Is This the End of Cable?

Written By Brian Hicks

Posted December 31, 2014

The Federal Communications Commission (FCC) recently proposed legislature that would make it easier for streaming media services to compete with cable providers.

Announced earlier this month, the FCC’s intentions will begin to pave the way for cable’s would-be usurpers.

However, the proposal will only apply to online services that offer multiple streams of prescheduled programming — excluding Netflix (NASDAQ: NFLX) and its competitor Hulu, both of which allow subscribers to watch movies and shows at their convenience.

Services currently being developed by Sony (NYSE: SNE), Dish Network (NASDAQ: DISH), and Verizon (NYSE: VZ), which have prescheduled programs in the works, will be included.

The commission’s exclusive plan is intended to encourage more people to ditch expensive cable packages in favor of online options, as it would give streaming services the same legal protections as cable and satellite providers in purchasing access to popular network channels.

The proposed legislation would classify certain online video services in the same category as cable and satellite. Networks that own channels (such as Comcast) wouldn’t be allowed to block their online rivals from carrying those same channels — surely a step in the right direction.

As is inevitable with any in-demand, developing technology, the streaming services industry is arriving at the milestone where more options and lower costs are becoming available to customers.

Where there were once two or three providers, there will soon be dozens.

The FCC’s proposal is designed to cooperate with this trend — that is, as long as the online services run multiple streams of prescheduled programming.

The expansion will come with regulatory perks as well as new responsibilities. Streaming services might have to broadcast emergency alerts, offer closed captioning, and carry certain local stations along with their cable counterparts.

FCC Chairman Tom Wheeler stated, “Big-company control over access to programming should not keep programs from being available on the Internet. Today, we propose to break that bottleneck.”

That’s a nice sentiment given Wheeler’s history as a former lobbyist for the companies he was hired to regulate and his position against net neutrality.

Hiring Tom Wheeler to head the FCC is a little like hiring a wolf to shepherd.

Conflict of Interest

For those who haven’t yet heard, net neutrality is the principle that says all information on the Internet must be treated equally no matter the source — be it neo-Nazi hate-group forums or Justin Bieber music videos. That’s just how America does it.

If net neutrality is revoked, Internet service providers (ISPs) will be allowed to charge companies for preferential treatment of their information via fast and slow lanes. The more information a company sends, the higher their fees.

The massive corporations would be able to handle the charges at great cost, but the little guys — start-ups, small businesses, free services, etc. — would be killed.

They wouldn’t be able to come up with the cash to keep broadcasting. Today, if you’re a business that isn’t on the Internet, you don’t exist — which is exactly what ISPs hope to exploit by shuffling out net neutrality.

And Tom Wheeler, the current chairman of the FCC and a former lobbyist for Internet and cable providers such as Comcast (NASDAQ: CMCSA), Verizon (NYSE: VZ), and AT&T (NYSE: T) — companies that stand to gain billions if net neutrality is repealed — has campaigned against net neutrality for years.

Government-Sponsored Shakedowns

As millennials drift away from traditional media providers en masse, moves on net neutrality are the latest efforts of ISPs in their constant battle to maintain their dwindling relevance.

Why would the FCC create legislature for the not-yet-existing streaming services of Sony, Dish Network, and Verizon while ignoring media providers Netflix and Hulu who’ve already proven themselves highly successful?

The decision on whether or not net neutrality will be made law again will come possibly as early as February of 2015 after being brought back to the table over a year ago.

Since net neutrality has been reintroduced as an issue, over 4 million people have submitted comments to the Commission, urging it to create strong laws that would prevent ISPs from applying fast and slow lanes.

Additionally, the FCC has come under pressure from President Obama to support net neutrality and classify the Internet as a regulated public utility, which would outlaw any sort of preferential treatment.

Despite vast opposition, it’s anticipated that the FCC will adopt a mixed approach toward net neutrality laws, allowing some conditional arrangements on traffic priority between some providers and services but also adopting a limit to avoid excessive bandwidth requests.

The Internet isn’t broken and doesn’t need to be fixed. It’s time for cable providers to get with the program.

So if net neutrality is renewed, look into buying Netflix (NASDAQ: NFLX). If not, be sure to invest in Comcast (NASDAQ: CMCSA), Verizon (NYSE: VZ), or AT&T (NYSE: T).

Also look into Sony and Dish Network once their streaming services get off the ground.

Good Investing,

  Tim Conneally Sig

Tim Conneally

follow basic @TimConneally on Twitter

For the last seven years, Tim Conneally has covered the world of mobile and wireless technology, enterprise software, network hardware, and next generation consumer technology. Tim has previously written for long-running software news outlet Betanews and for financial media powerhouse Forbes.

Angel Pub Investor Club Discord - Chat Now

Brian Hicks Premium

Introductory