Like the ‘net? Pay your cable bill, says Time Warner’s Britt

December 1, 2009

If you want the Internet to keep doing what it does, keep paying your cable bill, and don’t get carried away with the idea of free (free! free!) content.

The next big free idea (sort of) is “TV Everywhere“, the cable industry’s attempt to make cable programming available over the Web — for no extra charge — to paying subscribers. It’s an important initiative for the industry, since Pay-TV companies are concerned that the recession-resistant subscription revenue of cable television could be undermined if cable shows became widely available over the Web.

We asked Glenn Britt, chief executive of Time Warner Cable, what he thinks about the plan, and while he didn’t detail when it will hit the ground, he reminded us that its success is critical. Why? The guys and gals that run the delivery system must be compensated. Think what happens if people (like so many college students I know — and several journalists) start to depend on “free”.

Free doesn’t work in the long run. It works great for consumers, but if you took it to the extreme, and all of the networks put all of their content on websites for free, pretty soon consumers will figure out (they) don’t need to buy subscription video services.  Because my business has real cost to it, and we and the phone and wireless companies, we underpin this delivery, for this to happen we have to get paid.

We’re like the seamly (sic) underside no one wants to talk about. We have trucks and blue collar people and wires, etc. If we didn’t get paid, the whole Internet would fall apart. Somehow we are going to get paid. And if the networks don’t get paid, new content wont be created.

If we all give our stuff away for free, we’re not going to have a business anymore.

End

5 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

Unfortunately for Mr. Britt, the onus is not on the consumer to make a business model viable. If consumer behavior is not supporting the model you have developed, then it is time to develop a new one.

Posted by D. Glass | Report as abusive

“If we didn’t get paid, the whole Internet would fall apart.” Since when have you been in so much control of internet infrastructure as to have the audacity to make such a notion. There is no “dependence” on free. It is a marketing tool to bring attention to the practicality of a good/service in order to hook a consumer into rationalizing a payment for it or to build a larger audience. The amount of times you mention “get paid” in here obviously sets your priorities to me, now how about putting yourself in our shoes. I pay ~$100 a month for cable plus internet. Tell me you “justify” the cost of that once the cable is already laid and you sit and collect. My payments don’t fluctuate down due to you having made your compensation for the investment you made. No, you steadily increase the price, and place limits on a service widely promoted as free. I see that after success in one field you are ready to move onto another until you nickel and dime every last product you have. I guess that is your business model, even though there is no real sign of disastrous loss to your company at the moment, aside from your fairytale nightmare that has a great possibility of not occurring. And since when has the “extreme” ever been a part of normal business convention? You would not even mention it if it did not bring your argument to such a good light. Look at the housing market and economy in general. Honestly, I would think that if you were truly managing the bottom line you would start from the top down and see how much over-compensation is being wasted when it could be going into paying the “we” in your company. “We” referring to the blue collar workers which you casually lump yourself together with.

Posted by Oh really? | Report as abusive

Bravo “Oh really?”

Posted by name | Report as abusive

Free?!? Really? I have a years of high-speed Internet bills from TWC that beg to differ. How exactly does my $50 a month for HSI not pay for the cost of maintaining and improving the network? I’m sorry your cable TV business model is a dying dinosaur, but don’t tell me you’re not making money on HSI. I’ve read your quarterly earnings reports.

Posted by Michael C | Report as abusive

There is some truth to Mr. Britt’s statement. There is always an underlying cost in providing services like phone and internet. Infrastructure is not a one time investment. Weather, people, accidents and technological advances drive the need to repair, replace and upgrade existing equipment and lines. The demand by consumers for top of the line speeds and reliability means a constant reconstruction of the systems run by cable, satellite and phone companies.It comes back to the fact that nothing is free. Verizon has spent much more money upgrading their infrastructure to fiber optic lines than they can expect to gain as a return from their FIOS service. They were able to do that because of revenue from other business lines like their home telephone and wireless services. At some point, someone pays for everything.The truth of the matter is that ISPs that are only ISPs have not been successful because of this. They cannot afford to keep rates competitive and keep up with technology. They need to have some other type of revenue stream to offset the costs. In Mr. Britt’s case it’s Cable TV.This is also a double edged sword because as more content becomes “free” online, network television stations will see lower viewer ship on pay services like cable and satellite. They will make less advertising revenue and will in turn pass on higher fees to cable and satellite companies to carry their stations to make up the difference.Someone is going to have to pay for the content you see online. There is the potential that free content online would be the end of pay services like cable or satellite. When the networks loose the revenue they get from these companies, they will need to make it up somehow. I would predict subscriptions to their websites and video feeds. The consumer will have to pay one way or another.

Posted by There is some truth | Report as abusive