Frontier Communications (NYSE:FTR) launched a new Web site and service, my fitv, over the weekend that will act as a single source for Web content including local content, videos, entertainment and news. Frontier is pitching the free over-the-top search engine with the tag line “search less, watch more.”
The service will be available to anyone, not just Frontier customers, and will feature more than 100,000 titles, aggregated from major networks, Hulu or Amazon VOD titles. In a press release on the news, CEO Maggie Wilderotter said the service was designed to reflect the disappearing lines between TV, PC and mobile devices and the way time is shifting. She said the philosophy is, if the content is available on the Web for free, it will be free from Frontier. If it’s not, Frontier is offering a pay-per-view option through the Amazon partnership. Wilderotter said Frontier would continue to add to and refresh the offering as well.
Frontier currently resells Dish service to its users and doesn’t offer an IPTV service. It will, however, have a new subscriber base of video users after Verizon completes its sale of access lines to Frontier. Incorporating OTT content into traditional pay TV provider’s service is an option many operators are mulling. Some are even considering altogether replacing their service with OTT, according to SkitterTV.
Rural telcos at this week’s National Telecommunications Cooperative Association (NTCA) annual meeting and expo were among this group discontent with IPTV and considering a move. SkitterTV said that virtually no IPTV service from any of the co-ops across the country is profitable at this point, with many actually losing money.
It’s no surprise that SkitterTV, an IPTV alternative that combines live TV with over-the-top content, is publicizing these results, but it does have some stats to give weight to its theory. The company cited a recent Strategy Analytics survey that indicated that offering a 20% discount would incite 33% of IPTV customers to switch providers. Skitter said that many IPTV providers said they are already beginning to lose subscribers in the face of competitive pricing and can’t even reach a majority of their customers with their current IPTV platform.
Skitter’s promise to rural telcos exploring IPTV alternatives is that it can help lower costs, reach more customers from the central office and help them compete with more competitive service offerings. The company also has a deal in place with Zeugma Systems for service quality and is also available on the Roku set-top box.
I can understand the reluctance of co-ops and other independent rural telcos resisting the notion of launching their own IPTV service, but I think Frontier, CenturyLink, and Windstream are all birds of a different feather at this point. These three, who I’m certain will eventually become two after the merger and acquisition game finally finishes, have significantly greater footprints and are more than capable of launching or licensing either a VDSL solution like AT&T’s U-verse or a true fiber to the home solution, particularly in their larger markets. Frontier’s service area in Rochester covers nearly the entire Rochester LATA with 1,000,000 people, for example. Verizon is surrounding Frontier with FiOS across upstate New York, but leaving the Flower City with DSL service customers that sticks customers with service “up to 12Mbps” but in reality is closer to 3Mbps for many of them.
The real issues here aren’t dissatisfaction with the technology, but rather their reluctance to invest in it. All three of these companies depend on keeping their costs and investments as low as possible to keep their earnings, stock price, and dividends high, and to make their mergers and acquisitions do-able. That’s why they are bleeding landline customers at an alarming rate, and once a customer drops that, they never look back. Time Warner Cable is methodically killing Frontier in Rochester with a true triple play bundle that cuts customer costs at a time Frontier is increasing its rates and sticking customers on multi-year contracts with enormous early termination fees.
All three companies believe their survival niche is based on serving rural areas, where competition is slight or non-existent. They’ll saddle these communities with “good enough for you” phone and broadband service, and keep acting as a simple reseller of someone else’s satellite TV product. If your only choice is Frontier for 1.5Mbps DSL service or satellite fraudband, you’ll live with Frontier’s DSL service and their 5GB monthly usage allowance in their customer agreement. But you won’t like it.
Frontier’s portal is just another uninspired “do it on the cheap” way of trying to convince customers you are providing them with services that they actually aren’t. Embedding Hulu videos and readily available local TV newscast video from two stations in Minneapolis is hardly compelling or exciting news.
Frankly, being saddled with these three providers is bad news for everyone hoping for an advancement towards 21st century broadband platforms, from which customers could enjoy IPTV, telephone, and fast broadband service. Until they are willing (or forced) to spend some money on this and less on their insatiable acquisition campaigns, broadband backwaters and satellite TV resale deals are in customers’ indefinite future.
You’re right on with your assessment of rural telcos. They’re content to resell someone else’s poor service. Not that they wouldn’t *love* to be able to sell you the same quality service as the cable companies, but the technology isn’t there yet and the prices are astronomical.
Wireless is the way to go for rural, whether it’s cellular or satellite. Replacing the infrastructure is cheaper that way and will help the companies in the long-run. They won’t be saddled with the cost of upgrading that has seriously hurt cable companies in the past. Unfortunately, the tech is not there yet. The telcos (or whomever) will have to widen the bandwidth pipeline to the point that everyone can watch VOD at the same time and not be limited to 5GB a month.
Still, prices will fall when the ability is finally in place. Look at cell phones. Many of them are getting on the “unlimiting calling” bandwagon, at prices you wouldn’t have believed 5 years ago.
It is very disconcerting to see so many references to “rural” as being the areas served by the likes of Frontier, Century, Windstream, and a few of the less stellar RBOCs. The only way any of these guys will provide anything decent in rural areas is under PUC order, and, in my experience, most PUCs are so preoccupied with figuring state access charges down to the 9th decimal place that the don’t deal with such unimportant issues as service quality. So the mess continues. Philip is right on!
However, there is another “rural”, one most people seem to forget about. This is the small, local telecoms. Surprising, since the article refers to NTCA. Almost all NTCA members offer broadband to all their customers, usually at speeds much greater than 1.5 Mb and with no monthly cap. I live in an area served by a local telecom, and have fiber to the home plus triple play. Very high bandwidth broadband and crystal clear IPTV pictures. Plus the service is top notch.
And yet I am dissatisfied with IPTV, like I was with DBS before I switched to IPTV, mostly because of programming. Limited in quantity (what is shown and when, which may not be convenient for me), and quality. I am tired of watching 2 hour movies cut to 1 ½ hours to provide time for commercials. And the games ESPN and Fox tell me I want to watch because I live in a certain zip code. News is on at the wrong times for me. So what do I do? Netflix, ESPN 360, CNN, local newspaper website. To the point where I wonder why I even keep TV. I probably won’t much longer. But I will stay with my local telco because their broadband is so good.
This is a problem for all traditional channelized TV providers, not just IPTV. It doesn’t matter a lot what the traditional TV providers do, the market will change anyway. The winner will be the telecom or CATV, or whoever, who figures out how to deal with web TV in ways more ingenious than discouraging it with monthly caps.