Subscriber Losses? Yes, But Cord Cutting - No Way; Cable Companies Account for 3Q 2010 Results

Cable companies prefer very much to avoid the term “cord cutters” when describing recent subscriber sheds. Comcast attributes the bulk of its 622,000 subscribers lost in the first nine months of 2010 - 275,000 of which departed in 3Q alone, to the economic downturn and the expiration of lower priced promotional packages. Time Warner also cited the economy, as well as a migration by some users to satellite TV services, as the principle cause of its 155,000 lost subscribers in 3Q 2010 (compared to 64,000 lost in 3Q 2009). However, the cable giant is keeping a close eye out for the signs of cord cutting, especially in collegiate communities such as Austin, Texas and Columbus, Ohio - just in case.

And Time Warner may have a point, given that, in these college communities, where the assumed early adopters of “cord cutting,” i.e., the substitution of traditional pay-TV services with Internet delivered TV content, make up an appreciable portion of the local population, cable TV subscription levels AND broadband subscriptions have remained consistently flat and in accord with the level of student enrollment. If cord cutting were truly on the uptake, cable companies assert, wouldn’t the broadband subscriber rate be climbing markedly as cable subscription levels fell? And, although this could hardly be considered good news to cable providers, DirectTV is reporting recent subscriber gains, to the tune of 380,000 overall including 174,000 in the U.S. in 3Q 2010 alone; a 28% increase over 2009.

So where does that leave us on the question of cord cutting? Perhaps it is too early to tell. But, as more and better Over-The-Top TV options enter the market and as more premium content becomes available from alternate sources on alternate platforms, we may start to see today’s tiny ripples become tomorrow’s big, surfable wave. For some, this tidal change may not come as such a surprise. As Ivan Seidenberg of Verizon recently pointed it out, it is not as if such things have never happened before; look at what started to happen to local phone companies five or six years ago when people began dropping their land-lines in favor of mobile only phone services.

This is not a new train, he, and others, may have seen it coming before.