Jeff Kagan: What’s Next for Aereo and TV?

Jeff Kagan |

Aereo television model, Aereo television legal, don't count Aereo out, AT&T Uverse

We’ve watched Aereo challenge the traditional television model. However now that the Supreme Court struck down their business model, many think this newcomer will simply fade away. I don’t. I think Aereo will surprise us once again with a new business model and continue to compete. Just wait. You’ll see.

I will bet that both Barry Diller and Chet Kanojia are busy rethinking Aereo. And to tell you the truth I would not be at all surprised to see Aereo come back with a slightly different and new business model that keeps them just inside the line of the law.

Maybe it won’t be as profitable, but it will be legal. The next question is can they still challenge the industry?

Aereo was a dynamic idea trying to provide television service without paying a traditional fee to the television networks. If this was something that Aereo could do, I am sure others like Comcast (CMCSA) and Time Warner Cable (TWC) would be very interested as well.

However the Supreme Court said no. Since that time, reporter after reporter who contacted me thought that was the end for Aereo. I think that my response shocked most of them when I said don’t count Aereo out. Not yet.

I say the nation's television model is broken. Customers pay too much and costs keep rising every year. In fact what customers pay for cable television roughly doubles every decade. That’s insane.

A la carte has been kicked around for more years than I can remember, and still has not become an option. Strange.

Customers would love to choose the channels they want and pay less in total. The average customer may have access to hundreds of channels, but still only watches their same favorite five, ten, or 15 channels.

Telephone companies like AT&T (T) Uverse, Verizon (VZ) FiOS, and CenturyLink (CTL) Prism use IPTV. They deliver television over the Internet connection. In markets where they offer service and compete with cable television, they are gobbling up market share.

I remember AT&T saying at their annual meeting a few months ago they had a roughly 50 percent market share in the Dallas area. That’s powerful competition.

The only problem is telephone company IPTV is not everywhere yet. So cable television still has a strong hold.

However that may be weakening. Cable television companies are losing market share for the first time because their prices are too high and competition is growing.

Today customers have choices. Tomorrow they will have more choices.

Customers can actually get quite a few channels for free over the antenna today. And the quality is excellent. They can also use services like Netflix, Amazon.com, Hulu and countless others to watch more television and movies over the Internet. And that cost is very low.

As competition increases and technology explodes like the Internet, companies with the thinking of Aereo are going to keep bursting onto the scene, changing the customer opinion of where they get television from.

If the traditional cable television model wants to survive, they must offer low cost choices to customers who want it.

So this entire television space is broken. We need to destroy it and update the model going forward. That means what customers pay their service providers, and what they pay networks and content providers.

The marketplace will continue to get crazier over the coming years as we keep trying to squeeze the new marketplace of tomorrow into the tiny model from yesterday. It just won’t fit.

I look forward to seeing the rebirth of Aereo and root for reinventing the television model that we all grew up with, but which is so outdated.

What I want to see is choice. I want every competitor to have the fair chance to compete and to win. And I want to see every customers have the choice they want for low cost service with excellent quality.

Is that too much to ask?

 

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