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Guest Host: Jim Asendio
Technology is making it easier for consumers to “cut the cord” on their cable subscriptions. Netflix now offers access to a larger online library of premium films. Apple and Google are diving deeper into the entertainment business. We explore what this means for traditional home entertainment providers and the consumers who use them.
- Cecilia Kang Washington Post Technology Reporter
- Greg Sandoval Senior Writer for CNet, author of the "Media Maverick" blog
MR. JIM ASENDIOFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your community with the world. I'm news director Jim Asendio, sitting in for Kojo. Life without cable TV doesn't have to mean life without your favorite shows or movies. That is if you've got a good broadband connection where you can watch new episodes on Hulu, stream first-run movies on Netflix and catch live sports on ESPN.com. And tech companies such as Apple and Google are preparing to dive even deeper into the entertainment business. Problem is, cable companies don't want you to cut the cord on your subscription so easily.
MR. JIM ASENDIOJoining us to explore what this online revolution means for entertainment providers and consumers are Cecilia Kang, she's a reporter at the Washington Post and she's here in the studio, and on the telephone, Greg Sandoval, a senior writer at CNET where he's the force behind the "Media Maverick" blog. And he's joining us by phone from New York City. Thanks for joining us.
MS. CECILIA KANGThanks for having us.
ASENDIONow you listening online or on your radios, you can join us by calling 1-800-433-8850. You can e-mail us at firstname.lastname@example.org. You can also get in touch through our Facebook page or by sending a tweet @kojoshow. First to you, Cecilia. Cutting the cord to your cable box is no longer a fantasy. There are TV programs and movies streaming along the web into your home, a lot of which are available for free. Well, it's my understanding that both of you -- both you and Greg are trying to cut the cord yourselves. Are you making that work? Or how is that going? (laugh)
KANGThat's right. Thanks for reading our work online then. Thanks you've been following us. For myself, I have cut the cord. We moved, my husband and children and I, about six months ago and we decide not to subscribe to cable or Telco TV Subscriber. And I'll tell you, the experience has been a little tricky. There's a lot more -- there are a lot more options out there. It's not as easy as I thought it would be. And it really made me think about somebody who may not be quite as tech savvy, who may not have as great of a broadband connection as I do, and what the experience for them might be. But I do think that there's a lot of opportunity. It's just sort of messy right now. I don't know, Greg, if you would agree with that.
MR. GREG SANDOVALI cut about a year ago. I haven't had cable television for about a little, probably a little over that now. And I have to tell you, I haven't had any problems. Although I'm different than most people. I'm not a big TV show watcher. I watch a lot of films. I'm a film fan. And that's what solves most of my, you know, entertainment, film watching or TV watching needs. It's super easy. It's -- this -- the Microsoft's Silverlight technology, it provides a really great picture. And we're setting up the Roku box pretty soon, my girlfriend and I. And the picture on it, I've had it before, and it's beautiful. So if you're not somebody that watches TV, you know, everything on TV and lots of different channels, I mean, you're following lots of different shows, I think the dropping of cable is pretty easy.
ASENDIONow, both of you talked about the, you know, severing the ties and how your degree of tech saviness. Back up a little bit. What about your ability to continue to say know when you talk to some of the cable company? Because anytime you try to end a subscription these days or anything...
ASENDIO...they are incredibly insistent. No, (laugh) we'll give you 150 years for free. No, we'll come to your house and turn the channel but for yourself.
ASENDIOHow did you go -- how was that process like?
KANGThere are lots of ways that a service provider would like to keep you as a customer. And one way is an early termination fee. Though when we moved, the -- a contingency of our contract was that we could stop our contract with our particular provider. So that was fine. But, you know, lots of different offers thrown our way. And we just said, thank you. Thank you. No. But the thing that keeps us as their customer is that we are still this particular provider's broadband subscriber. So, yeah. I mean, they ask us if we wanted to pay TV and all these things. And we said, you know, for a little while, we'd like to see how it goes. And I wanted to just go back to one thing that Greg said, which I think is interesting, is if you are a TV watcher -- and I'll admit it, I'm a TV lover. I love "Mad Men." I love "Sopranos." I love "Glee." I love all these shows. And I love to...
ASENDIONow, are you a real-time watcher or do you record everything?
KANGAnd you have to know that I -- well, I do both. I watch real time and I record. But I do like to be at the water cooler the next day (laugh) in the office saying, wasn't that hilarious what Sue said on "Glee?" You know, I like those conversations. And I like being part of the mix, you know? And that's what I think part of -- being part of society in some ways. I think a lot of people like to be part of that pop culture mix. So that's been a little bit hard and it show. And it sort of points to this problem at this point is if you're going all Internet for TV, you -- content is still king. And content providers aren't necessary willing to put their first-run shows and movies on right away at these -- to these new platforms like Roku and Boxee and Google and Apple. And things are changing, but still not quite there yet.
ASENDIONow, I thought I was pretty much up on things being the news director. But you, you know, Roku and about Boxee and -- Greg, could you talk about the different options that are available right now?
SANDOVALWell, right now, the leader is definitely Netflix, right? So you have just a wide range of set up boxes from Xbox to the PS3 or a PlayStation, Sony PlayStation, Roku box, multiple televisions that will allow you to or enable you to stream your Netflix shows, movies unto your television set in the living room or wherever it is. So the pictures are great. It's supper easy to transfer. Netflix is, by far, the most dominant. But now we have Apple coming. Apple TV, they just came out with an upgraded version of their Apple TV. Google is working on its own streaming television, and Hulu is out there. You now have the free Hulu and a premium Hulu. You can pay that -- I think it's $10 a month and get, you know, like, Cecilia was talking about, you can get first-run TV shows. So this is relatively new. And I want to say I'm a Hulu user. I think it's great. I do have one fix. I love "30 Rock." And I can get it with Hulu premium and back episodes. So, like Cecilia was saying, it is coming. The Internet tech guys are getting more content. The technology is getting easier to use. I think cable television is in big trouble.
SANDOVALI think years and years of alienating their customers, you know, with all these stations and cable stations that you have to pay for, have to get. They've not given us a la carte. Their customer service is not known for being great. I think these chickens are coming back to roost.
ASENDIOThe Business Week recently had an article that said Hollywood is having a hard time deciding if Netflix is a friend or a foe. The fast-growing movie service has already helped drive DVD retailer Blockbusters to the brink of Chapter 11. And, now, Netflix is poised to take on the premium cable giants, like HBO and Showtime. Do you see Netflix as leading the way here?
SANDOVALI'm sorry. Was that for me?
SANDOVALYeah, yeah. Oh, absolutely. A year ago, in October, I went out to Hollywood, and I met with all kinds of different studio executives, people -- the MPAA. I talked to everybody, and they were telling me, "Hey, listen. Netflix is gonna have to pay up because they keep reporting these big, you know, huge quarters with big profits, and we want to see a share of that." And they were kind of down because Netflix has always been something that they've been afraid of, right? Netflix doesn't send them back, typically, the big margins that they used to get in the studios, in Hollywood. And they look at kind of Netflix kind of maybe a rogue player, a wildcard, out there.
SANDOVALWell, just recently, the headlines have been filled with how Netflix is paying big bucks to the studios to get content. And now, I went back there a few weeks ago, and everybody is happy. Everybody is essentially slapping Netflix on the back. They're seeing their money. They're seeing the revenue. And I'm sure they're happy to have a new competitor against the cable guys. So I think that whole thing about Netflix not being able to get content, it's over. They've shown they're gonna get it.
ASENDIOLet's go -- there's some comments from Facebook. And from Brian. He said "I tried twice to quit cable, and Comcast kept dropping my rate." (laugh) And so every time he said, "No, no, no," they said, "Okay, I'll go lower." "Oh, no, no." "I'll go lower even still."
ASENDIOAnd from Katie. She says, "I had to have cable for over a year and see no reason to subscribe given that virtually everything I would want to watch can be found online or through Netflix's watch instantly options."
ASENDIOAnd from Patricia, "I'm about to quit cable. I was told two months ago that in order to get basic expanded cable, it would cost me $62 a month. Others were getting it for $17 a month. Oh, yeah, I was born yesterday."
ASENDIOAnd here's an e-mail from Amy about Roku for Netflix. "In 2001, my husband and I got rid of cable after being sick of 9/11 coverage. We used rabbit ears and now digital rabbit ears. We get lots of channels with just this, including 12 different PBS channels and many international news channels. There are lots of options for kids, too. We've always had a Netflix subscription and now have felt an amazing change by getting Roku. Why aren't more people going the Roku way? More channels going to be developed. I love it." What's your experience with readers all on Roku?
KANGSure. I think that your -- that last comment kind of says it all. There are a lot of options right now. And, like Greg said, things really feel like they're changing, and that we've been talking about Internet TV, you know, for watching TV over the Internet for a long time, but it was really sort of an outlier thing for kind of people who are very tech savvy and who could figure out how to, frankly, find peer-to-peer downloads to things that were not okay by Hollywood or to find content in a smart way by searching and connecting your laptop through your TV. And it took a certain amount of tech savvy, but things are changing right now.
KANGAnd what I think is very interesting is how, as that first commenter said that you read, is how the cable companies are responding. And one thing they're doing and one thing Comcast is doing, Time Warner Cable and some satellite companies, is they're trying to make sure that their cable subscribers stay as subscribers in some way through a new model called TV everywhere, which is essentially where they offer only those who subscribe to broadband and cable, say, you're a Comcast subscriber to broadband and cable, then you also have access to certain shows on, say, a mobile device in the future.
KANGBut the point being is that you -- they want for certain to give only certain content to those who subscribe to broadband and cable. So it shows you just how fiercely competitive this is, and, frankly, how much a lot of the cable and the satellite and the telco, paid video providers fear new competition of what it might do to erode the sense that this model that they've had for quite a long time, which is very comfortable. They essentially have monthly subscribers that subscribe to big bundles of packages. And you hear over and over and over and I am to answer questions, Jim, I hear over and over and over from readers that they don't want to have 120 channels of which only two that they really watch and they care for.
KANGSo, you know, this sort of model that's been kind of put on your plate or forced fed to consumers is how a lot of my readers feel is changing as to how easy that's gonna be, how some of the new bigger players like Netflix will be a big threat. I totally agree with Greg. They're really leading the way. But what they do with how they serve up video on the Internet to subscribers is, you know, those models, we're not quite sure how that's gonna play out down the road. So there's more choice. It's a little messier. Cable providers are responding by, you know, trying to withhold their subscribers through certain deals and promises of only certain shows that you can see if you were subscribers.
ASENDIOWe're speaking with Cecilia Kang, a reporter at The Washington Post, and Greg Sandoval, the senior writer at CNET. We'll continue with our conversation after a short break. Please stay tuned.
ASENDIOAnd welcome back. I'm news director Jim Asendio, sitting in for Kojo Nnamdi. We're talking about broadband and Netflix and Roku and Hulu and Comcast and all of these content providers. Everyone wants to be your new best friend, whether it's for free or a subscription. We're speaking with Cecilia Kang, a reporter at The Washington Post, and also on the telephone line, Greg Sandoval from New York, a senior writer at CNET and he's of course behind the Media Maverick blog. Let's go to the phones right now. We seem to have struck a cord with some people. So Matt in Washington, you're on the air. Go ahead.
MATTOh, man. This is a great show. This hits home hard with me. I'm sitting at home looking at my TV. I only like watch, like, maybe two channels and I'm paying almost $200 a month for cable. Comcast, I got rid of it. I couldn't take it anymore. I used to call them -- not to mention the service is really bad, customer service stinks -- and I used to complain and I used to always end my conversation with, if I ever get a billion dollars, I'm gonna start being a cable company and I'm gonna do it so that my customers can pick and choose what they want and only pay for what they watch. I mean, listen. I don't pay for gas when I'm not at home and I'm not using it. I don't pay for -- I mean, I only pay for electricity I use. Why am I paying so much for cable when I'm not even home and not using it, plus all these channels that I don't watch? And I don't speak Spanish, so I definitely don't watch the Spanish channels. I mean, I can go on and on and on and it's, you know what? You know what'll be a great business? If somebody would make up a service where I could call them and tell them what I watch and they could tell me how I could bypass cable and everything and get it for free.
MATTAnd just charge me one fee for it.
ASENDIOThank you, Matt. We seem to have tapped into a vein...
KANGWe certainly have.
ASENDIO…of a popularity and -- or populist demand that Matt says he's gonna start a company and -- I can imagine, you know, even though you have the settings, your favorites you can exclude, how many people do that? I know -- so many people tell me they're frustrated. Just to go from channel to another, they have to go through 300 other channels.
SANDOVALPeople are angry.
SANDOVALPeople want something different, and that's the other thing that's pressuring Hollywood to look for alternatives to cable. What we have coming now, it is easy to -- it's starting to get easier and easier to download illegally on BitTorrent sites and what we call these or what they call these streaming, illegal streaming sites where you don't even have to download any software. The sites that reside outside the U.S. that you just go through a link, you do a Google search and you can find your show that's available for free on unauthorized copy and you just stream it, like you're streaming from Hulu or any other popular streaming services. It's that easy. Hollywood knows that if they don't offer consumers a low-cost, easy-to-use alternative, they know that these pirate sites are gonna take the share away from them, and they're not gonna get it done.
ASENDIOYou can join...
SANDOVALThat's another card that hasn't been played by NetFlix. NetFlix is important in helping Hollywood avoid the piracy.
ASENDIOYou can join us by calling 1-800-433-8850, e-mailing us at email@example.com. Get in touch with us through our Facebook page or by sending us a tweet @kojoshow. Let's go to Cindy in Annapolis. You seem to have cut the cord and doing quite well.
CINDYYeah. We cut the cord six years ago when our first son was born, and we really did it for him. We didn't wanna have a kid who was plugged in, so we got rid of the cable, we got rid of the TV altogether. And for our family, it's really paid off because we have, you know, a 6-year-old now who can fly from East Coast to Hawaii, 18 hours and not get plugged in and keep himself entertained or stand in line at the DMV with mom and not need to be entertained and really have a fantastic imagination, and we've all become more creative and better at exploring the world around us for it.
ASENDIOTalk about a little -- he's six years old, so I'm sure he's having at least elemental conversations with his peers and they say, oh, did you see so and so? Oh, I've been watching such and such. What's his answer?
CINDYThey don't talk about it, really. I mean his friends are plugged in. I mean, I would say he has a few who aren't plugged in, but most of them are, and they either don't bring it up because they have other things to talk about or he steers the conversation away. He knows that there's more interesting things. He'll say, oh, I don't know about that, but hey, let's go dig for treasure over there. And he manages to just make, you know, what he knows part of the conversation and move on from there. It doesn't bother him at all.
ASENDIOOkay, thank you very much for calling in. Now, Greg, I understand you have to go in a couple of minutes, so I wanna get back to Hulu and Netflix. Now Hulu is free, Netflix is a subscription service, but there seems to be growing frustration all around that these content providers are not always providing the best content. Can you speak to that?
SANDOVALThey're gonna get more. It's happening. They have Pipeline. They have Hollywood's attention. And Hulu, I should say too, has a free service and it has a subscription service which offers a lot more of what they call premium content, like the latest show, lots of shows from past seasons. You can get what you want there. And they're gonna get more, I'm telling you. Reed Hastings, the CEO of Netflix, is in Hollywood, and he's writing checks. And that's the -- what Hollywood listens to, and they don't care -- they're not married to cable. It's been a good partnership for them, but they're always looking for the next best thing to protect their business. And you're gonna see Netflix getting a lot more of the shows that people wanna see.
KANGOh, I was just gonna say, you know, we should keep in mind that you do have to pay for Netflix, and you do have to pay -- you know, these are subscription-based services too. So it's not -- there's a lot that is free. It's difficult when you wanna go all free on Internet still for video. But I think an important thing to keep in mind and, you know, with the -- this -- the listener who called in, and talked about, you know, I'm just tired of, you know, that you're speaking to me with this content is expensive. And why -- and he said, why do I need to pay for a hundred, 200 other channels when I only want two? And this is something that -- and I'm gonna walk out right now, but at the Federal Communications Commission, the former chairman tried to make cable channels available a la carte.
KANGSo you could just subscribe to, say, if you only want Disney and ESPN and MSNBC, let's just say -- that you'll be able to choose a la carte. That was perhaps one of the toughest battles, and he did not win. He lost, completely lost on that. It's very difficult to -- because the economics of this is difficult, content is very expensive to create at the same time. So there's a bigger economic story that sort of encapsulates all of this, and this is something that -- then that's what the cable companies will say, is why is it that you need to have these bundled packages? It's because for the fees that they charge for one or two shows, they need to be able to, you know, get other deals for other content as well. And, you know, not everybody agrees that that's really true…
KANG...if the economics are true.
SANDOVALI'm gonna play devil's advocate.
KANGCecilia let me play devil's advocate.
KANG(laugh) Go for it. I was waiting for it.
SANDOVALThat's their problem. That's their problem -- that's the cables guys. Let them worry about that. Their customers are saying, we want more value for our money.
SANDOVALAnd Netflix has given it to us. We pay $10 a month for our Netflix account. You know, some people are paying $100 for their cable.
SANDOVALLet them worry about paying these fees to their -- these content providers. The customers want value, and that means a la carte. This should have happened a long time ago.
SANDOVALForget about the government. The cable companies should be doing it because that's what their customers want.
ASENDIONow Greg, can you talk about the maturation of the consumers, because when cable first came out, it was -- oh, yeah, I'll pay as much as you want, because I wanna be on this new thing. And it seems the world has turned 180 degrees to where it's yeah, it's out there, I know it's out there, but these are the only the things I want, and now I'm in the driver's seat.
SANDOVALI'm sorry. I couldn't hear that last part, forgive me there. It cut out a little bit.
ASENDIOIt seems that the consumers now have gone from oh, yeah, I wanna join the band wagon, too. No, I wanna drive, I wanna drive the team now.
SANDOVALYes, they have more options. They have more options and we're talking years and years of consumers paying big fees for their cable and you always hear people, you know, about the bad experience that they've had and just basic customer service. This is a long time coming and this is a story we've already seen before. I'm gonna point out -- people used to complain about the music industry, about having...
SANDOVAL...to pay CDs, for CDs with two songs on it. When they are given the power, which the Internet provides as we know what happened when the music industry -- when they're given this power, you know, they had the ability to share music without paying for it, the same thing is happening in cable. The Internet is giving them an alternative, and now they're ready to jump on this new thing because it is giving them more value for their money. And, you know what, you have to forgive me, I have to leave. I have to jump off here on another story.
ASENDIOOkay, he is Greg Sandoval, the senior writer at CNET. He is the force behind the Media Maverick blog. Thanks for joining us from New York on the telephone. You're listening to "The Kojo Nnamdi Show." I'm Jim Asendio sitting in for Kojo. We'll be back in a moment.
ASENDIOAnd welcome back. I'm news director Jim Asendio sitting in for Kojo Nnamdi today. I'm talking with Cecilia Kang, a reporter for the Washington Post. We're talking about the future of entertainment and coming into your home, whether it's through cable companies or online services. We have this e-mail from Jason in Cleveland Park, "Cutting the cable cord, I think quitting cable TV would have been much easier 10 years ago. I don't have cable right now because I'm cheap. Does that mean I watch less TV? No, it means I watch a lot of bad TV, think "Wipeout" and "America's Got Talent." (laugh) I can't even watch "Monday Night Football" anymore without cable because it's on ESPN some of the time. And I'd like...
ASENDIO...to say that I could watch a lot of cool things on Netflix through my PlayStation 3, but my Internet connection stinks. I got halfway through "The Men Who Stare at Goats" the other day, and I lost my connection. The worse part about it, the movie was terrible." (laugh) Now, we're talking about people cutting the cord, and that there seems to be a movement afoot. But, Cecilia, talk about the numbers. Are we talking about...
ASENDIO...early adopters who are cutting the cord?
KANGRight. I mean, there's a lot of excitement right now about it. But in truth, the data is -- shows that it steals up a small portion of really the TV viewing audience. Only 4 percent of all video is viewed over the Internet. So I mean, it's still a small portion. But at the same time, this last quarter, in the second quarter, was the first time that the number of paid television subscribers fell, ever, the first time ever, down 216,000 customers. This is a report by -- a research from Kagan. And that was compared to, you know, just a year earlier, as network subscribers increased 378,000. And a lot of it is the economy, you know, people are deciding if they move, then they're not going to subscribe. That was the case with us and my family.
KANGPeople are, you know, when they -- look at their household budgets, they're seeing that $100, $200 a month on communications including TV perhaps should be whittled down, and the TV portion should go down. There's lots of decisions. And again, the other force at play is that there's more content available online. And I think your listener with that last comment was so -- that's a really interesting perspective, that 10 years ago, it might have been easier and then there is -- it sounds like he's saying there's kind of a lot of junk out there right now, and it's -- it would have been easier to cut way back then. But the truth of the matter is, is that it's growing, but slowly. And the number of people who are actually watching streaming online videos continues to grow, but it's still small. It's still small, but it's enough of a threat.
KANGAnd what's really interesting is that the fall lineup this week of -- broadcast TV line up, there's more spent by the networks than ever before. And it shows that broadcast is still where money is being made. And that's why you're gonna always see a resistance from the networks from Hollywood to broker these deals with, like, Netflix, and Roku, Hulu, and all these other -- well, Hulu is one of the networks, but, Google TV, Apple, the -- sort of the uphill battle they face is that these -- that Hollywood, the content companies wanna make as much money as possible, of course. And they're making the most money through the traditional model of partnering up with cable companies. And so that's a hard model to break. And it's a model that not also -- that also we should say that not every consumer wants to break.
ASENDIOLet's go to the phones now, Alexandria, Va. Mohammed, you're on the air. Go ahead.
MOHAMMEDJim, thank you very much for accepting my call. And my comment was -- actually nowadays, you can have HDTV with free, you know, programming, you know, your basic channels and some additional channels actually, which when I went to buy a HDTV and put an antenna, like back in the day, you can be able to watch the channels. And also Hulu online, it's great, you know, I can see all other shows which I missed.
ASENDIOYes and a lot of people, you know, they tune in to television or they have cable for certain reasons. Now we have Chris in Arlington, what's your concern?
CHRISI wanted to talk about the availability of sports online.
ASENDIOSo that's what you use your TV most, to tune in sports whether it's cable or broadcast?
CHRISRight. Right. I mean, you know, it's something that is definitely keeping me hooked to my cable company. I have -- well, it can only be called an addiction to, like, college football and the NFL, I think. (laugh) And, you know, I would love to get away from, you know, the cable company, but, you know, that is something that I have run into. ESPN3 is great, if you're going through the right likely cable company for your Internet access, you know, and I think it's a good starting point, but the picture really isn't there when you hook it up to an HDTV. So I wanna see if there is any experience out there with sports online or any options that I didn't know about.
KANGYes. Sports is one of the biggest frustrations for anybody who wants to try the Internet for all of their TV. In my household, where we couldn't watch the World Cup this past summer and the games we wanted, we'd have to go to a bars, local bars because it's so hard to find. So I think what the listener should keep in mind is behind the scenes, there is intense negotiations between carriers, the cable providers and the Internet companies, and the content creators over deals and payments and fees to carry content. And so you -- the answer to your question, which is a question that millions and millions of people are asking, where am I gonna able to watch my college, you know, ball sports or whatever over the Web and just go to one website and hopefully for free, these are being negotiated in deals, in -- with contracts in boardrooms that, you know, that we're not privy to.
KANGAnd so, those are what's gonna ultimately determine what you can watch on TV when it comes to sports and a lot of programming. I think that there's yes, in some ways, the consumer is in the driver's seat, but in many ways not. It's -- a lot of it, it has to do with the deals that are being negotiated. And obviously, Netflix is -- we're talking about Netflix as being sort of a leader in new models, but that's because they are able to broker these deals, these backrooms that I'm talking about, in a way that benefited them, and work for their own business model. So this is very much a business store. As much as consumers, I mean, if, you know, frankly, if the consumer interests or, you know, calls by consumers to change the model where the only determinant, things might have changed a long time ago, you know, because people talked about this for a long time.
ASENDIONow, we have an email from Steve that says, "Accessing online content outside the U.S. Most of the services mentioned are restricted are to users outside of the U.S. This also seems to be the case for programming coming from the BBC. As I live outside the U.S. and all the content I want is coming from the U.S., I was hoping your guest might have some advice." And we also have Carmen from Glen Burnie, Md. who has some questions about how the services differ from the United States and Europe. Carmen, you're on the air.
CARMENYeah. Hi. Thanks for taking my call. In the meantime, I've got a couple of other comments. But, first of all, I know that in Eastern Europe, I don't -- well, what used to be considered Eastern Europe, and I think it's throughout Europe, people just pay for getting a satellite dish on their house. And then they just get TV. They have 250 channels. They can pick up whatever they want. There aren't any monthly fees.
CARMENSo it's a one-time cost. Period. And here in the U.S., I mean, I've had cable and all we end up doing is just surfing it. There isn't anything on there.
KANG250 channels in Eastern Europe. That's pretty impressive.
CARMENSo what I've done is like the other person that you had on a little bit ago. With the HDTV, I've got an antenna of top of the house and I get everything I need. I get ABC, CBS, NBC. I got This that's a movie channel and a few other channels. And there's even an international one from -- the Easter from somewhere. I forgot. So everything is there. And then as far as sports, ESPN now has their own site on the Web. And my husband, he is an avid soccer fanatic and so he's been watching every night. He sits down and watches England and Germany playing on the Internet, stuff he can even get through cable even if you pay. (laugh)
ASENDIOOkay. Now, Cecilia, we seem to be hearing a lot of comments about there's so much on there. There's so much I don't really want to have access to. Why do I have to pay for that? You talked about numbers before, how many people are cutting the cord. What are the numbers in terms of particular channels? Is there a trend that more people who have cable will go to HBO or to Showtime, or if you have the cable company saying and the content provider saying that we have to spread the cost over so many different platforms, how do you do that? Are there leaders that, you know, they are paying for most of what we're receiving and we're getting all of these things for free that we really don't want?
KANGSure. So, you know, as far -- so definitely there are leaders in very popular channels. For example, you know, some of the cable news channels have become very popular. CNN and CNBC and MSNBC, and then there's HBO that's become very popular for paid -- you know, with additional paid subscription. And then, of course, the broadcast will always be popular. And then you have these newcomers, like Bravo and HGTV and some of these new channels that have become popular not with the same amount of -- not with the same audience as some of the broadcast channels and some of the news channels.
KANGBut that actually pointed the argument that the cable companies will say that they need to be able to -- that the ability to experiment and for new channels to come up is -- has been the product of these bundled packages and that new channels get a shot because, you know, somebody will be surfing and then they come across Bravo, and they realize, wow, I like "Top Chef" or "Project Runway," whatever it might be on that channel. So that's one argument that, you know, for bundled packages. And they would say that paying more sustains these -- supports these newcomer channels.
KANGSome people disagree that, you know, that that's really that the business model at play here and they would say that consumers should be -- have given the chance to just say, I only want them, Bravo and whatever it may be, ABC, HG and -- or ESPN. So it's -- there definitely are leaders who are sort of supporting the laggers and supporting the newcomers when it comes to bundled packages on cable.
ASENDIOWe're talking about the future of broadband and cable in entertainment coming into your house from various forms. You can join the conversation by calling 1-800-433-8850, emailing us at firstname.lastname@example.org, getting in touch with us through our Facebook page or sending a tweet, @kojoshow. You send that to @kojoshow. I'm Jim Asendio, sitting in for Kojo.
ASENDIOWe have this email from Kate, "Free online still isn't free. Free assumes an adequate broadband connection. What is the nature and cost of the least adequate broadband connection for watchable streaming and how -- and to how much of the country is this broadband available?"
KANGOh, that's such a good question. This is -- that's -- it's sort we should, you know, we should frontload the conversation with broadband really, because if you don't have a fast connection, then you're just gonna have a lousy experience. You're gonna have buffering. And, you know, for you, if you -- for anybody who's tried to watch most of their videos, say, on YouTube and you see that circle in the middle of the screen, go back and forth the buffering, it's extremely annoying. And so if you don't have -- and you -- if you don't have a good connection, then it means that you're just gonna have fragmented experience.
KANGSo, yes, you do need, first and foremost, a good broadband connection and that's not cheap, you know? Minimum payment for, you know, a good connection, and the federal, sort of, definition of broadband is fairly low. I think it was 700-something kilobits per second. And now it's, I think, been upgraded to about 1, I think, megabit. I might be wrong on that, listener. So excuse me if I am. But something like -- there is a big portion of the country that does not have broadband. That is, you know -- that is a problem that the Federal Communications Commission is trying to address. And if you don't -- so until you have broadband and a good connection, then all this conversation is for naught. It doesn't mean anything to you, you know. And there are certain pockets of the U.S. in urban areas, and some -- it's a small portion, less than 5 percent, but in urban areas and rural areas that don't have connections at all. And that's a problem because that means that, as we talk about this big transformation from the old cable TV broadcast model to the Internet, there is a segment of the population that could be left behind on all this.
ASENDIONow, you are listening to Tech Tuesday. That's why we're talking about megabits and, you know, gigabytes, (laugh) broadband and streaming. This is "The Kojo Nnamdi Show." I'm Jim Asendio, sitting in. Let's go to Tenleytown. Mike, you're on the air.
MIKEHi, Jim. Thanks for taking my call.
ASENDIOGlad to have you.
MIKEI wanted to bring -- oh, thank you. I just wanted to bring a perspective. I work for a software company downtown in Washington, D.C. And I work with a lot of 20-something, 30-something, and I'd say we're more the early adopters, kind of in that group. And I think it's funny. I'll go over to my friend's houses, and at night, there's just so many blinking lights because of all the boxes that we have beneath our television.
MIKEAnd my question is, is that what's really keeping us with Netflix, and especially with cable, is the HD streaming for the HD Food Network because it's what my wife likes, or the HD Sports, and essentially HBO. And I think until that gets put on line, people will still pay to have their cable. And I'll take my answer off the air.
KANGOh, yeah. Actually, before you get off the air, can I ask you what boxes are blinking underneath your TV, besides your cable box?
MIKEYeah, sure. Well, you have your router, (laugh) and then you have the wireless, then you have the Wii or the Xbox...
KANGMm-hmm, the console.
MIKE...so that you can get the streaming Netflix.
MIKEThen you also have the cable box there, as well as your Blu-ray player. (laugh)
ASENDIOAnd then somewhere in the basement of an apartment house or outside of a house, you have a -- an electric box spinning crazily... (laugh)
ASENDIO...to power all of this.
MIKEI'm telling you, it's not that uncommon. I mean, I know we're early adopters and we're probably spending a lot, but it's not that uncommon. And I think that's what it is. It's the HBO and some of those HD channels that keep us on cable.
ASENDIOSo would you say that a couple of days during the week of eating ramen is paying for all of it? (laugh)
MIKE(laugh) It's totally true.
KANGWell, content, definitely. I can't stress enough, it's all about the content. Until a Hollywood, a content creator, filmmakers decide to put their content on these new models, then, you know, it's just gonna -- you know, the models today will remain in place, and that's for sure. And I will say, though, that I actually did the math on how much -- is it cheaper, actually, or more expensive to do -- to go offline? And depending on what you get, it can be cheaper, for sure, than your cable subscription, depending on what you do, again. I mean, I -- the Netflix subscription is cheaper on itself, and we get it through -- we get Netflix streaming through our Wii console. And of course then you put in the cost for the Wii, but Wired magazine had a good little outline this last edition, this last magazine, on sort of the breakdown on the math. And they think it's cheaper. I'd be curious to hear from readers and to hear from listeners on what they -- if they find it cheaper or more expensive.
ASENDIOLet's go to Fairfax Station, Va. Liz, you're on the air.
LIZHi. I have a couple of comments, mostly about Hulu. One is that, you also came for content on Hulu because they have advertisements that you watch, and it's usually just a couple and they're kind of repetitive, but you're watching them. And so it's a little like a commercial TV experience in that way. The other is that I love it because -- well, I love it because I don't want to surf around. I don't want to have that Bruce Springsteen experience of (unintelligible). And so you go to Hulu because you realize it's the show you want to see and you just want to see that, which really, I think, the perfect solution for the people like the earlier caller and myself.
ASENDIOOkay. We got a -- sort of a deteriorating cell phone there.
KANGA bad connection there.
ASENDIOBut to her point.
KANGSure. Well, yeah, there are -- Hulu is supported right now. Hulu is a partnership between several broadcast firms, network operators, including NBC and Fox. And for now, much of the content is free and -- with advertising supporting it. But there is premium subscriptions available, and you can pay like a nominal amount for -- per show. But the bottom line is, again, this is very much an economic story that's driving this. This is very much a financial and business story. Hulu -- the partners of Hulu will tell you they're not making the money they want to be making. They're just, you know -- they -- the money that goes into advertising for TV is so much more, still, than the Internet. And I'm living that in the newspaper industry. Everybody in media is living that. We -- the money that you make online is just so -- is a fraction, still, of what's being fought over by the advertisers on radio and newspaper and TV.
KANGSo until that changes and the economics change, it's gonna still -- you know, these things are all kind of up in the air and moving targets. Hulu -- the partners of Hulu said that they cannot sustain themselves just on advertising, so that's why you see these premium subscription sort of models that are emerging. And so Hulu may be free today, but it may not be tomorrow. A lot of these models may be free today, they may not be tomorrow. I think there's a -- it's that they're just moving targets.
ASENDIOLet's go to Bob in Towson, Md. Bob, you're on the air.
BOBHi. I'm just been listening to the part of the show so that I may be repeating something someone else said. But this whole issue of using the Internet to watch video, on the assumption that it's free, except for what you pay for the Internet connection, that could change if net neutrality exercise turns into a situation where people are -- people who either send the signal or receive the signal have to pay a surcharge to watch a video. Has anyone seen that as a threat to the business, a way they keep the cable companies from -- or a way they allow the cable companies to keep their monopoly?
KANGYeah. This is -- in all of this discussion is a really interesting -- are many actually, very interesting debates in Washington from a regulatory perspective on telecommunications policy. Now, let me just -- try to not make this boring. (laugh) There is -- there's a discussion called net neutrality at the Federal Communications Commission. And the idea is how should cable and telecommunications firms that provide you Internet service treat content that go through their pipes, through the networks? And one discussion that is at play is this idea that maybe these carriers, the Internet Service Providers, can pair up with, say -- let's just say like Google TV, for a premium Google TV channel that might be $5 more or -- but this -- the quality is delivered at better access speeds and you just get a better experience all together.
KANGThese are some of the discussions at play. And consumer groups, groups that advocate for the public interest, are saying that that's just a lousy idea to allow for these sorts of partnerships because that means that new start-ups will -- won't get a shot against, you know, companies like, say, Netflix that -- say, if Netflix partnership with Comcast and decides to have, like, an HD channel that's like awesome quality. And a subscriber will only really have access to awesome scene of quality HD through Netflix in this particular channel. This is called paid prioritization. You're paying for priority delivery of service. That's at the heart of a really contentious debate right now in Washington. And that's really what net neutrality is about.
KANGAnd then another issue that can really influence things is a merger that's being proposed by Comcast and NBC. And what -- and not so much from a regulatory perspective, but how -- everybody sort of watching to see, okay, what happens when a big cable and Internet Service Provider owns so much content? And how are they gonna handle that content? And how will they disperse that content to competitors, to their consumers, and Comcast and NBC promised that they'll be fair? But everybody is sort of watching that as a test bed to see, you know, amid all this uncertainty and all these changing models, what's gonna be fair play for content if a company like Comcast owns so much of it? So there's lots of questions at play right now in Washington.
ASENDIOWhen you speak to the people in the companies, particularly lawmakers aside, are they able to project? Are they looking at a situation that the sands keep shifting and they really don't know where they're gonna be next week or a month out or two years out, that it really depends on technology, it depends on consumer demands, those kinds of things?
KANGSure. I think that there's so much uncertainty right now. And there's also a massive -- just a war, really, over who's sort of staking their claim first in getting the deepest footprint in the -- on so many different parts of this discussion from the content side, from the device side, from the software side, who's kind of putting their imprint in first, and making sure that they have the most flexibility, and perhaps the best advantage going forward. That's why Google is raising into TV and Apple is as well. And Apple wants to extend the same iTunes model they did for music in TV. Why not?
KANGIt's been hugely successful. Google wants to extend its Android software platform in the same way that they have for mobile devices and TV. So you can imagine they wanna have -- you know, the consumers have the ability to tap an application, just like you do it, like, say, on the iPhone or the Droid, and get a TV channel or a game or, you know, a video game or whatever. And there's just so many evolving -- there are so many evolving business models and everybody is really -- not even just raising, they're straight-out battling war -- bloody battle trying to make sure that they're the ones that are gonna be best positioned to make the most money to this massive transition.
ASENDIOWell, I'm gonna have to go home tonight, and check out my VHS and make sure it's not still blinking 12. (laugh) Thank you very much. Cecilia Kang, a reporter for The Washington Post. Joining us earlier in the hour was Greg Sandoval, the senior writer at CNET, where he's the force behind the blog Media Maverick. You've been listening to "The Kojo Nnamdi Show," Tech Tuesday. I'm Jim Asendio. I've been sitting in for Kojo. Thanks for joining us.
ANNOUNCERToday's programs are made possible in part by Joseph Perta, in memory of Max Pulgar-Vidal, whose 60th birthday would have been today.
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