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HBO And CBS Just Killed Cable TV

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Tommaso Boddi via Getty Images
Tommaso Boddi via Getty Images

This is starting to look like the week the chisel came out to carve cable TV's tombstone.

HBO on Wednesday announced it's launching a standalone streaming service; you won't need a cable TV subscription anymore to get "Game of Thrones" or "Boardwalk Empire." No pricing yet but it's expected to cost about $15 a month. (Not available in Canada at first, of course.)

Not even 24 hours passed before CBS announced pretty much the same thing: a streaming service giving subscribers access to most of its content, including live streaming of local affiliates, for $5.99 a month.

"The only thing surprising about CBS's announcement is how quickly it came after HBO's," writes tech columnist Peter Nowak. "The Vegas odds on other networks following are pretty good right now."

The move highlights some new realities. One is that the net neutrality debate has been altered completely.

Net neutrality activists fear that big telecom companies will favour their own content while throttling the internet traffic of competitors. But with HBO and CBS preparing to fight for viewers online, we can now count on at least two major media companies -- CBS Corporation and HBO parent Time Warner -- to stand up in favour of net neutrality. That's a game changer which makes it much likelier that rules against throttling and preferential treatment of content become permanently enshrined in law.

In Canada, though, the picture is different. Here, no broadcasters have yet announced their own streaming services, and the major new development in streaming is Shomi -- a joint venture of Rogers and Shaw, two major cable companies, designed to compete with Netflix.

CRTC regulations allow telecoms to throttle some traffic, but they have to be open about it with their customers, and they have to be doing it for some specific need, not simply to favour their own content. But that rule could be put to the test if the cable companies begin to compete directly on Netflix's own turf.

And that brings another reality into focus, one that could be hard to swallow for many media execs: The one thing we really won't need in the digital future of televised entertainment is cable TV companies.

Broadcasters are now reaching out to their audience directly, via the internet. Content producers have the option of selling their shows directly to streaming services (Netflix original series, for example).

It's clear that both the creators (producers) and the purveyors (broadcasters) will continue to be a part of the scene, but the infrastructure of cable TV is being taken over by the internet. In the future, we just won't need someone to package and sell broadcasters' streams to us. Cable is becoming obsolete.

The cable companies are beginning to realize this, hence Shomi.

To be sure, cable companies themselves will survive because most of them are now internet companies as well, and we will need the internet to watch TV.

But the $8 or $10 in revenue per subscriber from a streaming service simply doesn't match the $50 or $100 or more in revenue per subscriber from a cable TV package.

For this reason, we can expect the big telecoms to push back. Look at the recent debate at the CRTC about unbundling channels: The big telecoms fought tooth and nail against the proposal, arguing channel bundles keep smaller, less viewed channels alive.

But with TV networks launching their own streaming services, the idea of retaining bundled channels on cable TV seems increasingly old-fashioned. How are you going to bundle channels when people aren't even buying cable? Future "channel bundles" might simply take the form of several small (former) cable channels joining up to form their own streaming service.

Canada's big telecoms have a lot of clout, and they don't always use it for consumers' benefit. Former CRTC commissioner Timothy Denton warned in a recent blog post that the role of big telecom is often to impede progress.

How the big telecoms react to the coming obsolescence of cable TV will play a large role in shaping the future of Canada's entertainment industry.

Let's hope they don't keep us stuck in the channel-flipping past for too long.

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