Moderizing my television subscription

Photo by Solacetech
Photo by Solacetech

I was reading Wired 18.09: The New TV Guide which comes as I’m re-evaluating my cable TV usage and evaluating every cost savings as I try to free myself from expenses while starting up a new company. I decided to switch from Rogers Home Internet to Teksavvy. Teksavvy cable provides me (currently) with 15Mbps download and 1Mbps upload with 200Gb monthly usage for $42.95/month. This compares to essentially the same service from Rogers for $59.99/month (HighSpeed Internet Extreme – 15Mbps download/1Mbps upload and a 80Gb usage). I figured for approximately the same service I could save ~$17.04/month or about $200/year. Once this decision was made I started to look at our cable expense and watching patterns.

Basically, the F1 season ended and I my blood pressure can’t bear to watch the Steelers. I watch very little television, it was mostly morning news, kid shows, a few sitcoms and movies. I like watching TV in HD. I had Rogers VIP Ultimate with TMN that was approximately $100.47/month. We had a digital cable box plus the HD PVR. My cable bill was averaging approximately $140 after taxes (about $1680/year). What was watched:

On December 21, 2010 at midnight was the day the cable turned off in my house. I was really scared. It was the first time since 1997 that I hadn’t had cable television. I had Time Warner in Austin. I had Rogers in Canada. It’s been a long time. But I decided to shake things up and see what our TV watching experience would be like. I figured I had a rough budget of $200/month including hardware or about $2400/year. Here is my current setup.

Using a very simple amortization algorithm (divide the price of hardware over a 12 month period) plus the basic cost of content I spend $79.98/month (TekSavvy + Netflix + Hardware) versus $200/month for home internet plus HD cable. This is a very basic comparison and assumes that my total content is provided by Netflix or other internet source.

I’ve been pleasantly surprised with Netflix. Perhaps this is because the only 2 movies I’ve seen in a theatre in the past year are The A Team and Tron. And the only other movies I’ve watch on planes. There are all six seasons of Franklin the Turtle and Dora the Explorer. And I’ve caught up on some of the movies that I missed on The Movie Network (500 Days of Summer; I Love You, Beth Cooper; Taken; The Day the Earth Stood Still – not the best selection but when you haven’t seen them they are sufficient entertainment). Plus the documentaries are great (Crips and Bloods: Made in America; Empires: Medici – Godfathers of Renaissance; Blood into Wine; MacHEADS; Between the Folds; Vice Guide to Travel; and a bunch of other stuff). It’s not perfect but for $8/month it is perfect. I’ve rented 2 movies on iTunes at $5.99 (Predators and Cargo) plus purchased TopGear Season 15 HD from iTunes ($14.99) and DVDs of Shrek Forever After ($19.99); WALL-E ($12.99); Toy Story 3 ($19.99) and ripped them using Handbrake. So for December I’m all in for $425. Not bad given that it’s about 3x from my previous bill but includes hardware: cable modem and AppleTV. Using my rough calculations if I continue to rent 2 movies @ $5.99/month and purchase 6 movies (or TV shows on iTunes) @ $19.99/month I should break even after 4 months compared to my previous cable + internet bill.

The set up is not perfect. I feel like I miss local news even with a digital antenna for the TV and the CityTV application on the iPad. I’ve added the CityTV podcast to my favorites, and we’ll see if that satisfies my coffee and the news fix at 7am. I miss watching football, well technically I miss falling asleep watching football with a beer on Sunday afternoons. Television has been the most difficult. Season Passes to HD shows on iTunes are about $60 (The Big Bang Theory Season 4 – $55.99) and we’re part way through the season and I don’t feel compelled to purchase the full pass. Season 3 was 23 episodes at $3.49 – $80.49 purchased individually vs $64.99 as a Seasons Pass. I could download torrents of most of the shows but that’s not my style. I’m leaning more towards DVDs given the unfavourable ownership rights of digital content purchased on many of the services. We’ve tried watching episodes on Boxee and CTV but the quality is just not right on a 37″ 720p capable TV. And I have no idea what I will do for Formula1 in 2011, this is still up in the air, hopefully the mobile application for 2011 will work. But I’m hoping Bernie Ecclestone is reading I’d pay him directly for a live stream (may have to purchase a VPN connection to watch BBC or other broadcaster).

Kids are just as happy. There are movies and TV shows they watch. Essentially no change. Spouse is mostly happy. TV is a little weak but that’s because Boxee and iTunes are different. Netflix and movie consumption is up, which balances the displeasure of traditional broadcast. My assessment is that it’s a wash. We’ll break even in another 3 months and my TV watching behaviours will have changed.

Next, I’m considering purchasing a proxy or VPN service. Anyone have any recommendations? I’m also looking at hacking my AppleTV or jailbreaking the iPad to stream content from any app using AirPlay. Fun stuff.

Rogers and the iPhone

davidcrow kissing his iPhone

Jay Goldman and I picked up iPhones while at Mix08 and SxSWi. I think we have different experiences with the phones, but generally both are very positive and the key differentiator between a great experience and a good experience appears to be your dependency on Exchange support. Basically Jay runs iCal, to connect to IMAP accounts and Google Calenders. I work at Microsoft and I rely on Exchange Server 2007 on my PCs, my Macs with Office 2008 and Entourage and on my Palm 750 on Rogers.

The question continues to come up as to why we haven’t seen the iPhone picked up by one of the Canadian carriers. The conversation can focus on the third world have cheaper data than Canada. It can be about the pricing of contracts or devices in Canada. It comes down to some very simple business considerations:

  • Cell phone market penetration is high
  • High fees and high ARPU
    • Canadians cell bills are double that of Americans
    • ARPU = Average Revenue Per User
    • Canadian Wireless providers in 2007 had an ARPU of $56 which is high when compared to other countries
  • Apple’s outrageous (good on ‘em) ARPU share
    • The relationship between AT&T and Apple has been described as an ”$18/month ARPU share)
    • Canadian non-voice ARPU is currently less than 10% of existing ARPU meaning Canadian wireless providers see this as an opportunity to increase the ARPU
    • Canadian non-voice services at 10% of ARPU is lower than the US non-voice ARPU which has been reported in the low to mid teens
  • AT&T plans are lower than most Canadian plans
    • AT&T plans start at $59.99/month and work up to a true unlimited plan at $119.99/month
    • As an example, my current Windows Mobile plan on Rogers is $80 for 500Mb + $25 for 250 minutes + $8 Every Call Value Pack includes Voice Mail and Call Display + $6.95 systems access fee = $119.95/month + taxes. And this doesn’t cover long distance across Canada, and it certainly doesn’t cover roaming or roaming data when I’m in the US.
    • Given the Canadian dollar is at parity, I’m paying approximately double for less service than the $59.99/month AT&T plan

So the market is saturated, or at least very close to being saturated in urban centres. Let’s make some assumptions that all of the high value long time customers already have data plans and long-term contracts. These users switch phones on a regular basis because they derive status from the latest, greatest device. They probably don’t need or want to switch carriers. Coupled with the ARPU is the highest in North America. Data and non-voice services are currently less than 10% of the ARPU number and expected to grow. What advantage would Rogers have for negotiating a deal with Apple?

Unlike AT&T with aggressive rates to entice and retain existing customer, Rogers and other Canadian carriers are entrenched. Churn rates are around 2% and I wonder what churn looks like in higher value, higher spend customers. Canadian carriers have the highest ARPU around. Apple has been insistent on changing the wireless model by removing hardware subsidies and driving rates down on necessary data services. What part makes you think that Rogers, Telus or Bell is going to give up $10-18/month of ARPU and drive the overall service costs down?

Particularly when people like me and Jay Goldman are just buying iPhones in the US and running ZiPhone and upping our plans to handle more data. Well we might see an iPhone in Canada, but it won’t be for a while, after the carriers have milked additional ARPU out of the current set of non-voice services.

It makes me wonder where the CRTC is in all of this?