Cord cutters, beware: AT&T's DirecTV buy affects you, too

Jun 25, 2014 1:29 AM

James Careless

Having cut the cable cord, you may glance at the current landscape of big cable providers snapping up slightly-less-big-though-still-large rivals and decide that these megadeals have nothing to do with you. After all, you're getting your entertainment from other sources--over-the-air antennas, online streaming services, and the like. What's it matter to you if AT&T buys up DirecTV or Comcast absorbs Time Warner Cable?

Quite a bit, as it turns out. Because it seems like one of the primary motivators for big cable providers getting even bigger is to make cord cutting an unattractive proposition.

That's not how the cable providers themselves might spin it. Indeed, in a regulatory filing earlier this month for its $48.5 billion DirecTV buy, AT&T contends that it will be better equipped to compete with Comcast once DirecTV is part of the fold, which means benefits to its subscribers. "Millions of consumers will benefit from new and improved bundles of broadband, video, and--due to AT&T's advanced network and nationwide customer base in mobile communications--wireless services," AT&T says in the executive summary of its regulatory filing. (You can read the full filing if you've got a lot of time on your hands and an insatiable thirst for regulatory paperwork.) AT&T repeated its promises Tuesday in a congressional hearing into the purchase, telling lawmakers that the deal will mean more competitive pricing among cable TV providers.

Programming behind a paywall

But read between the lines of AT&T's promises of "creating more value for programming partners and taking advantage of broader expertise in video, broadband, and wireless," and it's not hard to see a scenario where cord cutters get squeezed out.

Take sports. Buying DirecTV gives AT&T access to the satellite provider's popular NFL Sunday Ticket. Theoretically, AT&T could negotiate with the National Football League to extend this exclusive DirecTV service to the combined company's cable/fiber, wireless, telephone, and high-speed Internet subscribers--but to no one else. Those pie-in-the-sky dreams of someone like Google buying the rights to NFL games and making them available on the Internet? Forget about that happening. (At least cord cutters would still be able to stream broadcasts of NFL games from local network TV affiliates in some markets--assuming Aereo's ongoing legal battles are resolved in its favor.)

It's not just AT&T and DirecTV; a merged Comcast/TWC could control about 30 million cable subscribers, giving the merged company tremendous clout when it comes time to negotiate with TV content producers. And that's the big concern here: merged giants like AT&T/DirecTV and Comcast/TWC would be in an enhanced position to negotiate exclusives, preventing cord-cutters from seeing their favorite content online, especially live sports.

A bundle of trouble

And while programming may be at the front of the mind for cord cutters, there's also the matter of Internet access. A combined Comcast/Time Warner Cable, for example, is well positioned to offer even more preferential terms to people who bundle cable and Internet service into a single package, while penalizing cord cutters who just want broadband.

That poses a problem for anyone who doesn't subscribe to cable, says John Fetto, senior analyst of marketing & research at Experian Marketing Services. "The web is absolutely a serious venue for cord-cutters to access content," Fetto said. "Indeed, nearly a fifth of households that use Netflix or Hulu are cord-cutters."

And that's going to motivate mega-providers like the combined AT&T/DirecTV and an expanded Comcast to push multi-service bundling even further. The goal? Keep subscribers paying for content they don't want in order to get access to what they do.

"Although a la carte programming on the Web is possible, I don't think it is realistic from a business standpoint," says analyst Ian Olgeirson of media and communications research firm SNL Kagan. "It is not in the best interests of either the distribution network operators or the content owners to really break down their bundles and sell much smaller packages to consumers."

From the perspective of AT&T and Comcast, cord cutting is bad for business. And that's why their current business practices are aimed at frustrating it.

And they've got good reason for doing so. Fetto notes that only 6.5 percent of U.S. households are cord cutters, meaning they have high speed Internet, but no subscription to cable or satellite TV. Still, there's been a 44 percent relative increase in the share of households that are cord-cutters since 2010. "Interestingly, we're seeing that millennial households are almost twice as likely to be cord-cutters," Fetto notes, "which could potentially be a challenge to the current revenue models of cable and satellite companies if those households never become cable subscribers at all."

What's a cord cutter to do?

Despite the current wave of content distributor tactics, there are ways for cord-cutters to get much of the programming they desire without submitting to Big Cable/Fiber/Satellite. But the fact remains that the content distributors understand the ramifications of cord cutting to their bottom lines, and are thus motivated to do everything they can to make cord cutting as unattractive as possible.

To be fair, not all of the content distributors' tactics are negative. For instance, Dish Network is said to be putting together a basic over-the-top service that, for $20 to $30 a month, would give cord cutters access to some Disney-owned networks online, including ABC and ESPN.

Other price breaks might slow the cord-cutting trend. "Bringing the price of the combined cable and broadband packages down would likely help," Fetto says. "Another thing that may help would be for cable/satellite carriers to make it easier for customers to consume their content across multiple devices and from anywhere. The Internet makes consuming video on-the-go and across devices easier, but it can take a cord cutter considerable effort to find the video content they want to continue viewing online."

In the meantime, cord cutters would be well-advised to watch out for further mergers and to track the progress of the AT&T/DirecTV and Comcast/TWC deals. Just because you've walked away from a cable provider doesn't mean their influence over how you access programming has come to an end.


The golden age of cord-cutting is upon us. Don't let scare tactics tell you otherwise

Despite what cable apologists may tell you, a la carte pricing is poised to change everything.

How CVS and Rite Aid's wrongheaded war against Apple benefits Walgreens

Rite Aid and CVS weren't official Apple Pay launch partners, but shoppers armed with new iPhones found that the chains had near-field communication card readers that were compatible with the new mobile payment system--at least for a few days. Over the weekend, both companies blocked NFC recognition, uniting enraged iPhone and Android users and inspiring plans to boycott both chains.

Meet Ubi, the tiny voice-activated computer that wants to control your smart home

Ubi responds to voice commands to adjust your thermostat, answer trivia questions, send text messages, and more.

Share files quickly and easily with Jumpshare

If you need to share a lot of files online this service helps you do it quickly.

Thom Yorke's BitTorrent Bundle album hits 1m downloads in a week

The Radiohead front man's BitTorrent Bundle experiment is a success so far, according to BitTorrent.

Expert Opinion


Don't worry, be snappy: Stop complaining about your digital camera

When one has done something long enough (and, for the sake of this particular argument, let's say living can be reasonably counted among them) there's a tendency to take the long view--we have some notion of where we've been as well as how things are now. Recent complaints about the state of Apple and photography have compelled me to take a journey down the historical highway in the hope of gaining some perspective on just where we stand in regard to taking and making images with our cameras.


Why you should care about CloudKit

If you've lived through the last couple iterations of OS X and iOS, you've probably had the opportunity to develop a special love/hate relationship with iCloud. Apple's cloud service suite is made up of many different parts and systems, and while it's great when it works, it also has a history of being prone to hard-to-diagnose outages and, for developers, obscure error messages.


With Yosemite public beta, Apple's more open than ever

Just a few years after a big leadership transition, Apple announced not only a brand new operating system but said they would be offering a public beta to interested customers. Sound familiar? The year was 2000 and the OS in question was the very first version of OS X. Now, 14 years later, Apple's once again inviting users to come and check out the Mac's latest and greatest operating system before its impending release.


Apple's HomeKit hub may already be in your house

At Apple's recent Worldwide Developers Conference, the company announced--among a great many other things--HomeKit, a suite of tools for controlling such devices in your home as thermostats, furnaces and air conditioners, smart appliances, lights, cameras, garage-door openers, and security systems. Apple will provide a platform that these devices will be asked to conform to. Do so, and you can control them all from your iOS device.

Editors Pick

justin_tv-100367814-orig_500.jpg goes off the air

With all signs pointing to a Google purchase of Twitch, the company behind has shut down the live video service.


Verizon fires back at FCC over data throttling

The FCC called out Verizon for its plans to throttle customers with unlimited data plans who use the most data, so the carrier responded.


Wasteland 2 preview: When deeply branching gameplay meets pistol-packing post-apocalyptic priests

After a successful Kickstarter run, Wasteland 2 is almost ready for release


Business faces backlash after threatening $500 fines for negative Yelp reviews

Businesses who don't know how to manage their social media presence should remember that the Internet can be vicious.

Latest Product Reviews


Network Radar: Mac app checks your network health

Apple's own Network Utility is pretty handy for basic network troubleshooting, but if you need to go above and beyond what it offers, Daniel Diener's $20 Network Radar (Mac App Store link) is a powerful step up.


Asana: a full-featured task manager for iOS devices

The new mobile app for Asana's popular task management service lets iPhone and iPad users run their collaborative undertakings on the go.


MacBook Pro (Mid 2014): Minor update offers slightly better CPU performance

Last week, Apple updated its Retina MacBook Pro line, and while the new models are identical on the outside to their 13- and 15-inch predecessors, released late last year, the "Mid 2014" models feature processors that are just a little bit faster. As modest as these internal improvements are, they do provide more performance bang for the buck.


Contexts: Make your OS X windows more manageable

Contexts 1.4 supplements--and can even replace--OS X's window management tools, and it does so in a way that is legitimately useful, especially if you rely on keyboard shortcuts to navigate your Mac.


Keep it Reel: Record, mix, and release a professional recording on your iPad

The iPad has become an incredible tool for musicians who wish to quickly and confidently record and produce live music on their tablet. Recently, I had the opportunity to produce and record a session for Ella Joy Meir, using just my iPad, software, and recording accessories. Last week, I covered when you might want to use an iPad and what you need to get started; now, let's talk about the actual recording and post-production process.