“Comcast will build extensive moats around their content,” predicted Susan Crawford, former special assistant to President Obama for science, technology and innovation policy, who is writing a book about the deal. “I can tell you confidently in the future you will need a cable subscription from Comcast to access online any cable channels that would otherwise be bundled by Comcast.”
Comcast’s Fitzmaurice insisted that the deal “will not in any way limit competition in the fragmented and dynamic marketplace for online video content.” Comcast’s goal is to bring “more, not less” content to consumers across platforms.
Comcast has been buying full-page ads in The Washington Post trying to convince customers that the merger, and the TV Everywhere model, is good for them. Subscribers will be able to access a wide range of programming anywhere there is an Internet connection. Watching television will become a seamless experience as subscribers move from one device to another.
But that seamless experience starts to run into snags if viewers want to get their Internet TV from someone other than Comcast. Upstart Internet TV providers trying to compete with this juggernaut have already met with limited success—even some of the biggest companies in the country have been stymied in trying to break into the television business.
Google TV, for example, launched service in late 2010. Its programming partners include Turner Broadcasting, HBO and Netflix. But not one of the four major networks is available on the service.
Apple TV, a $99 device that delivers movies for as little as $3.99 and television shows for 99 cents apiece, has also met with resistance. NBC Universal does not make its content available to Apple TV customers, though ABC and Fox do. Steve Jobs, Apple’s chief executive, hopes the rest of the networks will “see the light” and start offering their content.
Netflix has become extremely successful, first at streaming movies, but now also streaming broadcast television content—although its menu of available shows is somewhat limited. An Internet backbone company that distributes Netflix’s online streams of television content, Level 3 Communications, launched a public battle against Comcast in December, accusing it of requiring Level 3 to pay unfair fees to Comcast to ensure its streams reach its customers. Comcast denies it is competing unfairly, but the battle is sensitive because federal regulators are grappling with how to craft rules to ensure all Internet content is treated fairly. This isn’t the first time Comcast has been accused of disrupting the content of a competitor. (More on that later.)
At least some TV lovers are betting that despite Comcast and the cable industry’s might, these new Internet TV ventures will allow them to cut their cable cords and save some money. Research firm SNL Kagan estimates that the number of households that will substitute online TV for traditional cable and satellite providers will grow from 1.5 million at the end of 2009 to 8.1 million households by 2014. Indeed, Comcast lost 275,000 cable TV subscribers in 2010’s third quarter.
But others are not so sure that many will cut the cord. Susan Whiting, vice chair of Nielsen Company, the television rating service, told Congress in July that “at the present time” viewers appear to be using the Internet to add to rather than replace their usual viewing platforms. If she’s right, that would make the family that runs Comcast very happy.
Keeping It in the Family
While Comcast is the nation’s largest provider of cable TV and broadband services, it is still very much a family operation. It was founded by Ralph J. Roberts, now ninety, who, with two other investors in 1963, purchased a 1,200-subscriber cable television system in Tupelo, Mississippi. Today he carries the title of chairman emeritus.