Advanced Television

CEA: 10% will cord cut

June 1, 2011

By Colin Mann

New research from trade group the Consumer Electronics Association (CEA) suggests consumers are relying less and less on over-the-air TV signals and few US households have interest in cancelling their pay-TV service, leading to a call for incentive auctions for broadcast spectrum.

In a phone survey of 1,256 adults conducted in December 2010, CEA found the number of homes that rely on over-the-air signals for TV programming plummeted last year to eight per cent of all US households with TVs. Over-the-air TV viewing has been steadily declining since 2005, according to CEA’s research.

“Over-the-air TV was once the defining distribution platform,” said Gary Shapiro, CEA president and CEO. “But using huge swaths of wireless spectrum to deliver TV to homes no longer makes economic sense. Congress should pass legislation to allow for incentive auctions so free market dynamics can find the best purposes for underused broadcast spectrum, such as wireless broadband.”

The study also found that pay-TV providers face little threat of their customers cancelling their service in favour of over-the-air broadcast TV and Internet video. Seventy-six per cent of respondents said they were unlikely or very unlikely to cancel pay-TV service. By contrast, just ten per cent of households said they were likely or very likely to cancel pay-TV service.

“Contrary to the National Association of Broadcasters’ assertions, antenna sales are falling and cord-cutters are not shifting to over-the-air television but rather to the Internet. The only cord being cut these days is the one to the antenna,” Shapiro said. “It’s time we accept this shift away from over-the-air TV as an irrevocable fact of the TV market. The numbers tell the story.”

While the survey found consumers were unwilling to cancel pay-TV service, more and more are viewing Internet video from Hulu, Netflix and others on their TVs, which is still the dominant device to watch video content. Nevertheless, computers, car video devices and smartphones are increasingly being used to watch video content.

The CEA recently found that 96 per cent or 114 million, of US households own a TV. Therefore, there are just nine million homes now exclusively watching over-the-air TV. By contrast, consumers are quickly adopting smartphones and alternative display devices such as tablet PCs, and wireless broadband data use is exploding. According to CEA’s 13th Annual Household CE Ownership and Market Potential Study, US households owning a smartphone is estimated to skyrocket from 33 per cent in 2010 to 45 per cent in 2012.

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