Cable and satellite TV providers may have reason to worry
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Cable and satellite TV providers may have reason to worry

If Apple does indeed plan an iTunes subscription service -- and gets around to taking the Apple TV seriously -- these steps could pose a serious threat to the cable and satellite TV industries.

The hype of the digital conversion has long passed; however nine months after the long-awaited, frequently talked about digital transition, sales of over-the-air antennas continue to climb, reflecting not only the continued growth of over-the-air television, but a trend developing among the American people, according to Antennas Direct. As an US antenna manufacturer, it's not exactly an unbiased company, but makes some interesting points in a new report.

“From current economic conditions, increases in cable and satellite TV rates to the expansion of over-the air channels and new technologies, there is a bright future for digital television,” says Richard Schneider, president of Antennas Direct. He believes the facts are hard to ignore and says that over-the-air television is a cost effective alternative for several reasons.

The current economic conditions are causing viewers to question the cost and value of cable and satellite TV. Schneider says the expansion of multicast in local markets gives audiences more viewing options. In markets that broadcast 40 plus digital and HD channels for free, over-the-air television is becoming the new basic cable, he adds.

With services like Hulu, Apple TV and Netflix readily available, consumers can switch to over-the-air television without missing favorite shows and movies, traditionally found on cable channels.

Of course, billions of dollars have been invested by the government, broadcasters and American consumers in the DTV conversion, an investment that only supports the popularity of digital television. Original reports estimated that no more than 20 million DTV conversion coupons would be requested; however, more than 34 million coupons were redeemed, and a total of more than 64 million requests for coupons were received.

So, not surprisingly, digital television is a growing trend and increasing in popularity. The FCC reports that only 10% of American homes rely solely on over-the-air TV signals; however, Schneider says these numbers don’t take into consideration the 35-50% of households that use an antenna as a supplement to pay TV. Close to 50% of the 114 million TV-watching households are using an antenna, he adds.

According to Antennas Direct. Europe, which had an earlier digital transition than the U.S., has seen its over-the-air audiences explode in the three years since its conversion; almost 50% of all households in the United Kingdom are over-the-air only. The U.S. may follow the trend in Europe, Schneider says (and, obviously, hopes).

Of course, there's no way that antennas alone are going to kill off cable and satellite TV. There have been rumors (and they may be nothing more) that Apple wants to offer an iTunes TV subscription service for US$30 a month.

Peter Kafka wrote in a report for AllThingsD (http://mediamemo.allthingsd.com/20091102/apples-itunes-pitch-tv-for-30-a...). He says the company is trying to round up support for a monthly subscription service that would deliver TV programs via its multimedia software to pretty much any device that supports iTunes.

I would consider ditching cable TV (sorry, Comcast) if iTunes TV, as I'll call it, offered the same viewing packages I can get via my cable provider. I'd use my Apple TV instead of my cable box on my widescreen TV. But I'd have the added benefit of being able to watch the same shows on my Macs.

In other words, I'd want the same options I have now (no delay in new TV shows, for instance), just on more devices. At that point, you could count me in.

However, as Kafka points out, there are stumbling blocks. He writes: "Cable networks, for instance, don’t want to threaten existing relationships and subscription fees from cable providers like Comcast (CMCSA). And programmers are also worried about the effect a subscription service would have on advertising revenue: Even if the service didn’t distribute TV programs until after their initial air date, that could cut into ratings, which now measure viewership over the course of several days."

Having a bigger and better use for my Apple TV? Sweet. Having my iMac transformed into a real media center (except for that missing Blu-ray support)? Well, let's just say I'm intrigued by the possibilities.

Right now, I subscribe to Comcast's triple package of cable, TV and phone service. If Apple ever offered a Verizon version of the iPhone (or AT&T beefed up its service in my neck of the woods) and if the iTunes TV-Apple TV scenario above materialized, I wouldn't need Comcast for anything except high-speed Internet.

And that should worry Comcast and similar companies.

-- Dennis Sellers

 
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