Apple Pushing Ahead with Plans for Subscription TV Service by Christmas?

[redfirebird08]

Near it's end, capitalism begins to fail consumers when the few own/control so much that there is no longer any real competition. When it is permitted that an area can have just 1 or 2 broadband providers, there is virtually no reason to compete on price. Price moves only 1 direction in this scenario.

In this thread, there seems to be universal disgust for the cable monopoly because prices only go one direction. More competition would be the remedy but you can't be a new competitor through the Internet pipe if the cable company is also the gatekeeper of that pipe.

Our system struggles because we have too much owned/controlled by too few. The few likes their cash flows "as is" or better so they will do anything to persist the status quo. For example, if a new broadband upstart pops up in your town, watch how long they last until they are either crushed or bought out. But that's the bigger problem we live with.

If capitalism was working as its supposed to work, we'd have lots of competitors working hard to compete, driving down the costs of things like broadband, wireless communications, food, energy, etc. Instead, the big dogs keep swallowing the pups until there is no competitive pressure to do good for consumers.

And that's exactly how it's working in Asia's broadband market right now. They have a free market where startup companies offer a certain level of service for a certain price and force major telecoms to compete with it. If they don't, consumers will choose the startup and eventually it will turn into a powerful company. But here in the U.S., the government actually supports a monopoly and barriers to prevent startups from being able to compete.

 

[Diode]

And there's also Anti-Trust laws that makes collusion a no-no.

-hh

With extensive lobbying efforts (Comcsat spent $20M in 2011 alone) - don't expect this to come easy - or for them to pass laws that would make it harder for Apple and other like-minded companies to compete.

 

[wovel]

Bull. Total bull. I have never spent more than $15 for a regular, single-cd album at brick and mortar stores. Ever. I have over 5000 cds and have been buying since 1985. Yes, I have a few collectibles and double cds that were $20 but that is because they are rare or limited editions.

Since 1990 I have purchased new release cds every Tuesday and typically pay $9.99 to $12.99. If I don't buy them on the release date, I still can buy them anywhere for those prices. Since 2001, Amazon has supplied me with all my cds because of the price and free shipping.

There are few albums more worth more than the 3 or 4 songs I buy off I tunes. (There are a few, but not many). I own 45,000 purchased songs. (3/4 ripped from CD). I will only rarely buy a CD since I have no where to actually listen to a CD other than on the computer. I suppose I may value my time a lot more than you value yours.

----------

With extensive lobbying efforts (Comcsat spent $20M in 2011 alone) - don't expect this to come easy - or for them to pass laws that would make it harder for Apple and other like-minded companies to compete.

Apple could out lobby the entire entertainment industry if they chose to; if they saw a real threat they would.

Comcast agreed to license all NBCU content to online competitors as a condition of their takeover.

Under the proposed settlement and the FCC order, the joint venture must make available to online video distributors (OVDs) the same package of broadcast and cable channels that it sells to traditional video programming distributors. In addition, the joint venture must offer an OVD broadcast, cable and film content that is similar to, or better than, the content the distributor receives from any of the joint venture's programming peers. These peers are NBC's broadcast competitors (ABC, CBS and FOX), the largest cable programmers (News Corp., Time Warner Inc., Viacom Inc. and The Walt Disney Co.), and the largest video production studios (News Corp., Sony Corporation of America, Time Warner Inc., Viacom Inc. and The Walt Disney Co.)

(http://www.justice.gov/atr/public/press_releases/2011/266149.htm)

 

[lilo777]

Where there is lots of competition for broadband in America, there is much cheaper pricing. There's just not many places left where there is much- if any- competition.

Sure. But the money math is very different for US and Asia. While competition is good it also means some overhead. If you have, say, three optic wires coming to your apartment - technically it's 2 wires more than you need. It's one thing to wire, say, Singapore 3 times over (yes, there will be overhead but it could be tolerable) but in US it might be just too expensive. In the end we all would have to pay for it. Although, I am not sure they do it this way in Singapore. I suspect that in Asia they may rely more on the power of the central government and have a single physical network coming to each house.

 

[samcraig]

I hope people who think they'll get their channels for .99 each are prepared to watch about 20 commercials before they can access their content every time they turn it on - because subscription pricing alone isn't going to cover an iota of production costs for the shows they want to see.

 

[whooleytoo]

You're in Ireland. The situation you describe isn't even available to a vast majority of Americans, including myself. Our government supports the cable companies, subsidizes them, and creates HUGE barriers to prevent competitors from jumping into the market. In most cases, you have only two or three options and all of them are cable/satellite providers. In my case, my apartment complex has an agreement with one cable provider and I literally do not have a choice. I will say that this particular cable provider is better than the other one in my town, so at least I'm not stuck with the worse option of the two.

Yikes. I'd assumed that the broadband options in the US would be (at least) as good as here, and probably far more plentiful. Thankfully the competition now here is much improved, meaning ISPs can't really unilaterally put up their prices or they know they'll lose their customers (unless price-fixing occurs!).

In the situation you mention then yes, the cable companies do have you over a barrel.

 

[wovel]

There's been satellite based internet for awhile .. you use the phone line for the uplink request to send data. Works find for connections that don't need a lot of uplink bandwidth (ie, classical media consumption).






So just launch more satellites, right?






And there's also Anti-Trust laws that makes collusion a no-no.



Not necessarily. The situation that you describe suggests that the current business practices are rife with inefficiencies. Inefficiency is something that capitalism - - by definition - - is supposed to destroy.


-hh

Indeed. Look at how carrier control made a mess of the mobile market and how Apple changed that. If other manufacturers would take the same approach, Android would not be such a disaster. Apple made mobile phones consumer driven, if they can do the same thing for TV, more power to them.

 

[HobeSoundDarryl]

Sure. But the money math is very different for US and Asia. While competition is good it also means some overhead. If you have, say, three optic wires coming to your apartment - technically it's 2 wires more than you need. It's one thing to wire, say, Singapore 3 times over (yes, there will be overhead but it could be tolerable) but in US it might be just too expensive. In the end we all would have to pay for it. Although, I am not sure they do it this way in Singapore. I suspect that in Asia they may rely more on the power of the central government and have a single physical network coming to each house.

Or they could not allow a single company to own the pipe. The competition could compete through the same pipe. There are many countries where single players don't own the 3G network. Instead they have to compete on the service over a shared network instead of network vs. network. In those countries, in general, 3G costs a lot less than in the U.S.

Here we have single entities that own the broadband pipe. For example, for me, it's Comcast cable (not Comcast service available on a cable). As such, there's only Comcast cable if I want cable broadband. If Apple builds the worlds greatest cable TV replacement service fed by iCloud, the videos must flow through Comcast's pipe. If everyone near me drops Comcast cable TV for Apple's cable TV replacement, Comcast would feel the pain. But since Apple's replacement solution must flow through Comcast's pipe, Comcast will just crank up the broadband bill for us "heavier users".

If Comcast decides it wants to double my broadband rate next month, my choice would be to have broadband or not have broadband. I can't exactly turn to someone- anyone- else. And that's one of the bigger- but often ignored- problems with this whole iCloud dream. iCloud is in North Carolina. My television is in Florida. Between me and iCloud sits Comcast. For others it might be Verizon, AT&T, Time Warner, Cablevision, etc. Whoever it is, they are positioned as both a competitor to whatever Apple could roll out as a cable tv replacement solution and the toll master through which Apple's solution must flow.

That's why this tiers stuff is cranking up... even in wired Internet offerings. The cell phone plans are illustrating that people will pay $30/month for up to 3GB of broadband data and the wired Internet people are thinking why can't we do that too with our faster broadband. It's only a matter of time until current "unlimited" tiers as high as 250GB start getting pinched down to ever-lower numbers... especially as the cable subscription cash cow is increasingly threatened by alternatives pumped through that same pipe.

 

[redfirebird08]

Yikes. I'd assumed that the broadband options in the US would be (at least) as good as here, and probably far more plentiful. Thankfully the competition now here is much improved, meaning ISPs can't really unilaterally put up their prices or they know they'll lose their customers (unless price-fixing occurs!).

In the situation you mention then yes, the cable companies do have you over a barrel.

Like I said though, I think I have a pretty decent cable company by cable company standards. I wasn't a fan of them a few years ago, but they've drastically improved their Internet and HDTV offerings in the last couple of years. I remember when the fastest Internet they offered was 12 Mbps. Last year they did a revamp and now they offer 24 Mbps (I have this one), 40 Mbps, 65 Mbps, and 110 Mbps. Previously I was paying a similar price for 8 Mbps, so my speed has tripled. But it's unfortunate that it has taken the industry this long to start getting their act together. HDTV content has also increased drastically in the last year or two. They used to only offer around 10 HD channels and now it's up to 75.

 

[jhwalker]

My cable company uses every channel from 001-999. I watch <10 channels, but those 10 channels are spread across every tier. If I want to see all the shows I like, I have to buy every channel from 001-999

I would buy each of those 10 channels from Apple if it were available. This is what the cable companies are afraid of

 

[inreasonsimage]

Cable Channels A la Carte

If Apple finds a way to offer cable channels a la carte, I'll buy an Apple TV. We canceled our cable subscription a couple years ago. But, I do miss a few channels.

Apple’s negotiating stance can be summed up as “we decide the price, we decide what content,” according to one source familiar with the talks.

Why didn't Apple take this stance when it came to e-books? I loooovvee paying as much or more for an e-book on Amazon as I pay for the paper version. I still haven't forgiven Apple or Steve Jobs for the agency-model debacle.

 

[rjohnstone]

There's been satellite based internet for awhile .. you use the phone line for the uplink request to send data. Works find for connections that don't need a lot of uplink bandwidth (ie, classical media consumption).

So just launch more satellites, right?

You obviously never used satellite based internet. It sucks.
It's painfully slow (1 - 1.6 Mbps tops), and capped at 450 Mb/s per month on the most expensive plans available ($80 per month) and doesn't work during heavy storms (just like satellite TV).

The need for a phone line as an uplink channel has been gone for years now. The newer dishes will send as well as receive. (top send speed is a blazing 250 Kb/s)

Hughes Net for example, also sacrifices bandwidth for user slots to increase the user capacity of their satellites.

Do you realize how much ONE communications satellite costs to build and then place into orbit?
The price starts at $50 million to just build one and get it into orbit.
Bigger ones are in the $400 million range.
Then you have to purchase spectrum and then maintain it.

 

[hipnetic]

But here in the U.S., the government actually supports a monopoly and barriers to prevent startups from being able to compete.

Correct. The problem you describe is fascism. The problem is not capitalism but the power that the state has in deciding the winners and losers. In an anarcho-capitalist environment, Apple (or anyone) could use some of its money to create an attractive alternative to the current cable and wireless providers. The government (via the FCC) prevents real, new competition from entering the marketplace.

 

[Saladinos]

Do you realize how much ONE communications satellite costs to build and then place into orbit?
The price starts at $50 million to just build one and get it into orbit.
Bigger ones are in the $400 million range.
Then you have to purchase spectrum and then maintain it.

I think all of this is getting pretty absurd.

Apple wants to build a better television experience. But they don't want it so badly that they're going to burn billions of dollars launching dozens of satellites.

It also wouldn't help with content rights - you know, the legal rights to broadcast copyrighted media? Those rights are already dished up in webs of international contracts, with various exclusivity rights and other junk.

Example: I can't watch daily show videos online because of an exclusive deal with Channel 4 in the UK. Apple can't just turn up offering that same content.

 

[lilo777]

My cable company uses every channel from 001-999. I watch <10 channels, but those 10 channels are spread across every tier. If I want to see all the shows I like, I have to buy every channel from 001-999

I would buy each of those 10 channels from Apple if it were available. This is what the cable companies are afraid of

Cable companies do not provide the content (Comcast owning NBC now is an exception). If they could give you just 10 channels in a profitable manner they would. They do not necessarily dictate the terms here.

 

[rjohnstone]

Correct. The problem you describe is fascism. The problem is not capitalism but the power that the state has in deciding the winners and losers. In an anarcho-capitalist environment, Apple (or anyone) could use some of its money to create an attractive alternative to the current cable and wireless providers. The government (via the FCC) prevents real, new competition from entering the marketplace.

Proof?
The FCC manages a finite amount of radio spectrum for broadcasters (once it's gone, it's gone) and regulates hardline communication lines.

You know what prevents competition? $$$$$$$$$$$$$$$$$$$$
It's cheap to build a multi provider network in a small regional space.
Try going national with it and you better have Billions in the bank to build it out.
It's the same issue with the cell carriers. You have a finite resource (spectrum) combined with a large geographical area and expensive equipment to run it all.
Apple's $100 billion is a drop in the bucket to creating a nationwide alternative to a cable or satellite provider from scratch.
They would have to buy existing infrastructure to even get started.
That would go against the new competitor argument since that would mean one was simply replaced by another.

Or are you suggesting the feds (taxpayers) nationalize all the communications infrastructure and manage it themselves?
Good luck with that.

 

[Michael Scrip]

Not quite right - People used to buy albums on pieces of plastic - not songs. That was a major barrier for the music industry buying into the iTunes model. People were buying the whole album to get the hit song they wanted.

Correct...

But my point was... we've always paid to own specific songs and albums.

Television is just piped into your home via a cable subscription.

 

[lilo777]

Correct. The problem you describe is fascism. The problem is not capitalism but the power that the state has in deciding the winners and losers. In an anarcho-capitalist environment, Apple (or anyone) could use some of its money to create an attractive alternative to the current cable and wireless providers. The government (via the FCC) prevents real, new competition from entering the marketplace.

That's just BS. Nobody prevents Apple from building their own broadband network and doing anything they want with it. It's Apple that don't want it because it's a low profit margin business. An attractive alternative for Apple would be if Internet provider absorbed all the costs required to build the networks, Hollywood produced the movies and gave them to Apple for peanuts and Apple would distribute those movies with a nice (costs $100K to develop) GUI and get all the profits. Something like what is happening with iPhone subsidies where all wireless providers reported losses in Q4 while Apple reported record profits.

 

[Michael Scrip]

Yes, I can imagine this because the Daily Show is available for sale on iTunes. It costs $3 an episode. Enjoy. Wait, you don't like that price? Now you see the problem with a-lacarte pricing for something that you are used to buying in bulk.

Bingo.

Most people just pay their cable bill and get a whole buffet of programming.

There are some people who stopped paying for cable... and instead use online streaming or pay for certain shows.

But I don't think the vast majority is ready for that.

They are too used to the buffet.

 

[bbeagle]

But I don't think the vast majority is ready for that.

They are too used to the buffet.

I 100% disagree. EVERYONE I have talked to about this (dozens) would like to buy their CHANNELS a la carte. Everyone talks about how there's a thousand channels and nothing to watch.

People will pay for quality programming that interests them. Very few people want to buy their TV SHOWS a la carte and have nothing else, every person I've talked to wants 10,20,30 channels of their content. And even if they paid $60 for 30 channels instead of $80 for 1,000 channels, they'd be happy.

Of course, it has to be just as easy to use as the current television environment. Nobody wants to search lots of different sites for content, or open different apps. They want channels, or guide lists like we have now. And Apple has been working YEARS on this. They didn't just decide one morning to do this, and then implemented it the next day... Apple no doubt has a team of people (probably 10-20 people) who all they do 9-5 EVERY DAY is try to develop a way to do television right.

Apple changed the whole music game with iTunes.
Apple changed how developers can develop games through the App Store.
Apple changed how authors can write and sell books through the iBooks app and iBookstore.
I have no doubt that Apple will re-invent television.

And if it's Apple's idea of re-inventing television sucks, like Microsoft's first try at Tablets in the 90s, then they will fail. Apple knows this. They are thinking this through, not rushing to market with crap.

 

[linux2mac]

Of course you'd rather give money to Apple. Because they are good and Comcast is evil?

I can't speak about Comcast but yeah, Apple is good, more like great actually!

"And Boom!"

Apple is Fortune's Most Admired Company once again, winning for the 5th straight time
http://www.phonearena.com/news/Appl...ain-winning-for-the-5th-straight-time_id27575

iPad3 will squash the competition next week. The competitors should just "tap out" already in the tablet arena.

 

[MagnusVonMagnum]

“They want everything for nothing,” said another media executive, echoing similar tense negotiations Apple has had in the past with magazine publishers and music companies.

That reminds me of the things I heard about when companies had to deal with WalMart to get their products on the shelves. They wanted lower priced goods and they didn't care what the companies had to do to get them lower (which often meant lower quality lines or having to move jobs to China to get cheaper labor). It's no longer up to the customer and market forces, but the big companies want to set the bar and leave it there. You should be able to get cheaper Apple products when retailers compete, but you CAN'T because Apple won't allow it in their licensing agreements. They PRICE FIX. Apparently, this is all perfectly legal even though it flies right in the face of what Capitalism is supposed to be about. Go buy another (incompatible) product if you don't like it, seems to be the punch line. That's fine with milk; it doesn't work so well if all your apps are for a given operating system, for example.

 

[MacAddict1978]

I have always fought shy of subscription TV services because they don't offer me the kind of things I like. The same would apply here, but if it is to be "App driven" and you only pay for what you want, it will then depend on content.

I'm a sci-fi buff, if Apple had a channel airing such programmes and films, AND if the ATV3 is 1080p, then I'm in.

Agreed. Cable gives you 300 channels and their is seldom anything on. Honestly, I ditched cable awhile back because I was paying $99 a month for the luxury of one or two channels. The idea of being able to buy channels ala carte would be wonderful. A create your own cable platter of sorts.

For networks not owned by cable companies (ahem, Comcast-NBC-Universal family) I don't understand the resitence. Chances are they could make more money selling their channel for a few dollars a month than what they get from the cable companies... unless Apple is insisting on no ads or something.

I'm betting Apple probably also wants every show to be on demand, which would cut out ad revenue and thats where I could see networks having fits. Which is understandable. That's actually where they make the bulk of their money.

 

[-hh]

You obviously never used satellite based internet. It sucks.
It's painfully slow (1 - 1.6 Mbps tops), and capped at 450 Mb/s per month on the most expensive plans available ($80 per month) and doesn't work during heavy storms (just like satellite TV).

The need for a phone line as an uplink channel has been gone for years now. The newer dishes will send as well as receive. (top send speed is a blazing 250 Kb/s)

You're right in that I've not used satellite...but those horrible speeds you describe are nevertheless faster (up & down) than the DSL serivce that I'm paying for today.

Do you realize how much ONE communications satellite costs to build and then place into orbit?
The price starts at $50 million to just build one and get it into orbit.
Bigger ones are in the $400 million range.
Then you have to purchase spectrum and then maintain it.

More the reason to buy into someone's existing infrastructure, even though $100B could be used to go buy 250 - 2000 new satellites.

In any case, I'd see the main motivation here to really be to find the leverage to chisel a crack in the status quo barriers to market entry. Being that the satellite companies come with their own contracts with service providers as a starting point, it might be an interesting approach...


-hh

 

[scootaru]

Why are people acting like the cable companies will die overnight? It might take 20 years just for the amount of internet TV only subscribers to equal that of cable subscribers. I think Apple would be happy with just 1% of cable subscribers.