Are you bothered by the fact that you have to pay for television channels that you don’t even watch? This has been a major pet peeve for millions of cable subscribers who have only wanted to pay for channels they actually consume. Verizon Communications (NYSE:VZ) may have found the solution to this quagmire.
Speaking at a Goldman Sachs investors conference in New York on Thursday, Verizon CEO Lowell McAdam announced that the company would be offering an Internet television service by the middle of next year and it could consist of a la carte, a groundbreaking move for the telecommunications giant.
The Internet TV service would include the key four broadcast networks – ABC, CBS, Fox and NBC – and numerous custom niche channels that are available to order by channel rather than in large packages. This a la carte feature could definitely sway consumers who are either looking to save on their monthly bills or have been considering cutting the cord.
It remains unknown as to how much each channel would cost. TVPredictions.com theorizes that a popular channel like ESPN could come with a cost of $10, while a lower-rated network channel could be much lower. This means that depending on the customer’s menu of channels, a monthly statement could still swell to $50 per month.
“Lowell McAdam is definitely onto something when he mentions that millennials want their content on devices,” Glenn Hower, a research analyst with Parks Associates, told TechNewsWorld. “About one-third of millennials say that online is their preferred outlet for watching video content, and Verizon appears to be listening.”
Although this has been something consumers have been clamoring for, some of the smaller networks wouldn’t be so keen on the measure because it could create a situation whereby they lose an enormous sum of money, create less content and may even shut down their stations. Hower noted that television content is quite expensive to produce so “the cost of content is going to have to come down, or customers are going to have to keep paying more. Either way, something has to give.”
We reported in May that basic cable prices increased 6.5 percent to $22.63, while expanded basic cable costs have risen 5.1 percent to $64.41.
The concept of creating an a la carte (or pick and pay) for cable television has been a much-awaited policy decision for the Canadian government over the past year. Last year, the federal government introduced new consumer legislation that would implement a pick and pay TV model for cable companies. However, it is being reported that the big cable TV providers are fighting back against regulators to offer this option and making Canada the first country to allow an a la carte feature.
“The current model benefits the big three and other cable companies, but if they implement new regulations I can see the big cable guys taking a hit for that,” said Kevin Chu, an analyst with Accountability Research in Toronto, in an interview with the Financial Post. “It’s very profitable.”
Rogers Communications Inc., Telus Corp. and BCE Inc. have submitted documents to the Canadian Radio-television and Telecommunications Commission (CRTC) noting that customers will likely pay higher prices for individual channels, especially sports – Rogers paid $5.2 billion in 2013 for the rights to broadcast NHL games in Canada for 12 years. The big three also warned that producers won’t take as many risks in producing content.
