Wednesday, June 4, 2014
The Next Cord Cutting: Real Cord Cutting
Today "cord cutting" refers to consumers who stop paying for TV and go broadband only from the cable or telecom company. This is more accurately called "cord shaving". The economic impact is significant but it's more of a redistribution. More money to "Netflix" and less to the service provider for video. Yet, more to the latter for higher capacity broadband that provides higher margins.
Tomorrow's "Real Cord Cutting" refers to consumers who completely stop all services from a wired service provider. The go completely wireless. We've seen the prequel with the elimination of a "home phone". This next generation cord cutting has consumers relying on their 4G/LTE service for all broadband services. This can be accomplished by simply turning their smart phone into a Wi-Fi access point when in their home. The economic impacts of next generation real cord cutting are severe. The fixed access service provides not only lose all service revenues they lose customers entirely.
As 4G/LTE deployments expand and as more small cells get deployed the average bandwidth per device will increase substantially. When the Netflix threshold (e.g., when the quality of streaming video is acceptable) is only a matter of time. Slowing down real cord cutting will be the price of mobile data plans which will eliminate the intended savings in the first place. Service providers with wireless assets will be in a strong position to succeed in this future scenario. Other, such as cable MSOs will need to address their pricing plans which are driving customers away in the first place. They can also compete with unique content, primarily "Sports and Wars", (i,e., live programming) and push for better quality video such as emerging 4K technologies.
Today's cord cutting is growing significantly especially in the under 30 demographic. Tomorrow's real cord cutting will occur and will have substantial economic disruption for the entire ecosystem.
For past article please visit greywale.com