Cable subscribers should brace for ballooning Internet bills.
A new report suggests that cable companies will have to double charges for Internet service if “cord cutting” — opting to watch shows online instead of through traditional TV — catches on with consumers.
According to Morgan Stanley media analyst Ben Swinburne, a plethora of Web-enabled TVs and other Internet viewing options are making it easier for consumers to cancel their cable.
For instance, Internet-connected TV sets offer consumers the ability to access not only traditional TV but also movies on Apple’s iTunes, Google’s YouTube and TV networks’ own Web sites.
Already, programmers including Time Warner’s TNT and TBS, are creating apps for Google TV, a new service that is incorporated into Sony’s Web-connected TV set.
If a “material” number of households cut the cord, Swinburne said cable and satellite-TV providers will have to make up for the lost profits — most likely by jacking up the cost of the broadband services they provide alongside cable packages.
Swinburne said the migration to the Web will also push cable and satellite operators to offer more flexible pricing based on broadband consumption.
Swinburne said he believes the decline in cable video subscribers, which fell for the first time last quarter, is related to the weak housing market and the economy, as opposed to cord cutting. At the same time, he acknowledged that new technology is quickly bringing cheaper TV options to households.
Separately, a report from NPD’s Display Search unit estimates that 40 million Web-TV sets will ship globally in 2010. That figure is forecast to grow to 118 million by 2014.