More Households Cut the Cord on Cable
More people are joining the ranks of "cord cutters" by forgoing cable TV subscriptions that can run $60 or more a month. In response, cable companies are beginning to experiment with new Internet services.
Some people are turning to free over-the-air high-definition television channels and video-game consoles for their TV viewing. Others are watching Internet-connected TV sets, paying a basic high-speed Internet fee of about $45, and using set-top boxes from companies like Netflix. Some are also using free media browsers that provide access to TV shows and movies on the PC. But Web TV doesn't offer as much high-definition content as pay TV. And pay-TV services, like cable and satellite, still carry more live events, TV shows and movies than what's available online.
So far the number of cable cutters remains too small to threaten the pay-television industry. But large cable companies are noticing that young people in particular "are saying 'all I need is broadband,' " says Glenn Brit, CEO of Time Warner Cable. Indeed, in the last three months of 2008, pay-TV penetration grew by only 0.7%, or 220,000 homes, its lowest rate on record, per Sanford C. Bernstein & Co.