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A shave and a service cut – two bits

Wed, 10/26/2011 - 12:12pm
Brian Santo

NEW ORLEANS – People still fear that cord-cutting may yet develop into a phenomenon, but the evidence is that it isn’t happening much.

The worry now is that with increasingly easy access to over-the-top (OTT) content, compounded by a foundering economy, the bigger problems will be “cord-shaving” – downgrading service – and that young people will never plug in the cord in the first place.

Stretching the “cord” metaphor to the fraying point is not something anyone seems to worry about at all. But I digress. …

In an interview here at the TelcoTV show, Jeff Weber, AT&T’s vice president of video product and strategy, said he feels that cord-cutting is out there, but he just can’t find it in his numbers. The reason, he speculated, may be that even in a down economy, “We’re a good value.”

Colin Dixon, an analyst with The Diffusion Group (TDG), reported that the worry about cord-cutting is “way overblown.” Only 10 percent of people surveyed express an interest, “and fewer will do it,” he said.

There is tremendous interest, however, in saving money, he said. About half of TDG survey respondents say they’re unhappy with what they’re paying for TV. Dixon believes there’s a tremendous opportunity to help customers cut their bills by offering them a package of traditional channels and OTT. Specifically, he thinks delivering OTT via broadband can be an excellent play, especially for the service providers likely to be attending TelcoTV.

Today, Adi Kishore, an analyst with Heavy Reading, reported that about 5.8 percent of the respondents to a survey have canceled their pay-TV service.

The average subscriber, however, sticks with their MVPD for at least five years. There are a lot of reasons for churn, but price is one of the most prominent – it’s the reason cited for a full third of churning customers. Only 3 percent of those who’ve churned recently said they are relying entirely on OTT.

Internet viewing is high, and getting higher, Kishore noted. Furthermore, people might switch service providers if they can get a better online video experience. All of that, coupled with price sensitivity, led Kishore to the same conclusion reached by Dixon: Telco TV providers could benefit by supporting access to OTT.

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