In the world of pay television, news doesn’t get much bigger than the headlines that splashed over newspapers and online media organizations in the middle of February announcing Comcast’s $ 45 billion dollar takeover bid of Time Warner Cable, Inc.
The merger, if it’s allowed to go through, would dramatically change the cable TV business landscape by essentially making Comcast, a mega company as it currently exists, the largest cable television provider in the nation.
While it’s easy to get the fainting vapors, once again, about another potential cable television merger squelching competition and limiting consumer cable TV viewing and payment options, there’s a far more ominous specter lurking in the obvious but somewhat ignored details of the deal.
Simply stated, cable television business models don’t have much left in the way of shelf life. Cable television as a business is probably financially viable for another 10 or 15 years, but the real future of television lies with broadband Internet.
As broadband Internet television continues to spawn streaming video options like Hulu, Netflix and others, in conjunction with the expanding world of handheld WiFi-enabled devices, it’s easy to imagine a straight cable television completely disappearing as it melds into the exploding world of broadband.
And therein lies the ominous specter lurking in the potential Comcast and Time Warner merger. A good, standard quality streaming video typically requires a broadband connection of more than 2Mb / s, while a high definition stream can require 4Mb / s or more. Once you start factoring in high quality audio, plus any concurrent downloads or uploads, you can see a considerable jump in your broadband requirements.
For Time Warner Cable, such substantial broadband requirements haven’t been much of an issue. As a Time Warner Cable subscriber, you could pretty much binge on as much broadband each month as you wanted. In fact, most Time Warner Cable customers probably weren’t even aware there was such a thing as putting a strain on broadband.
On the Comcast side of the coin, however, broadband is a relatively tightly held commodity where customers are regularly capped at how much broadband they can devour during the course of a month. Granted, Comcast’s broadband caps are fairly generous as they apply to casual or even medium broadband users, but the broadband gluttons (gamers) can and do hit their broadband ceilings. Generally, Comcast doesn’t radically enforce its caps, but that can always change.
So, back to the Comcast and Time Warner merger. Should the merger get the nod of approval from the government, you’ll have the larger company, Comcast, with its broadband caps, buying out Time Warner, with its casual approach to broadband. Therefore, what you possibly have on the horizon is a multitude of Time Warner customers who are used to unlimited broadband suddenly being informed that broadband caps now exist. Further, you’ll have a company that just shelled out $ 45 billion in acquisition costs looking to fill its coffers.
The question just begging an answer is this – will the merged Comcast and Time Warner venture decide to start clamping down on customers who regularly exceed their monthly broadband allocations? Will there be financial penalties incurred?
The answer is … probably.
Again, we have to go back to the emerging realities of streaming video. As the streaming video technologies continues to grow, evolve and improve, and as more streaming video providers enter the marketplace, the need for more broadband to accommodate ever growing video streams means current broadband caps will be surpassed more regularly. The financial impetus to penalize the most egregious broadband cap violators will almost certainly become too tantalizing to pass up.
Of course, it’s also entirely possible that advances in broadband technology could push broadband capacity to heights previously considered unattainable. Broadband capacity could outstrip demand, keeping prices stable and pushing broadband caps so high only a select few could continue to surpass caps. As with all technologies, only time will tell, and probably not all that much time at that.