Over-the-top (OTT) services represent long-elusive freedom of choice! And simplicity! Oh, and lower bills! And now people are watching TV delivered by cellular carriers!! Can cable companies survive?
Comcast Corp. (Nasdaq: CMCSA, CMCSK) chairman and CEO Brian Roberts, speaking at the Goldman Sachs Communacopia conference, calmly reassured analysts that MSOs are going to be alright, whether it's on their own or, he intimated, with help.
"Wireless wants to find a wire as fast as possible, and not everybody wants the same bundle," he observed.
Roberts has often hinted that there might be collaborative solutions to the respective, complementary shortcomings of wireline and wireless competitors. If MSOs and the leading wireless companies aren't talking yet, it's clear that Roberts thinks they should be.
Consider some of the signs that the wired and wireless worlds are converging: Here's T-Mobile US Inc. offering dual-mode cellular/WiFi phones, and its rivals following suit; Here's Altice buying Suddenlink Communications and Cablevision Systems Corp. (NYSE: CVC), all the while talking up the demonstrated value of the quad play in Europe. (See T-Mobile Turns Up VoLTE-to-WiFi Handoff and Altice Confirms $17.7B Bid for Cablevision.)
And here we have Roberts again making statements downplaying the supposed hostility between wireline and wireless competitors in the U.S.
So what to take away from Roberts' seemingly bland comments?
One conclusion starts with the observation that among US MSOs, Cablevision was one of the few remaining cable operators with more than 1 million subscribers that had not yet acquired another company or been bought (the others being Cox Communications Inc. and Mediacom Communications Corp. . That means the mega-deals among major US MSOs are about done. However, cross-category deals such as AT&T Inc. (NYSE: T)/DirecTV Group Inc. (NYSE: DTV) remain a possibility.
Combined with the observation that WiFi and cellular appear increasingly complementary, it all leads to the conclusion that alliances among erstwhile competitors are the likely, perhaps even necessary, next steps in the evolution of the consumer communications services market.
That still leaves the threat of cord-cutting. Pundits were eager to diagnose the imminent death of the cable industry even before cord-cutting was detectable, which it now most certainly is. They're reading some of the signs correctly: Cord-cutting is gradually accelerating; the number of 'cord-nevers' is growing; more and more people are watching video on their phones.
Even if Roberts was panicking, you'd never know it -- the man has the demeanor of a successful small-town mortician.
But he doesn't seem to be panicking at all. He placidly assured analysts at the Goldman conference that OTT competition in its current state of progress isn't quite as attractive as advertised. When viewers create their own bundles of OTT services, the cost can quickly get out of hand, he noted.
And it turns out that consumer needs are evolving. Different people desire different combinations of service, and their needs for services seem to evolve with time, he explained. Comcast (and other MSOs) are busy crafting multiple packages that suit those evolving needs.
In other words, perhaps the Death Of The Bundle is inevitable, but the old bird is clinging tenaciously to life. With careful estate planning, laying the old cable model to rest won't be as devastating as people fear.
— Brian Santo, Senior Editor, Test & Measurement/Components, Light Reading