One of the big stories in tech reporting over the past year or so has been the move by some consumers to “cut the cord” from their subscription TV service and begin relying on the Internet for the delivery of video content.  I catch up on a lot of shows myself by watching them online and this is definitely a convenient service.

While cord-cutting is definitely a trend that the entire media industry is watching, many of the articles and blog posts covering this say something like: “Tired of paying so much for cable? Cancel your subscription and turn to the Internet to serve your needs!” The direct implication of this is that you can get all the stuff you currently watch on cable television – or via DBS (DirecTV & DISH) or from the phone companies (AT&T’s U-verse & Verizon’s FiOS) – just by going online.

But all this coverage ignores the fact that you can’t do this. You can get some cable programming online, but not most of it.

Let’s focus in on a couple key elements.

From an October 29 article in the Washington Post:

[Cord-cutting] was a somewhat easy thing for us to do. We don’t watch that much TV in the first place, and most of what we do view is on the [over-the-air broadcast] networks anyway…

If you look at this post I wrote in November of last year, you’ll note the same thing: A lot of cord-cutting proponents don’t watch much television and what they do watch is from broadcast television (generally easy to find online).

From the New York Times on December 9:

…Boxee easily allows access to the Netflix streaming service, which offers up thousands of movies and television shows (just not always the most popular options).

Anyone who’s actually used Netflix’s “Watch Instantly” feature, as I have, knows that you can see older movies and some TV shows but not any of the current cable shows generating water-cooler discussion. And you don’t get any access to new hit movies.

This HuffPo post, while also proclaiming the wonders of cord-cutting, charges that major cable operators “have been pressuring TV programming networks to keep their shows off the Internet,” implying that they should be provided for free.  Perhaps the writer may be unaware that cable programmers have a dual revenue stream: They get some money from advertisers (which is based on the number of homes they’re carried in) and some money from cable operators and other multichannel video providers (called carriage fees).

Online advertising revenue has not been as lucrative yet as television has been. And multichannel video providers would undoubtedly not want to pay as much for a product that is being given away for free online.

And is this really such a good deal for consumers? The Times notes:

If you watch premium-cable television shows, you can pay more than $40 for the season of a single show. But even that is less than one month of cable.

Wait.  $40 for a season of a single show?

I’m paying Comcast about 100 bucks a month for video service, but it’s a very robust package that includes hundreds of viewing options, including multiple premium services. SNL Kagan reports that the average price for digital cable (which 67% of cable subscribers now take) is about $60 a month. I probably watch about three hours daily, for about 90 hours a month. The latest “Three Screens” report from Nielsen reports that Americans are watching an average of 31 hours and 19 minutes of live television per week or 125+ hours a month.

So, one cable show via iTunes for $40; two shows are $80. I happen to watch a lot more than two cable shows.

All this gives me a cost-cutting idea!

Anybody who knows me knows I don’t care about sports. Not professional, collegiate or amateur athletics. Given that situation, I guess I should cancel my subscription to Sports Illustrated, huh?

Yeah, I’m kidding, because I don’t have such a subscription. But it illustrates a good rule for some people: If you’re not interested in watching cable programming, you probably shouldn’t subscribe to cable television.

Online video viewing is small, but growing. The statistics are dwarfed by the amount of television delivered via traditional methods, and the number of video subscribers continues to grow. In all likelihood, those figures will shift over time. But it’s not there yet.

It’s ironic, because lots of people like cable TV precisely because of the programming. Back in the early Seventies, when I was a kid, we had cable for clear reception. By the Eighties, we had it for all the great new channels: Nickelodeon, MTV, A&E, CNN. If this service is of no value to you, then it’s wise to not subscribe. But you’re not going to duplicate the experience through your computer – not yet, anyway.

UPDATE: For more on the economics of buying programming “à la carte,” such as from iTunes or Amazon, see here and here. Bottom line: Buying individuals programs is a great cost savings, provided you watch very little TV.

Today, NCTA President & CEO Kyle McSlarrow gave a speech at the Media Institute, the nonprofit research foundation specializing in communications policy issues. Fittingly, since the Institute is very focused on issues of freedom of speech, the address focused on “net neutrality” and the First Amendment. You can read the speech here, but I thought it would be helpful to provide some background information.

There are plenty of freedom-loving Americans who love the Constitution. Some of them even carry around copies of that document. And yet, even among these hardcore fans, there is often a misunderstanding of the First Amendment to the U.S. Constitution.

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

There are many circumstances under which individuals may claim a violation of their First Amendment rights. Someone may lose employment after saying something in the press. A person may not be allowed to appear on a television broadcast. A student might be suspended for something written in the newspaper of a private college. These might be unjust situations, but they are not governed by the First Amendment, which says that the government may not abridge freedom of speech.  What the First Amendment guarantees is that the government doesn’t get to decide who gets to speak and who doesn’t.

In his speech, Kyle McSlarrow says:

…urging the government to impose rules that supposedly promote First Amendment values is too often used to justify regulations that instead threaten First Amendment rights.   By its plain terms and history, the First Amendment is a limitation on government power, not an empowerment of government.  Making these arguments is, ironically, almost proof that First Amendment rights are being implicated.

It’s also important to note that there are many who seem to think that the cable industry is a special case. They argue that cable’s infrastructure was built with government funding and is therefore a public utility and subject to common carrier regulation. All of these assertions are factually incorrect. To quote a previous post:

To be sure, our video services are subject to government regulation – at the federal, state and local levels – but we aren’t like telephone companies (which built their systems with captive ratepayers and a government-guaranteed rate of return) or even radio and television broadcasters (who were given public airwaves for free, but in return had to adhere to certain “public interest” requirements).  Our industry had no government-guaranteed return or government-granted public airwaves – to the extent we used any public resources, we paid for our rights-of-way with local franchise fees. Indeed, the cable industry built analog networks, our new digital networks, our cable modem and digital phone services with private risk capital with no assured return.

Some might argue that, because the FCC has previously regulated speech on the broadcast networks, such an approach would be appropriate in the Internet Age. But note what Kyle said in his address:

…in this case, the FCC is not engaged in the allocation of the public airwaves.  The bandwidth we’re talking about is capacity on private transmission facilities constructed by ISPs.  Imposing regulations that prevent providers from using “too much” capacity for speech-related services not even associated with Internet access should cause all sorts of First Amendment and Fifth Amendment Takings alarm bells to go off.

Finally, it’s not just the cable operators that would be affected. The other concern about the government deciding to involve itself in these debates – which should properly been seen as technology discussions – is that we don’t know what future applications might be developed or how they might need the network to be structured in order to work most effectively.

To quote from Kyle’s speech:

Not all content providers may need the same speed, prioritization of data and quality of service as, say, providers of high-definition video, or maybe 3D video or who-knows-what-else may be invented by application providers.  But ISPs can’t prioritize all content, due to the physical limitations of their systems.  And it may be entirely too costly (as well as unnecessary and inefficient) to offer the same quality of service that a video game service requires to every single content provider.  And so the effect of such a rule would be simply to prevent the offering of the services consumers might want that require such special treatment.

Or to quote one of my earlier blog posts:

If you want a dumb pipe, with every bit treated the same, that will significantly affect telemedicine and other advanced services which may require priority treatment. If creating some method of optimized delivery was such a terrible thing, what does this say about services like Akamai, that help make content distribution more efficient, benefiting both consumers and content producers?

Really, all we’re saying here is that these are very complicated issues and we hope that the government treads lightly as it contemplates taking action.

The latest “Three Screens” report from Nielsen today shows that despite repeated claims of rampant “cord cutting” from the media, the overwhelming majority of video is still consumed on good old fashioned televisions, and without time shifting from DVRS.  Live TV is still the number one choice for viewing.

• Americans watch an average of 31 hours and 19 minutes of live television per week
• On average, only 31 minutes of time shifted video and 22 minutes of Internet video are consumed
• Even men age 18-24 (rumored to have dropped out of TV viewing altogether) watched 22 hours and 44 minutes of traditional TV versus just 35 minutes of web video

These numbers may come as a surprise given the number of people in tech media who have proclaimed live television and cable dead simply based on their own viewing habits.  The facts, however, continue to show that consumers find great value in television programming and likely the time spent together enjoying it.

Today we are announcing the next step in our industry’s longstanding commitment to use our technologies to improve education in America. We’re proposing a two-year public-private pilot program called Adoption Plus (A+) which could bring broadband to millions of children in low-income households.

Twenty years ago, our industry founded Cable in the Classroom (CIC), which over the past decade has brought free broadband service to thousands of schools and community libraries.

In recent years, our industry has also focused on the digital divide and how to promote broadband adoption.  Cox Communications, for example, has participated in a widely praised program in Santa Barbara, California, in which it provides discounted broadband service to children who participate in the National School Lunch program, together with partners who provide discounted or free computers.

Even though broadband is available to more than 90% of the households in the United States, almost one-third of those households don’t take the service.  Why?  Well, recent studies by the Pew Research Center demonstrate there is no single reason, and some of the multiple reasons – such as understanding the relevance of broadband, digital literacy, computer ownership, and affordability – likely overlap.

Several months ago, with the strong encouragement of FCC Chairman Julius Genachowski, we started working with the FCC’s broadband team to explore how we might help.  They were critical to helping with the data necessary to determine how to really focus in on a concept that could provide the maximum benefit.  Chairman Genachowski and Blair Levin, Executive Director of the FCC’s Omnibus Broadband Initiative, were very supportive of developing a proposal that would help low-income households that do not currently receive broadband.

The A+ pilot program builds on the experience of Cox Communications’ Santa Barbara initiative, by proposing a two-year, public-private partnership designed to promote sustainable broadband adoption for a vitally important-but-vulnerable population – middle school-aged children in low income households that do not currently receive broadband service.  The program is called Adoption Plus because it is a comprehensive approach that treats broadband adoption as a multi-faceted problem that requires multi-faceted solutions.  Barriers to adoption – e.g., relevance, digital literacy, computer ownership, affordability – are interwoven and cannot be resolved in isolation.

The goal of the A+ program is to help give millions of students the opportunity to become digital citizens of the 21st Century by driving sustainable broadband adoption and positively and materially affecting educational outcomes.

Here is how it would work (a more detailed summary can be found at NCTA’s website):

• A+ would promote the adoption of broadband service to households that do not currently receive it, by offering comprehensive digital media literacy education, discounted computers, and discounted home broadband service to households representing up to 3.5 million American children in grades 6 through 9 who are eligible to receive a free or reduced-cost meal through the National School Lunch Program.
• We propose that school districts administer the program, apply for federal funding, and partner with non-profit corporations promoting digital media literacy, computer manufacturers and/or retailers, and cable and other broadband Internet Service Providers (ISPs).
• Perhaps the most important role of the school districts is to implement digital media literacy programs, including online safety training, and training on how to use computers and broadband.  Including administration costs, we recommend that $100 million of federal funding be used for school districts which apply to set up an A+ program.
• We also anticipate that computer manufacturers would supply discounted computers as partners in A+, but ask the government to consider whether and to what extent federal funding is appropriate to help further discount the cost of computers.
• For each eligible household, participating ISPs would provide free installation of broadband service; a 50 percent discount off the monthly subscription cost of their entry level broadband service; and a 50 percent discount off the cost of modem equipment, whether purchased or rented.
• It is important to note that, while we recommend federal funding for digital media literacy training and administration of this program by school districts, we are not seeking any government funding of the ISPs’ contribution to A+.

While the A+ program is open to other broadband ISPs who wish to participate, so far, all of the cable ISPs represented on NCTA’s Board of Directors have agreed to participate in the A+ program as outlined above.  Those companies also have committed to air public service announcements explaining and promoting local A+ programs.  We estimate the value of the cable ISP contribution to the A+ program, with full student participation, at well over $500 million.

Our industry will continue to creatively harness the power of technology, including broadband, for educational purposes in other ways as well.

For example, A&E Television Networks, through HISTORY, has partnered with more than a dozen major cable operators around the country in creating Take a Veteran to School Day, where veterans are welcomed into local schools for special assemblies and oral history projects – a program that was recognized by President Obama at the White House just a few weeks ago.  And Viacom has partnered with the Bill & Melinda Gates Foundation in the Get Schooled initiative to identify effective approaches to increase high school and college graduation rates, improve post secondary readiness and promote the fundamental importance of education.

With the nation’s new emphasis on science, technology, engineering, and mathematics (STEM) education, major cable companies have stepped up with new commitments, such as the $100 million Connect a Million Minds initiative launched in November by Time Warner Cable, to introduce young people to opportunities and resources that inspire them to develop the STEM skills that will help solve our economic, environmental, and community challenges of the future. Discovery Communications is supporting STEM education by offering a commercial-free programming block for middle schoolers on the Science Channel, and through Discovery Education, which will provide STEM Connect, a new broadband delivered curriculum-based career development resource helping students link their science, math, engineering and technology education to their future careers. President Obama recently recognized both Time Warner Cable and Discovery in a White House announcement on STEM initiatives.    Earlier this year, Comcast teamed with One Economy to launch the Comcast Digital Connectors program in more than 20 markets nationwide, an initiative designed to teach broadband technologies to young people ages 14-21 from diverse, low-income backgrounds, who then put that knowledge to work in their local communities.

And Cablevision offers teachers important tools for using broadband and interactive technology as part of its Power to Learn program.

There are many other examples of creative initiatives that recognize how broadband can positively affect education of America’s children.  What they have in common is an understanding that partnerships and collaboration among interested stakeholders is required for success.  A+ is an ambitious step forward in this tradition, and we look forward to working with interested government agencies and other stakeholders to make it a reality.