Spoutin' Off: Netflix-Tivo deal brings us closer to fair cable prices


By Michael Rau

November 4, 2008


Well, it turns out that this column is pretty much a continuation of the last. I didn't plan it this way, but developments dictate an update.

In our last exciting episode, we talked about “white space” - the term used to describe ranges of radio frequencies that are unassigned, and in theory could be used to expand availability of wireless broadband Internet service to areas currently underserved or markets in which the cost of broadband service places it out of the range of average working families.

One major point I brought up was that greater access to broadband could lead to the demise of orthodox cable-TV service. A huge percentage of television programming and movies are available through various sources for downloading and/or streaming. This means it's only a matter of time before you can pick what you want to watch and pay for it ala carte, instead of having to pay for a bunch of extraneous stuff that you never watch, anyway.

Now, our friends at Netflix have upped the ante. They've reached an agreement with TiVo to have that company offer Netflix' streaming service over their DVR devices.

There are millions of TiVo boxes in use, thus almost immediately opening up a huge new market for the Netflix service. It will be available on TiVo HD, HD XL, and Series3 DVRs, but not Series2 or DirecTV models. They're beta testing the service now, and expect to roll it out to the masses in December.

In addition, certain models of Blu-Ray players from Samsung and LG will also run the service, and if you have an Xbox 360, you too will soon be able to access the Netflix stream.

And of course, if you have none of these devices, you can still get the service by purchasing the $100 Netflix Appliance made by Roku that we reviewed here a couple of months back.

Unfortunately, even going in this direction to acquire the television and movie programming you want won't free you from the burden of finding cost-effective broadband service, which you need to access the Netflix stream.

Locally, Cox has just announced another rate increase, and is also now lobbying to have its price-structure deregulated so it can raise its prices to whatever it chooses.

Again, I cannot possibly overstate how grossly out of proportion the cost of broadband service is in the U.S. when compared with the rest of the developed world. We get nailed by these companies every day, and frankly, it's our own government that has enabled this financial pillaging to occur.

It's time for local governments to start charging cable and fiber companies a fair market rate for the use of public right-of-ways, using those fees to enable methods of broadband access that create genuine competition.

This is where white space comes in.

Let's face it. Running miles of cable or fiber is cost-intensive, and thus not an option for anyone who wants to compete with the telecommunications mega-companies.

However, wireless broadband requires a much simpler infrastructure. If the FCC made these unallocated radio frequencies available in a fair manner, smaller companies could set up wide-ranging wireless broadband networks that could leave the big boys in the dust.

Of course, all the major players in the telecommunications industry are screaming bloody murder, claiming that allowing these frequencies to be used will lead to interference with signals carried on close-by frequencies.

Anyone with a basic understanding of modern digital transmission via radio waves knows this is a bunch of bull. Cell phone calls transmit over frequencies that are so close together, they're measured in four decimal points. How often do you hear another call bleed over into yours?

This brings us back to the whole Netflix thing. While this doesn't yet represent true competition to the cable companies, and keeping in mind that invariably in any given market, the cable-TV providers and broadband providers are one in the same, anything that chips away at their market share can only help to open up the marketplace to true competition.

With this service, you could in theory dump your cable-TV service and get all your programming via broadband. In practice, this won't quite work yet as an equivalent because of things like live news programming, etc. But the Netflix streaming service brings us closer to such a reality than ever before.

And with more and more programming being streamed live over network sites, etc, once they make their livestreams available over services such as Netflix, cable-TV will be obsolete. Period.

If customers abandon traditional cable-TV in droves, plus cheap and easily accessible broadband becomes as common as it is in the rest of the developed world, what will the big boys do?

It's simple. For the first time in their histories, they'll actually have to compete for your business – the idea of which, I'm sure, scares them senseless.

So hats off to Netflix and their new partners. Thanks for putting another nail in the coffin of the big ol' telecommunications companies.


Michael Rau is a mass-communications consultant in Virginia Beach. To send feedback or view past columns, go to http://dailypress.asoundidea.com.


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