Charter Communications CEO Tom Rutledge is unimpressed with all of the hoopla surrounding planned virtual pay TV services — including ones planned from Hulu and AT&T’s DirecTV Now that promise to offer superior value vs. cable.
“Most content companies offer us the same carriage conditions” as they offer other distributors, he said today at the Goldman Sachs Communacopie conference. “So far all of the things I’ve seen have significant limitations in terms of their coverage of all the services that people might want.”
Couldn’t a streaming alternative lead many consumers to cut the video cord with cable? Probably not, he says.
Netflix, once seen as a driver of cord cutting, has turned out to be “more of an ancillary service” — 57% of Charter customers also buy the streaming service.
“Some of these packages look like they’re designed to be substitutions,” he says. “But so far I haven’t seen them. If they in fact become available, they’ll also be available to us and we’ll find ways to compete with them….How the companies that sell us content want to break themselves up or not is a question for them.”
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Rutledge says he’ll just look at ways to offer customers services they want, no matter where they originate. For example, he’s already working to include Netflix among Charter’s array of channels.
He recognizes that consumers might become confused if the options include Hulu’s planned service, which would have many of the same channels available on the traditional cable line up.
“I really don’t know what [the Hulu offering] is,” he says. “I’d offer it, confusing or not. If it were lower priced than another package then it might give me an opportunity to sell more higher margin services.”
He recognizes that there’s a big demand for a lower priced alternative to the traditional expanded basic cable bundle.
“It’s not affordable to everyone, so you have people being priced out of the market.”
That’s a problem for programmers who keep pressing for higher payments. “They need to find ways to not keep banging the rate, because if you do, you lose customers.”
Content owners also should be wary of the lack of security on digital alternatives. “There was a distribution that was done without thinking through how it would actually work” with password sharing and piracy.
On other matters, Rutledge is unimpressed with FCC Chairman Tom Wheeler’s effort to mandate apps that would enable independent companies to sell cable boxes — where operators currently have a near-monopoly.
That could present a copyright problem for content compnies, who risk having their programing “ripped apart,” he says. “It could be a potential steal of a lot of valuable copyright material….We’d be disappointed if the FCC got in the middle of our relationship with content companies.”
Wheeler and consumer advocates say that cable companies have fleeced consumers by forcing them to rent technologically antiquated boxes that make it hard to access online video offerings.
Meanwhile, Rutledge is upbeat about cable’s ability to match or beat telcos looking to compete for broadband customers.
Cable companies soon could offer 10 Gigabites per second of symmetrical service to every house. “It’s not a far fetched strategy,” he says. “It’s in the lab,”
And, like Comcast, Charter is eager to offer mobile services by blending wi-fi with a cell service from a wholesale agreement with Verizon.
“We’d like to pursue that relationship,” Rutledge says. It wouldn’t be expensive to deploy and could help the industry to rope in some of the 25 million households that don’t subscribe to a cable-provided service.
“The new architecture five years down the road for mobility will have the traditional cellular umbrella and these really small cells, and I think we’ll have those in every house and every business we serve.”
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