Dish Takes Aim at the Cable Bundle

Dish Takes Aim at the Cable Bundle

The convergence of wireless and fixed broadband will blow up cable TV and overturn FCC regulatory assumptions.

By Holman W. Jenkins, Jr. in the Wall Street Journal

Charlie Ergen of the Dish Network will apparently beat several contenders ( Verizon , Sony ) in delivering a cable-like TV package to sell over the Internet. As announced, the product will be called Sling TV when it debuts in a few weeks. For 20 bucks a month, users will get ESPN’s two main sports channels, plus 10 others, including CNN, Turner and Disney .

The first question that comes to our perhaps persnickety mind: Why didn’t ESPN cut out the middleman and offer itself over the Web for 20 bucks? ESPN, we suspect, is the only reason anybody would buy Mr. Ergen’s package.

The second question is the one everyone has been asking: Does this commence the unraveling of the traditional cable bundle? A Comcast executive, Neil Smit, was not quivering in his spats at an investor conference last week. He noted that, after counting the price of a broadband subscription, Sling TV wouldn’t be cheaper than basic cable plus a Comcast Internet subscription.

Yes, but not everybody is paying for Internet. More Wi-Fi sharing is going on than carriers like to admit, and even more will be going on as Comcast and others continue to roll out millions of Wi-Fi hot spots. That’s millions of access points, across town or across the country, that anyone can tap by using, say, their parent’s or friend’s or a perfect stranger’s cable logon.

Traditional cable is not just at risk from low-budget cord cutters and cablephobe young adults. Cable operators underestimate their risk at the high end too. Millions of cable’s best customers are already paying for a top-tier cable bundle, plus Netflix , plus Amazon Prime, etc. The heftiest part of this bill, the traditional cable package, begins to seem the most dispensable, especially with HBO and ESPN available independently over the Web.

Here we must correct a misconception common in the media. This is not a shift to “a la carte” TV, the supposed nirvana of paying for only the channels we watch.

Those who confuse the decline of the traditional cable bundle with “unbundling” ought to ask themselves what Netflix is if not a bundle of programming.

Rather, we’re seeing the beginning of the decline of “linear TV,” or what we call channels in the traditional sense, which increasingly are useful only to deliver live news and sports. Truth be told, sports already is the only thing keeping many people paying for cable or satellite.

Of course, as Mr. Ergen, a former professional poker player and operator of the country’s second-biggest satellite broadcast service, rightly calculates, satellite customers won’t be the first to be cannibalized by “over the top” Internet-based TV services. Satellite skews rural and exurban. Many satellite subscribers wouldn’t be satellite subscribers if they weren’t already far from the broadband infrastructure that would connect them to Sling TV.

In the longer run, though, Sling TV is a package Mr. Ergen can distribute over the huge amount of wireless spectrum he has been quietly and mysteriously buying. An elephant on the couch for the tech world has always been when, if and whether wireless would become an effective substitute for fixed broadband in the home.

Cable operators laugh off the idea, though less convincingly with each passing year. Federal regulators resolutely ignore it because it would put in doubt their know-it-all assumption that broadband is a natural monopoly needing close supervision. In fact, everything the Federal Communications Commission currently puffs itself up about—net neutrality, cable mergers, last-mile competition—would be a non-issue in a world of fixed-wireless convergence.

And listen to the players. Comcast’s Mr. Smit says his company is extremely keen on its Wi-Fi build-out even if it’s not sure yet how to monetize it. AT&T and Verizon seem to have no doubt, judging by their public statements to shareholders, that their cellular networks in the future will be handling large amounts of video.

Simply as a product of rising speeds the distinction between fixed and wireless is tending to evaporate. Already, plenty of Americans choose to watch TV on tablets even when a big screen is nearby. The development of TV products aimed at these wireless-only or wireless-first customers is the force that will really blow up the traditional cable bundle.