As WWDC approaches, there is a lot of speculation about Apple releasing some sort of new Apple TV product. Most interesting, we’ve heard rumors that they are negotiating with some of the major networks so they can offer a television package where you pay some flat monthly fee and you have channels streaming through your Apple TV.
There’s a lot to like about such an idea. With most cable providers, the user interface design is an afterthought and looks like it. Navigating my cable system is a mess and I’d love to see what Apple could do. Nevertheless, I don’t think this is going to solve the“TV Problem”.
Recently I spent some time at the local corporate office of my local cable provider. It’s is a big company and I’m sure they have lots of offices like this all over the country but the one I was at was gorgeous, huge, and full of employees. It is quite an enterprise. Setting up a cable network is not cheap or easy. It up takes a lot of money and manpower. In exchange for this investment, the government, more or less, gives cable providers local monopolies so they can recoup their investment. That strategy seems to be working because these companies appear to be massively profitable. This article claims that Time Warner Cable has a 97 percent profit margin on Internet service. According to the New York Times, last year Comcast reported $2 Billion in profits.Moreover, the cable companies seem intent on holding onto this advantage. Last year Comcast spent nearly $17 Million lobbying. Time Warner spent $7.8 Million. That data pipe going into your house is big business and existing cable providers are going to do everything they can to remain the only person that can give it to you.
And that is the real “TV problem”. It has nothing to do with television production or licensing at all. It’s all about that Internet pipe coming in your house. Even if Apple is able to make a deal with the content creators, you’re still going to need to pay for Internet access. The cable companies understand this is the current vector and that’s why they are suddenly pushing back against net neutrality.
I don’t see a scenario where Internet access suddenly gets much cheaper and government regulation clamps down on cable company profits. There’s too much money at stake and there’s too much lobbying going on for that to ever realistically happen. In my opinion, the only way we’re going to truly revolutionize Internet access and, in turn, television access, is when we cut the cable entirely. I think it’s going to require a technological breakthrough.
When we can access the Internet directly from the satellite or some other wireless medium and it doesn’t involve guys driving around with trucks and ladders, then there’s a potential for competition and a much more satisfactory position for consumers. I have no idea when this will happen but I suspect it will … eventually. Until then, I don’t know if there’s any solution to the “TV Problem”.