one is rapidly disappearing, another is being accessed outside the home and the third is going to be challenged by companies outside the MSO industry.  The MSO cable business is a 20th century business that is now facing the technological realities of the 21st century.

It occurred to me that 100 years ago ATT stood for American Telephone and Telegraph Company. The name incorporated the dominant and new communication technologies; one from the 19th century and one from the 20th century.  So the “two-play” of a century ago is a historical parallel to the “three-play” of the cable industry today.  What happened to AT&T/ATT?  It is, of course, out of the telegraph business and largely out of the landline phone business and into the 30-year old cellular phone business where it seems to be doing quite well.

What will the leaders of cable MSOs do in the next 10-15 years?  Will they look ahead and fully go down the path of reinvention as AT&T obviously did albeit over a much longer time? Or will the embedded sense of being entitled monopolies keep them from transformation?

The politically powerful cable industry has largely had its way in the political arena during the last 20 years. Politicians did not want to mess with their constituents’ addiction to TV, nor lose all the platforms for on-screen exposure the MSOs provided them.  Now, the Internet powerhouse companies are winning the lobbying game.  This is similar to the failure of the movie industry to win the copyright regulation of the Internet when millions of Internet connected consumers responded to calls from Wikipedia, Reddit, Google and others to send messages to Congress that the Internet should be kept “free.”

As a long time student of media and having spent some 20-plus years in media and entertainment, I know the truism that old media does not go away when new media comes into being.  There are just more categories of media and they get sliced ever more thinly. However, dominance moves to the newer media.  Newspapers ruled the roost, then had to share with magazines.  Then they had to share with radio, which led to television and then cable television.  Then all of them were ushered into the Internet Age -- really the high speed wireless Internet Age -- and the slaughter began.  The Internet is the connective tissue of all media, let alone society and the global economy.

The MSO business will be a big and lucrative one for years to come. That said, it is inevitably entering a decline.  Whether this is a rapid or slow decline depends on how the industry adapts and if they do it with speed. That decline will of course trigger new economic realities for all television networks.  Unbundling, cord-cutting, streaming, infinite content ever more available anywhere and anytime and often free are realities that force the MSO industry to redefine its business model, how it interacts with old customers and how it attracts new customers, if there are any.

It has been a wonderful, transformative, incredibly lucrative 40-year era for the MSOs and the networks that benefited from the must carry, digitally expansive television landscape.  I was fortunate to be part of the early years of cable with the launch of MTV, VH1, Nickelodeon and CNN Headline News.  That time now feels almost prehistoric when viewed from the high- speed wireless world of handheld devices of 2015.  It was a great run.  How much longer might it last?

The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of Media Village management or associated bloggers. Image at top courtesy of freedigitalphotos.net.

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