The Death of Cable  

Moneybox
A blog about business and economics.
May 20 2013 4:32 PM

Cable Is Dying, But Is It Losing to Cord-Cutters or to Fiber Optics?

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Above you'll find the Leichtman Research Group's analysis of what's happening in the multichannel pay television ("cable") market over the past quarter and the past year. Basically, cable companies are bleeding subscribers. Janko Roettgers at Gigaom seems convinced that we are at last seeing the rise of the cord-cutters.

I think the picture is quite a bit less clear than that. If you look at the past year, there's been a net reduction in the number of people subscribing to pay television. But if you focus on the last quarter, high-end fiber optic services from Verizon and AT&T have grown faster than cable has shrunk. The yearlong view supports the idea that cable is losing out to the cheaper alternative of cord-cutting, but the quarterly view suggests that cable is losing out to high-end competition from fiber. That those two interpretations are out there only underscores the extent to which the cable industry is in long-term decline faced with competitive threats on both sides.

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Something to note if cord-cutting does continue to gain traction is that although you can save a lot of money by canceling your cable right now and just getting broadband (this is what my wife and I do right now), if everyone drops television service, it's likely that the price of broadband will rise a lot to compensate. Just as a la carte won't fix cable, cord-cutting won't really fix it either. The issue is that there's a lack of competition in the industry and every different approach to regulation you can think up has serious problems associated with it.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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