HUFFINGTON POST

Cable Companies Should Be Seriously Terrified Of Apple Right Now

03/17/2015 04:41 pm ET | Updated Mar 17, 2015
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Apple could finally offer some real competition to cable and satellite companies.

The Wall Street Journal reported on Monday evening that the consumer tech giant is planning to launch a web-based TV service this fall, with a small package of roughly 25 channels.

A TV service from Apple, which has been rumored for years, could shake up the TV industry, forcing other pay TV providers to drop prices, improve customer service and offer smaller packages to compete.

“If nothing else, it should put some pressure on the traditional pay TV players and get them to up their game,” said Jan Dawson, an independent telecom analyst. “Most of them don't have much competition today, and as a result they have high prices, poor customer service, lousy interfaces and complex offerings.”

For many people, the company they pay for TV is also the company they pay for Internet, and Internet providers may raise the price of broadband-only subscriptions to keep people from dropping their TV packages.

The price of expanded basic cable service went up 188 percent between 1995 and 2013, according to a report last year by the Federal Communications Commission. TV industry executives justify higher rates by saying that the value of a bundle has never been better -- you’re getting more channels than ever before.

That may be true, but you’re likely not watching the vast majority of them.

Even though many TV packages offer more than 200 channels, the typical person watches fewer than 20 channels, according to Daniel Ernst, a principal at Hudson Square Research, a technology and media research firm.

“What people really want is the major broadcasters -- ABC, CBS, NBC and Fox -- plus a handful of cable and Internet networks like ESPN, HBO and Netflix,” Ernst said.

Apple’s TV service won’t be á la carte -- that is, you won’t be able to pay only for the channels you want to watch -- but it will reportedly be a small package of roughly 25 channels, including ABC, CBS, Fox and ESPN. It’s still unclear whether the package will include channels from NBC Universal, because Apple had a “falling out” with NBC parent company Comcast, according to the WSJ.

It’s unclear how much the service will cost -- the WSJ pegs it at between $30 and $40 a month, while The New York Times reports it could cost as little as $20 . It will not only work on Apple TV, the company’s streaming box that connects your TV to the Internet, but will also work on other Apple devices, like iPhones and iPads, the Journal reported.

Apple declined to comment.

In another foray into TV, Apple and HBO announced last week that Apple will sell HBO Now, HBO’s standalone streaming service, through its devices.

This latest round of rumors of a TV service from Apple -- some details of which were reported by Re/Code last month -- come as pay TV companies face increased competition on all fronts.

Subscriptions to pay TV are declining slightly, as a growing number of consumers choose to get their entertainment from streaming services like Netflix and Amazon instead of paying for TV. Dish, the satellite provider, recently launched a smaller live TV service aimed at so-called cord cutters, Sony is expected to launch its own TV service soon and Verizon has said it will launch a web-based one later this year.

Ernst said that Apple, the company that revolutionized the way we buy music to become the largest seller of music in the world, is in the best position to compete against the cable companies.

Apple can “give consumers what they want, when they want it, in a reasonable and well-executed package,” Ernst said.

Cable companies may be forced to respond to Apple with their own slimmed-down packages. But even that may not be enough to lure customers back from Apple, which will likely offer a better user experience and won’t require a set-top box rental fee.

Because Apple has something going for it that cable companies don’t: It’s a company Americans seem to really like. It ranks in the top 10 out of 1,300 brands in perception, according to YouGov’s BrandIndex.

No cable company ranks outside of the bottom 10 percent.

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