No, Cable's 4th Quarter Surge Doesn't Mean Cord Cutting's a Fad Charter Communications joined Time Warner Cable and Comcast this morning in announcing that for a change, they actually added cable TV subscribers during the fourth quarter. According to Charter's earnings report (pdf), Charter managed to add 29,000 video subscribers during the fourth quarter, with a small net gain of 11,000 subscribers on the year. That comes on the heels of Time Warner Cable adding 54,000 TV customers in the fourth quarter (with a net gain of 36,000 subscribers for the year) and Comcast adding 89,000 TV customers in the fourth quarter (with a net loss of 36,000 subscribers for the full year).

While some analysts and news outlets will be quick to insist this turnaround means cord cutting has somehow been beaten back, "overblown," or otherwise hallucinated -- what's actually happening is a lateral subscriber migration from telco TV and satellite TV operators -- back to cable. For a notable chunk of the last decade, cable customers had been fleeing cable providers for satellite TV and telco TV providers who were being notably more innovative in terms of set top boxes (Dish's Joey, and Verizon's FiOS TV platform, specifically). But more recently, companies like Comcast (the X1), Charter and Time Warner Cable (Maxx upgrades) have made a concerted effort to provide better set top boxes and TV functionality, so many former customers are just returning to the fold. As a result while cable is seeing slight additions, AT&T and DirecTV combined reported a net loss of 26,000 video subscribers last quarter. And while FiOS TV added 20,000 users in Q4, that was its worst subscriber showing since 2006. Dish hasn't reported Q4 earnings yet, but in Q3 the satellite provider lost 23,000 subscribers -- a whopping 178,000 if you ignore Dish's attempt to pad its rolls with Sling TV subscriber numbers. Cable's got another ace up its sleeve in its growing broadband monopoly. As AT&T and Verizon give up on millions of unwanted DSL customers, these users are fleeing to the local cable provider, which is now seeing less competition before thanks to telcos unwilling or unable to upgrade their networks. These users -- desperate for faster speeds -- are often picking up cable TV on bundle promotion, since cable will often price cable and broadband service bundles lower than just broadband alone.

So how many customers are signing up for TV without actually wanting or using it? Nobody really knows, but it's substantial. And will these users drop cable TV when the promotional period ends? Stay tuned. But the reality is the practice of temporarily subsidizing cable TV with broadband revenues is helping cable pad its TV subscriber rolls -- we just don't know by how much. Once those customers are on board, cable companies hope to use usage caps and the practice of exempting their own services from usage caps to punish customers that use third party streaming services and reward those that remain in the fold. Keep in mind too that while overall pay TV subscriber growth remains flat or in slight decline, population and housing growth continues to increase (2015 saw the biggest new home construction since 2007), meaning there's millions of households who simply aren't signing up for traditional cable. Most of them are Millennials. As traditional cable customers get older and die over the next ten years, cable's established base will start to erode more quickly. Cable can of course try and combat this and appeal to younger customers with price and bundle flexibility, but the industry remains highly resistant to this idea despite ample lip service to the contrary. It's also unclear if younger customers will ever again really find the lure of legacy cable appealing. And cable providers, wary of cannibalizing traditional TV customers, are hesitant to offer truly disruptive and innovative streaming services these younger users might actually like. That's why you see an endless flood of "me too" junk "Netflix killers" like Comcast Streampix that pretend to be innovative, but are intentionally stunted to prevent legacy cord cutting. So no, the recent small spike in subscriber cable numbers doesn't mean cord cutting is "overblown," isn't real or that it has been "beaten back." What's happening is cable operators are, perhaps temporarily, winning some subscribers back from telco TV and satellite providers thanks to set top upgrades, a broadband monopoly, and temporarily-discounted TV bundles. It's just the shuffling of a saturated market. Cord cutting persists as a slow but steady trickle underneath, and cable's fundamental problems (like horrible customer service, unsustainable programming hikes, and a younger demographic that views legacy cable as a pointless relic) have gone nowhere. So no, the recent small spike in subscriber cable numbers doesn't mean cord cutting is "overblown," isn't real or that it has been "beaten back." What's happening is cable operators are, perhaps temporarily, winning some subscribers back from telco TV and satellite providers thanks to set top upgrades, a broadband monopoly, and temporarily-discounted TV bundles. It's just the shuffling of a saturated market. Cord cutting persists as a slow but steady trickle underneath, and cable's fundamental problems (like horrible customer service, unsustainable programming hikes, and a younger demographic that views legacy cable as a pointless relic) have gone nowhere.







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Most recommended from 39 comments



battleop

join:2005-09-28

00000 17 recommendations battleop Member They have reached saturation No on is going to see any more significant gains anymore. Most of what we're going to see are people jumping from one ship to the other and back again chasing those new subscriber promotions. The over all number of subscribers will continue to slowly dwindle over time as more tech savvy people cut the cord.



When someone finally makes it easy to get same content delivered to a single device that has an up and down button on the remote then there will be a rapid increase in cord cutting.

karlmarx

join:2006-09-18

Moscow, ID 9 recommendations karlmarx Member It's the shareholders that they lie for Duh, cord cutting is real, and it will only accelerate. Having said that, NO ceo would ever admit that, because that would 'scare' the shareholders, who would dump their stock. The cable monopoly, and the broadcast cartels are both going to struggle in the next few years. Expect things to get worse, far worse, before they get better. The days of ripping off people for cable box fees will end, the days of 'under the line fees' will be exposed to the light of day. The house of cards the cable companies have built will come crashing down on them, and when that happens, the days of the media gestpho being able to 'force bundle' crap channels so you can watch the one or two channels you want to watch, while paying for 50 you don't want, will end too.

10 years from now

1gb/1gb via fiber to everyone in the us.

channels are sold a-la-carte, for .50 to $2.00 per channel.

monthly costs for internet + tv will hover around $50.00, and cell phones bills will average about $25.00.

Do the math, none of the coke snorting fat cats who run the megacorps are going to be around in 10 years to see it. They don't care, as long as they get the benjamins on their retirement.

davidc502

join:2002-03-06

Mount Juliet, TN 8 recommendations davidc502 Member Example of how this surge could be false For 2 years now, I've been a happy little cord cutter doing my own thing. However, the 2 year "deal" with TDS was about up, so I decided to call them. After talking with TDS, the bill for 50mbps internet was going to go up to 82 dollars a month (not including taxes), which isn't all that bad (not complaining). However!!! for 1 dollar more, I can double my speed to 100mbps, but it also includes BASIC TV PACKAGE.



I took the 100mbps deal for 1 dollar more.. However, I'm sure the basic TV package was included as a gain in the TV subscriptions. But is this a true gain?



The point is, most of these ISP's force a TV subscription with a certain speed tier. In other words, depending on the package, bundling is forced, and may show as a "false" addition or potentially false addition as was my case.