For the second straight quarter, the number of Americans who pay for television service has fallen, writes analyst Craig Moffett of Bernstein Rsearch in New York.
In the third quarter, Comcast, TimeWarner and other cable companies lost subscribers faster than AT&T, Verizon, Dish and their still-growing competitors could add new ones. The phone companies' "TV gains can be expected to slow sharply" in future, as they've stopped extending lines to new customers, Moffett adds.
7/8 of Americans pay for TV. Who's dropping out? "The evidence suggests that poverty is the problem," among people who can't or won't pay $100+ a month, writes Moffett:
The count of "broadband only" customers is shrinking, not growing as it would be if TV customers were moving up to broadband. Also, cable companies are losing most among "lowest tier" services.
And yet: "Public sentiment, particularly among the technology press, strongly favors the Internet substitution thesis." Tech writers want to believe more tech-savvy, device-rich, educated, well-off people are "cutting the cord" and going with all-online and pay-per-program TV-a-la-carte on cool handheld devices.
But there's little evidence that's actually happening, Moffett says. Cool tech people can afford to pay for Comcast or FiOS and avoid the hassle of jury-rigging alternatives, if that's the price of getting Phillies playoff games and easy HBO.
"Revolutions always start at the low end of the market," Moffett concludes. Like Netflix, the bargain-priced nemeses of the regional cable monopolies and the phone giants can be counted on to "start small and gather momentum."