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Note to TV Nets: Steer Clear of Music's Painful Path

By Jeff Kagan
Apr 7, 2011 5:00 AM PT

New technology may be cool, but it can also be a double-edged sword. Different industries are starting to overlap, and even though the blending of different technologies can be very exciting, it can also be very confusing.

Note to TV Nets: Steer Clear of Music's Painful Path

One example is how cable television companies have been starting to use the Apple iPad and other tablet computers as a super-powered remote control. You can flip through pages of channels and times and shows on the handheld screen and select what you want to watch. They do this through an app that customers download. I'll explore some of the implications of the tablet's encroachment on the TV this week.

As my Pick of the Week topic, I want to congratulate CenturyLink for becoming the No. 3 baby bell by acquiring Qwest.

Fighting Change Instead of Embracing It

The TV remote app is just for starters. Taking this to the next logical level, cable television companies are letting customers watch shows not only on their TVs, but increasingly on personal computers and tablets. Customers love the flexibility. Time Warner customers have downloaded its iPad app more than 300,000 times already. This seems like it is just what customers want, and it will be big.

However, this innovation seems to be rubbing some in the industry the wrong way -- like some television networks and channels.

These companies are starting to remind me of the music industry during its transformation in the 1990s, when music was starting to be turned into files and listened to on the laptop, and then iPods and the like.

Cable television companies have started down this exciting path -- watching television on whatever screen you choose -- and today we have an increasing number of screens. Imagine watching television shows on your handheld device anywhere in your home. And imagine what is coming next, when you are at the store, or waiting for the kids in car-pool line, or even in another city on a trip. Eventually, you will be able to watch your own personal cable television service anywhere.

Time Warner and Comcast are starting to allow customers not only to use their tablets as a remote, but also to watch television on them. Cablevision was planning on launching its app in March, but it is not yet ready. Cox is starting to dip its toes in the water with its first app. This is the beginning of an entirely new way of thinking about and watching television.

Some networks don't like this innovation, however, and are starting to raise the same objections the music industry did. Fighting the change rather than embracing it ultimately hurt the music industry. Will the same thing happen to these networks?

While Time Warner is not saying it did anything wrong by putting channels on the iPad streaming video application for their customers, it has decided to remove a dozen channels from some powerful networks that were not happy.

Why did these networks object? They wanted to make more profits on their channels, I guess. Screw innovation. Screw the customer. It looks like they are singularly focused on the investor. Why don't they see this as a ticking time bomb?

Old Agreements vs. New Technologies

Time Warner says it will continue to fight to ensure that their customers have access to the content they pay for, no matter which screen in their home they choose to view it on. Customers are on the Time Warner side of this argument.

The networks' argument is that by making the content available on the iPad, Time Warner has violated its agreements with them. OK, so let me get this straight. As technology and innovation continue to sweep across the marketplace and delight us, we have to be worried about old agreements that didn't see these changes coming. Adhering to these old agreements makes this cool new tech no better than a really hot paperweight.

Fortunately, Time Warner Cable soon rebounded, announcing it would start including 17 new channels for viewing on tablets. As with music, this is a runaway train. The networks should either figure out how to join this exciting movement or they should get out of the way. They can't stop it.

This battle is in the very early stages, and it is time to make your opinion heard. It is important to understand that this issue has a variety of heads -- including the investor and the customer. Which are the networks focusing on? The investor, it looks like.

Fine, investors in the networks are probably happy. On the other hand, customers of Time Warner want innovation, and the networks are standing in the way. If the networks don't want to make viewers angry, they should be very careful here. Competition is growing from AT&T U-verse and Verizon FiOS. Even the new third baby bell, CenturyLink, is experimenting with this technology. The writing is on the wall, and innovation is key.

Don't Tick Off Your Customers

This shows the painful problems of innovation as technology expands and changes. This shows the problem when a company focuses on today's profits and ignores the competitive reality that is changing beneath its feet.

Here's an idea: What about saying customers can watch the programming they've paid for on any device in their home area? Televisions, table computers, laptops, desktops, screens on the walls -- everything. After all, we are starting with iPad computers, but as the table computer continues to explode, this is another great new way to watch television.

Any new technologies would be allowed, as long as they were used in the home zone. Why does it have to be a TV screen, when so many other screens can access the same content?

Perhaps there can be an additional charge for watching your television shows when out of your home zone. So if you want to watch TV while waiting for the kids in car pool line on your iPad or even on the TV screens in your mini-van, you will have to pay another fee. Maybe that's a solution.

I don't have all the answers, but I do know that trying to stop this sweeping wave of exciting change will only tick off customers and viewers -- and the price that will have to be paid down the road for that stupid move will be very costly indeed to the networks. This is the kind of anger that is the starting place for real innovation.

So come on networks and cable television providers, work it out -- and quickly. The consumer is champing at the bit and has a very short fuse.

Good job, Time Warner Cable. Here's a pat on the back to Jeff Bewkes, Time Warner chief executive, and Glenn Britt, Time Warner Cable chairman and CEO.
Jeff Kagan's Pick of the Week

For my Pick of the Week discussion, CenturyLink is now the No. 3 local phone company, after AT&T and Verizon. It just completed its acquisition of Qwest, and now we will see what new things will start to occur.

By the way, this also moves Windstream up to the No. 4 position among local phone companies, if you are counting.

We are watching the U.S.'s local phone companies change and break up into two distinct groups -- AT&T and Verizon on one side, and CenturyLink and Windstream on the other.

CenturyLink seems to have some aggressive plans. Whether it can make them reality is the question that has yet to be answered. It has some innovative ideas. It is testing its own wireless service in a few markets. If this works, it will expand. What about television?

What will CenturyLink look like going forward? Will it compete with a variety of services -- more like AT&T and Verizon -- or will it stay on the other side of the line with Windstream? It will now be in 37 states with a 190,000-mile fiber network. It will also have 850,000 wireless customers, 1,415,000 video subscribers, 17 million access lines and more than 5 million broadband customers. It sounds like a pretty solid company at this point.

Glen Post, the CEO and president, says the Qwest acquisition allows CenturyLink to offer customers of all sizes an even more robust portfolio of communications solutions that will continue to be backed by honest and personal service. That actually sounds like a pretty good place to start, doesn't it? Refreshing. Maybe it'll catch on.

It will be interesting to hear its position on important industry reshaping issues like the AT&T + T-Mobile merger.

So congratulations, CenturyLink. You have suddenly become a very large and important company. You will now be watched more closely. You may enjoy some of what is written and said about you, and you may not like other parts. That's just the way the business goes. Your performance is what counts for customers, workers and investors.

I hope you are ready, because the rules of this big game are much different than the rules of the smaller game you've been successfully playing for the last several years.

Suddenly the world has changed for you. Just remember, all of a sudden everybody will be listening to every word you have to say. Good luck!


Jeff Kagan is an E-Commerce Times columnist and industry analyst following wireless, telecom and healthcare technology. He is also an author, speaker and consultant. Email him at jeff@jeffKAGAN.com. Read the first chapters of his new book Life After Stroke now available at Amazon.com and Barnes & Noble.


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