Even Google needs video to compete against broadband incumbents

17 April 2015 by Steve Blum
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Cut the cord carefully, if you bleed Dodger blue.

Video is an essential part of high speed broadband service. That’s the conclusion that Google has apparently reached. Google Fiber exec Milo Medin spoke at a conference in Florida earlier this week and, according to a story in Fierce Telecom, said…

What we have found is that while it’s not necessary to offer voice service because of wireless [substitution], if you don’t offer a good TV service your ability to compete with incumbents that bundle Internet and TV together is significantly impaired.

The ability of Google or any other new entrant in the broadband access business to offer television service, though, is also significantly impaired. Content companies charge small pay TV companies more per household than large ones, and some programming – particularly prized local sports programming – is completely unavailable. Medin pointed to Time Warner’s exclusive lock on L.A. Dodger games as an example of why Google Fiber won’t be expanding to southern California anytime soon.

Although more and more homes are doing without cable or satellite television subscriptions, it was only last year that the total number of U.S. pay TV subscriptions started to slip. According to the SNL-Kagan consultancy, there were about a quarter million fewer cable and satellite households in 2014 than in 2013. But that’s barely a tick in a market that claims 100 million of the 116 million homes – 86% – in the U.S.

Control of high value programming and a commanding share of video subscribers is a huge advantage for any broadband provider, which is why Comcast bought NBC/Universal and lusts after Time Warner. Television and Internet access services are not separate, stove-piped businesses, [preliminary decisions by a California Public Utilities Commission administrative law judge]() not withstanding.