cutting the cord

I got the notice in my email.  The price for Netflix was going up again.  It was only a dollar more a month but any increase in fees is always cause for me to reassess the benefits of keeping whatever service raised the price.  Netflix is no different.  The only person in my house who uses it is my young son.  As much as I wanted to just turn it off I relented and decided to just go to the lowest level they offered.  The bottom Netflix tier only includes a single stream at 480p quality which is practically 2x the resolution we can get anyway.   Since my son doesn’t comprehend quality, and since our abysmal DSL only allows for 240p video on a good day I knew we could get away with this plan and he wouldn’t be the wiser.  Because my kid doesn’t know the difference between the Vaseline smeared look of comically compressed video versus the pristine near reality visuals offered by a good 4K stream Netflix got to live to bill another day at my house, but just barely.

Netflix was my last video service holdout and as I said it got one more reprieve.  Like everyone else my age I subscribed to my local cable monopoly the second I moved out of my childhood home and got my first place.  Over the years I have pared down my multi-channel television dramatically.   It’s not like I’ve ever had the Full Monty when it came to television.  I’ve always been the guy who wanted the lowest tier that offered what I wanted to watch.  In my case it was the lifestyle channels like Travel Channel, Food Network, and HGTV.  I have always played some measure of financial defense although maybe not to the level I would like or recommend and my television choices were not exempt from that.  Because of this I’m always shocked at people who paid $200 plus a month for some multi-channel TV provider’s triple play service.  Point of note: I say this as a guy who spent a chunk of his life working for one of the big satellite providers and whose job it was to convince people how much value there was in the biggest packages.   Personally I don’t think we should have to pay for any of it if the programming includes commercials which is a form of payment in and of itself.  Between commercials and monthly subscription charges, people who get television are paying twice for the same content.  Unfortunately the business model that has developed over the years is built around paying for access and then additional revenue generation through commercials and I alone can’t change that.   Going back to the cost of the big packages, I say I don’t get it because I can do basic math when it comes to the costs of the service.  Just to put the numbers in perspective at $200 a month a cable TV bill is demonstrably over 5%, and it’s probably closer to 10% of the average household’s take-home pay when you consider taxes and insurance and everything else that gets paid before the take home.  To reiterate, I’m not saying its 10% of discretionary income, I’m saying it’s 10% of total income.

Apparently I was ahead of the curve on the idea of paying for cable.  It’s gotten so expensive that as a society, little by little, we are either cutting the cord or just never plugging it in in the first place.  Much of the catalyst for this is the fact that there are finally alternatives available beyond the local cable monopoly.  If you’re fortunate enough to have quality broadband you can subscribe to Netflix, HBO, Hulu, PlayStation Vue, or whatever your internet based multichannel TV service of choice is.  I’ve heard arguments that you save a ton of money going the streaming route and arguments that after you have added up all the services it takes to get everything you want, it cost just about as much as cable.

So I’ve opted out. I have exactly two services. TiVo at $15 a month and Netflix which is now down to $9 a month. The second my 8 year old says he’s done with Netflix, that’s going to go too.   I may even get rid of TiVo.

Pro’s and Con’s

There are pros and cons to this approach of cord cutting. The biggest Pro is of course financial. I literally get a 10% raise every year in my take-home pay because I don’t pay a cable bill, something many consider to be just one more utility. A secondary benefit, one that most people in my family enjoy except for my son, is we don’t waste time with the old boob tube. My life is much simpler.

I cite as an example of the benefits of simplicity, the last presidential election cycle.  Anyone who really pays attention to politics on a macro level knows the President of the United States isn’t as immediately powerful as most people ascribe them to be.  There is hand wringing and protestations that the world is coming to an end if this person or that person wins the election.  There are uncounted hours of talking heads exhaustively discussing what could happen. Yet, when the new administration gets into office they have to deal with hundreds of people in congress to get anything done.  Mostly, as anyone with a bit of age can tell you from experience, nothing of real consequence ever gets done.   That’s politics, but it happens with economics, health issues, child rearing, and pretty much every other topic that has an emotional component to it. Less exposure to the crisis topic du jour means less stress in my life worrying about said crisis.

Yes I miss some greedy little pleasures like House Hunters International and Island hunters or Deadliest Catch, assuming that still even on the air. I have no idea honestly. But on the whole I’m happy to give them up to get my money back, or not lose it in the first place as the case may be.  I’m also very happy to not have more things to worry about that really don’t impact my daily life.

There is a dark underside to this cable free existence and that is unfortunately the disconnection you have from society. The disconnect gets worse and worse the more time you are away from all the channels. Everybody’s watching Game of Thrones except me. Everybody knows about the scandal of the moment be it a politician or a movie star. I don’t. Hell I have no idea what hurricanes are coming through in hurricane season unless I hear enough people talking about it where I check out Ditto with major Economic Development issues that potentially could affect my job and career.   Still that type of stuff doesn’t come along that often, at least not the kind that is critical to be aware of and if it is critical, someone is going to want to talk about it.

I am not a financial ogre who lives alone and only comes out on triple coupon Thursday.  I have thought a little bit about how this void affects my younger children.  I console my worry with the idea that they have access to Netflix, at least they continue to have it for now, and YouTube where more and more culturally relevant content is going.  I also can’t forget that they have access to television at their schools and friends house. I think they’ll pick up enough of the cultural stuff they need to fit in through these *ahem* other channels to where they’ll be able to make the needed connections within their own peer groups.

An Alternative Model

I for one have never understood why one of the big satellite companies hasn’t put out a completely free tier with many channels of older content.  This is basically the same model the Over The Air channels are working under.  Only with the traditional cable providers it would be channels like Nickelodeon classic, HGTV classic, Etc. Anybody who wants it just puts up a satellite dish that they buy for cash.  This avoids the expensive subsidy model employed by the Satellite TV companies they use to lock in customers.  There is a good argument to be made that by splitting the advertising revenues the video providers can start getting people back who are moving away from their product.   This would also be a big hit for low income demographics, for people in low-bandwidth areas, and transitional populations among others.  Right now the modus operandi of the MSO’s is to keep hooking people with Sports and unique content.  I don’t care how many shows Netflix green lights, that dollar a month was nearly too much for me. I have a sneaking suspicion that eventually I won’t be alone in this.

Another benefit of this model is that an open platform is an accelerant for quality service and creativity.  Ask any video connoisseur what they think of the boxes provided by the cable companies.  They usually cringe with disgust.  The best boxes I ever had were the ones that came from someone other than the cable companies.  I could easily see all sorts of solutions develop for people with different needs if the core component was open, i.e. a bunch of unrestricted channels.  Unfortunately, this is all pie in the sky.  Even if the cable and satellite companies wanted to do this, I’m not sure the content creators would get on board unless they were forced to do it economically.

For the majority of my life Cable TV was a bill like electric service and phone.  It was just assumed that you would pay for television if you wanted to watch anything and be connected to the rest of the world.   Times change.  Electric is still the same but the phone has mostly morphed into two bills, broadband and cell phone service. The cable bill has morphed into many more than just two and nobody knows how it’s going to shake out.  Many people are walking away and like me decided life without cable bills is a pretty good thing.  If you are a fan of economics and business this destruction and rebirth of an industry is a fascinating story.     Maybe that will be Netflix’s next great in-house produced documentary.  I can see it now ”The Fall of Big Cable” only on Netflix!  I just hope they don’t raise prices before they produce it because I’ll probably miss out on that one too if they start charging me another dollar a month.

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Posted by Mike Peluso

Mike Peluso writes about the collision between between the business / professional world and life. He also writes about the journey involved with the Peluso Presents efforts including the Blog, Books, and Podcast so that others may benefit from his efforts. From Mike: I spend hundreds of hours working on these articles every year with no compensation other than support I get through donations. You can support with a tip and by Subscribing to the Podcast (and writing a review on iTunes would be really appreciated as well!) One time tips:

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