Will internet cost as much as TV?

The recent news that Comcast will charge more for viewing video content over the internet rather than traditional broadcast cable follows the trend of many TV service subscribers to “cut the cord” so to speak and go with internet-only video delivery. Netflix, who is seeing large increases in usage during peak hours, recently made a deal with content delivery network Level 3 to handle what could be double capacity this upcoming year as Netflix is now offerng a streaming-only service and is generally still taking on new subs at a rapid pace.

Comcast doesn’t like what is happening. After all, both Comcast and Level 3 are content delivery networks. In a statement Comcast said “Level 3 is trying to gain an unfair business advantage over its CDN competitors by claiming it’s entitled to be treated differently and trying to force Comcast to give Level 3 unlimited and highly imbalanced traffic and shift all the cost onto Comcast and its customers.”

In a response Level 3 said, “Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network,” adding that, “Comcast threatens the open Internet.”

They both have a point. But these are unchartered waters. Streaming content wasn’t part of Comcast’s business plan when they launched in 1963. And, it’s really only been this decade that video on the web has become more seamless. Before then, video was just frustrating.

What is the real reason TV watchers are switching to the internet? Is it because the cost of television service is too much? Is it the ease of use — switching between programs from your laptop keyboard and mouse? Or is it simply an addiction to content on-demand? YouTube can attribute much of its success to its on-demand nature. Video over the internet allows us to watch what we want, when we want, and how we want (in our kitchens, the backyard, cars, basically anywhere other than in front of the TV set).

So this leads us to the question: “Will internet cost as much as TV?” Well let’s imagine everyone “cuts the cord” to their TV service. How will the providers then make their bottom line? There seems to be no other way than to raise subscription costs if television and movies transition completely to internet. It’s probably coming sooner than we think.

Recently I called my service provider and asked what kind of deal they could give me if I turned off my television service and just had phone and internet. After about 10 minutes (no exaggeration) of what I guessed was number crunching the service rep came back on the phone and told me I wouldn’t be saving that much money if I dropped TV service. Not that much money? I rent two HD DVRs and subscribe to a HD service pack and your telling me I won’t save any money? Not that I actually replied with those words, I just played stupid and laughed as I hung up the phone. The MSOs are scared and just don’t quite know what do to about the streaming revolution, yet.

While the Comcast vs. Level 3 war rages on, there is another one called “net neutrality” for which the chairman of the Federal Communications Commission will make a proposal on Wednesday, Dec. 1 which would prohibit internet providers from favoring websites or censoring certain types of internet traffic. Chairman Julius Genachowski will face much opposition to his proposal from those who call the proposal anti-business, and those with vested interest in monetizing the web.

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Jeff Chabot

Jeff Chabot

Jeff Chabot writes about technology, broadcasting, and digital entertainment. You can also find him on Gameverse, Gadget Review, and Google+.

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