Tag Archives: Dish Networks

Chipping Away at the Cable Industry

Digital-tv-antenna-620x400It seems that every day I read a story about some big company who is working very hard to break the cable monopoly and to bring alternate programming packages to the market. Aereo is at the Supreme Court this week for trying just that – for bringing a small package of network channels to cell phones and tablets in major metropolitan areas.

Yesterday I read that Dish Networks expects to have a new service out by late this summer that is going to further chip away at the cable industry. They plan to offer a smaller package of programs over the web that are aimed at Millennials that will let them watch TV on smartphones and tablets for $20 – $30 per month. But I think a package like that is going to be appealing to a lot of households and is going to lead to a lot more cord cutters.

Dish has already signed up Disney, which brings them Disney, ESPN and ABC. They have reportedly been in negotiations with A&E, Turner, Comcast (which includes NBC) and CBS. The largest content providers have reportedly placed some contractual conditions on Dish getting such a package. They must include at least two of the major networks of ABC, CBS, FOX and NBC. They also must include at least ten of the highest-rated other networks in the package.

This concept is not new for Dish and they already sell packages on the web in fifteen different languages that they market under the name of DishWorld. This includes packages at $14.95 per month in Arabic, Hindi, Cantonese, Urdu, Filipino, Punjabi and many other languages and is a great way for emigrants to see programming from their home countries.

In another announcement that came out today, HBO, a division of Time Warner agreed to sell its library of original content to AmazonPrime. This is the first time that HBO or any cable network has made such a deal. This content has been made available on the web to people who subscribe to HBO at a major cable company like Comcast or Verizon. But the content has never been available to people who did not subscribe to HBO.

No one of these deals is going to break the cable industry. However, these two particular deals will chip away at the subscribers who buy traditional cable packages. These are deals that will let people get content on the web in a way they could not get it before. I think it is these sorts of deals that will chip away at the cable industry, and the industry won’t die in a big bang but will die from a thousand cuts.

Dish will lure away a pile of cord-cutters with this package. Verizon Wireless will lure away another pile. Google, or somebody non-traditional will get the rights to the NFL Sunday package and will lure away a pile. Somebody will make a deal with ESPN and the other key sports networks and take a pretty big pile. The Dish deal is the first major OTT deal but it will not be the last. As the programmers find a way to monetize their content over the web we are going to see more and more people dropping the giant packages. Virtually nobody is happy about paying for content they never watch.

Interestingly, not everybody sees the world in this same way. Here is one guy who sees a rebound for the traditional cable providers. He sees an increase in both customers and penetrations through 2019 for the cable industry. Nothing is impossible and we don’t have to wait long to see if he is right, but just about everybody else predicts that the large cable companies are going to keep losing customers and that the rate of loss will accelerate. Every little side deal made with Dish Networks or Verizon Wireless or Google is going to drag another pile of customers away from the big dollar, big-channel packages.

And at some point, the big line-up model starts breaking when programmers start getting less revenues for the less popular channels that are not being included in the new Internet-only alternatives. ESPN and Disney and the other popular networks are going to do just fine since they will probably be viewed by more people than ever. But the other 80% of networks have to be very worried about the trend towards OTT.

A Little Bit Closer to OTT

TabletWe keep inching closer and closer to the day when customers will have a viable access to real time over-the-top programming. The first company to make any progress in this area was Aereo who is sending the network channels to people’s cellphones and tablets in major markets. But Aereo has an upcoming day in court and the US Supreme Court could put them out of business.

It’s not like there isn’t any programming available on the web, because there are mountains of old TV shows and movies available on NetFlix and AmazonPrime and the many other companies that have deals to put content on the web. And many customers of the major cable providers have TV anywhere where the cable company lets them watch some of the channels they subscribe to on remote devices.

But what is still missing, and what will finally give a lot of people the impetus to cut the cord is when they can get the programming they most want in real-time on devices other than televisions. I have largely cut the cord and watch the programming available on NetFlix and AmazonPrime. But I would be very happy if I could buy ESPN and the Big10 Network a la carte. And maybe some news network like CNN.

There were two announcements this past week that inch us closer to an OTT alternative. The CEO of Verizon Wireless, Lowell McAdam announced that he has had discussions with content providers about launching an OTT service for customers using the Verizon LTE network and also possibly for those using other broadband providers.

The second announcement came from Dish Networks who announced a major deal with Disney that would allow them to distribute Disney and ESPN wirelessly. The agreement was complex and also resolved a number of issued between Disney and Dish for satellite carriage. Last week I reported on the spectrum that Dish has been buying, and this announcement demonstrates that they have plans to use some of that spectrum to offer an OTT product.

When the Verizon CEO was asked about the Dish Networks announcement his response was that he thought Verizon has a huge head start and that it would take Dish at least a year to construct a wireless network. So I think we can expect Verizon to roll something out soon to take advantage of the existing network.

Both announcements make it sound like customers will be able to buy the OTT programming without having to subscribe elsewhere to a landline version of the same channels. This would be the first time that such live content like sports has been made available this way. I wrote last year that there are only a handful of channels with enough market power to pull off OTT programming, and that very short list includes ESPN. I know that I would gladly pay $20 for ESPN a la carte rather than have to buy a $60 package to get it. And I don’t think I am that unusual. Just in the last week I have had conversations with several other sports fans who say the same thing.

I had cable service several years ago with all of the channels and all of the movies. And I found that I would go weeks, and sometimes even months without turning on the TV (especially outside of football season). I am really hoping that these announcements are the first little crack in the programming monopoly and that the first pieces of OTT are here. But I won’t believe it until I can buy it. It’s possible that Dish and Verizon Wireless will be forced to also sell bundles of programming including a lot of things I won’t want. But I can’t see them getting into the OTT business if they aren’t going to let customers buy the smaller packages they really want. I will be watching.

What’s Up With Dish?

Satellite_dish_(Television)The FCC just held an auction for the 1900 MHz spectrum and the only bidder and the winner of it all was Dish Networks. For some reason they did this under a different corporate name, but everybody knew from the beginning that it was them bidding.

This is not the first spectrum purchased by Dish. In the 2008 auction for 700 MHz Dish bought a nationwide footprint in the E Block. Dish also bought a nationwide 40 MHz-wide band of S-band spectrum at 2 GHz from TerreStar Networks and DBSD North America. Adding this all together Dish now has a sizable pile of spectrum.

So what do they plan to do with it? Nobody is entirely sure, but we know a bit about what they have been experimenting with. The E Block of the 700 MHz spectrum isn’t really usable for two-way communications. Last year Dish told the FCC that it was experimenting with using the frequency for various mobile television technologies. This included Mobile to Handheld (ATSC M/H), Digital Video Broadcasting Handheld (DVB-H), Satellite Services to Handhelds (DVB-SH), and China Mobile Multimedia Broadcasting (CMMB). They also could use the spectrum in an LTE network to broadcast some of their satellite service directly to handsets.

If they can get happy with one of these technologies, then they could then offer a mobile TV service. You might remember that Qualcomm tried this a few years back and offered a dozen or so TV channels for $10. That venture was a failure. But since then the world has changed rapidly. There are now a lot of smart phones and tablets and there are a lot of people looking for ways to bypass their expensive cable packages. One only has to look at the success Aereo has had in major cities to see that the time might be ripe for such an offering. And Dish already has the programming and would avoid Aereo’s legal woes.

Dish is currently testing wireless broadband in Virginia and will be testing it later this year in Corpus Christie. They have made a deal with Sprint to use the spectrum from Sprint cell sites and they could use this spectrum to bring broadband to some parts of rural America. The amount of bandwidth they can deliver would not be competitive in metropolitan areas, but it might be welcomed in those parts of America where there is still no real broadband.

Like all wireless data technologies, the speeds anybody gets is going to depend largely on how far away they are from a transmitter. But one would think that this technology could deliver up to 20 Mbps download close to a transmitter and maybe 3 Mbps download four or five miles from the transmitter. In places that still have dial-up that could be a good new option.

This would also bring broadband to those same areas where Dish sells a lot of satellite TV. This would allow them for the first time to offer a bundle of services, something they have always wanted to do. They already have some of the cheapest television prices in the country, since it is cheaper to operate satellites than it is to operate wireline cable networks. They could become quite profitable with the bundle – and one would suppose this would also bundle in Sprint cellular service.

Rural America needs broadband badly. What Dish is looking at is really not a great solution, but it is a lot better than what is there today. The only problem I see with this idea is that once Dish delivers slow broadband to a rural area that other providers are going to be even less likely to invest to build landline networks to bring real broadband. While 5 Mbps sounds like heaven to somebody on dial-up, it doesn’t give the rural customer the same speeds and benefits gotten in urban markets. The data speeds in Cities is getting faster all of the time and there is a growing list of places that now have an option for Gigabit fiber. As much as I appreciate what Dish is contemplating, I also fear that their bandwidth could relegate rural markets to a permanent slow Internet hell. The FCC would no longer worry about such areas because they would consider that they have broadband. Which is a shame, because this is not broadband that can help rural America thrive, but rather will just keep them limping by.