American Phone Companies once enjoyed territorial monopolies on phone service, not unlike those of the cable companies today. But regulatory scrutiny, increased competition, and changing technology brought an end to that, and today you’d be hard pressed to find anyone that still relies on a landline telephone in their home. Now as the same challenges hit the cable industry, the phone companies seem to be in the midst of a renaissance of sorts. While they once found themselves losing phone and internet subscribers to cable bundles, they’ve been able to mount a come-back as the Internet grows ever more important in consumers’ lives, giving those phone lines into millions of homes a new purpose. The advent of IPTV has meant that they can now also compete with the big cable companies with pay TV offerings of their own.
The cable and telephone service industries share a lot in common. In particular, they’re dominated by a handful of giant corporations with less than stellar reputations. Comcast, Time Warner, and Charter are the usual suspects of the cable industry, while Verizon and AT&T reign supreme among the telcos. While it would be easy to lump them all together, their strategies when it comes to the pay TV business couldn’t be more different. The cable companies show few signs of willingness to change their ways, and at their own peril. Meanwhile AT&T and Verizon in particular have begun making great efforts to appeal to those disenfranchised by the usual complaints with cable.
Recently both AT&T and Verizon have begun offering “cord cutter” deals, which generally consist of internet service, a very basic TV package, and premium channels. Verizon offers the choice of Showtime or HBO, and prices their package at $50 a month. AT&T offers only HBO, but they also throw in a subscription to Amazon Prime, which includes access to Amazon Instant Video, for just $40 a month. Considering that the average pay TV bill in the US is over $80, these offers from the phone companies go a long way to address the most frequent cable complaint: it’s too expensive.
Verizon also has an Internet TV service in the works, potentially creating another alternative to cable for dissatisfied subscribers to flock to, while AT&T is in the midst of an acquisition of satellite TV provider DirecTV. Whether these ventures pan out for the phone companies is yet to be seen, but one thing is for sure, they’re doing a lot more than the their cable counterparts to make a splash in the TV industry. Perhaps they’re so eager to change things up because they’ve seen what happens when you don’t once before. Despite their efforts, the real question is whether the likes of AT&T and Verizon can appease cord-cutters for long. Both of their special offers require a 12 month commitment, after which the price goes up significantly. Consumers could see that as a bait and switch, fleeing as soon as their 12 months are up.
AT&T and Verizon are doing one thing right. In their efforts to appeal to the growing demographic of cord-cutters, they’re bringing prices down. AT&T was the first to offer an inexpensive deal, and Verizon was quick to follow suit. Competition drives prices down and quality up. That’s why the Internet, with low barriers to entry, has become home to such a wide variety of services, and where high quality ones can achieve unprecedented success. Rabbit TV takes full advantage of this by giving users everything the internet has to offer, bringing content from multiple competing sources together under one roof for users to enjoy. Cable grew quickly in popularity because it was a one-stop-shop for entertainment of all kinds. But now that users are forced to pay for far more than they want to or are even able to watch, it’s falling out of favor. Rabbit TV reimagines the one-stop-shop model for the 21st century, through video-on-demand, keeping the price of the service low and offering premium content a la carte, rather than forcing all users to pay for massive bundles of content that largely go to waste.