December 5th, 2007

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Housing Slump Hits Cable -- DUH!

About frickin' time someone else noticed this.

I've made this argument to the FCC for the last month that the decline in cable subscribers is in part because of record foreclosures and many on-foreclosure sales by people going back to rental. This was patently obvious by the steady growth of basic cable subscribers during the housing boom, in addition to dramatically increased subscriber rates for direct broadcast satellite (DBS) (i.e., DISH and DIRECTV).

What remains to be seen is what happens to DSL and dial up. I have a suspicion that we will see a move to cheaper, unbundled DSL (where available) and a return to cheap dial up. There may be some shift to cable voice products if cable aggressively subsidizes VOIP as a means of keeping customers. But the problem for cable is their bundle has just gotten too damn expensive. Even a monopolist faces constraints when the overall economy tanks and forces consumers to change habits.

This is where a shift to online video services and cable a la carte would occur in response to the market, if that were possible. But the control of cable operators and large broadcasting conglomerates over the bulk of programming will prevent this. Programming is not fungible. People who want Heroes and Battlestar Galactica will not be happy watching Democracy Now and Al Jazeera (both of which are available as independent online streams).