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Cord-Cutting Rises as Consumers Shift to Streaming Over-the-Top Video, According to NTIA Survey

Broadband Breakfast Staff

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BROADBAND BREAKFAST INSIGHT: That latest internet use survey from the Commerce Department’s National Telecommunications and Information Administration shows that the proportion of internet users watching videos online has grown from 45 percent in 2013 to 70 percent in 2017. The organization added a question about over-the-top vide viewing to its survey in order to track trends and demographic differences in internet use. Overall, 73 percent of U.S. households had a cable or satellite television subscription in 2017, which is down from a high about a decade earlier.

Cutting the Cord: NTIA Data Show Shift to Streaming Video as Consumers Drop Pay-TV, from NTIA:

Americans increasingly are moving away from cable and satellite pay-TV services and opting to stream online video offerings, data from NTIA’s latest Internet Use Survey show. While most households still subscribe to cable or satellite television services, the survey shows the proportion of Internet users watching videos online has grown from 45 percent in 2013 to 70 percent in 2017.

Internet-based video services typically provide on-demand streaming from a large content library, and are not dependent on the offerings made available by any particular cable or satellite provider. The shift away from pay-TV services crosses all age groups, but younger Internet users have consistently been much more likely to watch video online than their older counterparts. For example, 86 percent of Internet users between the ages of 15 and 24 watched video online in 2017, compared with just 40 percent of users ages 65 and older (see Figure 1).

Graph showing percentages of Internet users watching videos online

Given this rapid change in just a few years, as well as the significant demographic differences, NTIA in 2017 added survey questions that specifically asked about subscriptions to traditional cable and satellite programming. Overall, 73 percent of U.S. households had a cable or satellite television subscription in 2017. Of the 27 percent that did not, two-fifths (40 percent) were “cord cutters,” or households that reported previously having a subscription, while the other 60 percent said they never signed up.

Internet users in cord-cutting households were more likely than their peers to watch video online; 82 percent of cord-cutting Internet users watched video online in 2017, compared with 67 percent of those in households with a cable or satellite television subscription, and 71 percent of those in households that never had such a subscription. This is an indicator of how the traditional television subscription is faring in the era of pervasive streaming, and we will continue to track this trend in future studies.

Why are Americans dropping subscription services? For some, particularly younger viewers, it’s a matter of preferring online video to subscription services. While 26 percent of non-subscribing households between the ages of 15 and 44 cited the use of Internet-based video services as a reason, only 15 percent of their counterparts between 45 and 64 and 8 percent of those ages 65 or older cited this reason.

Concerns over cost and relevance were common to all age groups, with 46 percent of non-subscribers citing cost and 38 percent saying they had no interest. These results suggest that while cost and personal preferences dominate decisions about purchasing cable or satellite television services, the availability of Internet-based video services is also influential.

Nineteen percent of households lacking cable or satellite TV service cited using Internet-based video services instead of traditional television service. This includes 24 percent of cord cutters and 16 percent of households that had not previously subscribed.

About three-fifths of non-subscribing households were “cord nevers” that never bought a pay-TV subscription. The cord-never households tend to be younger, lower-income and less likely to be non-Hispanic white than those with cable. In contrast, cable subscribing households are on average over 50, and less likely to have children in the house than cord-cutters. Consider that there is nearly a 20 percentage point difference in terms of mean age between cable and non-cable households.

 

Figure 2: Selected Characteristics by Current or Previous Cable Subscribership
Percent of Households, 2017

Has Cable Previous Cable Use Never Had Cable
Total Households 92.7 Million 13.8 Million 20.8 Million
Family Income < $25K/Year 19% 25% 38%
School-Age Child Present 23% 27% 22%
Located in Rural Area 14% 13% 14%
Household Reference Person* Characteristics
Mean Age 53.0 45.8 47.6
No Post-Secondary Education 35% 32% 45%
White, non-Hispanic 69% 67% 57%
Internet Usage Details
Internet Use at Home 81% 81% 62%
* The reference person is the first individual in each household who is identified as owning or renting the housing unit.

 

This is the first time NTIA has asked questions about cable and satellite television subscriptions. Data gathered in the next Internet Use Survey will build upon the research generally in how Americans are using the Internet, and more specifically should shed more light on trends in subscribership.

NTIA intern Kevin Mersol-Berg contributed to this report. Want to read more of NTIA’s research? Sign up for the Data Central mailing list to be among the first to hear about future publications.

Source: Cutting the Cord: NTIA Data Show Shift to Streaming Video as Consumers Drop Pay-TV | National Telecommunications and Information Administration

Broadband Breakfast is a decade-old news organization based in Washington that is building a community of interest around broadband policy and internet technology, with a particular focus on better broadband infrastructure, the politics of privacy and the regulation of social media. Learn more about Broadband Breakfast.

Big Tech

Government’s Reactive Nature Hobbling Tech Regulation, Expert Says

Congress may need another big tech breach to move earnestly on regulation, says consultant.

Samuel Triginelli

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Screenshot of Steve Haro at FiscalNote event

April 12, 2021 – The reactive nature of Congress to data crises means another breach of citizens’ privacy may be needed to spurn the next big legislative move, said a former congressional chief of staff.

“We still have questions to answer how to deal with technology dominance. We are not there yet because, unfortunately, Congress, for the most part, tends to act in response to crisis,” said Steve Haro, who is currently a government affairs consultant and was a former assistant secretary of commerce.

During a discussion sponsored by FiscalNote and CQ Rollcall, experts joined in a conversation on the current state of public policy for the tech industry and how influential Congress and the Biden-Harris admission will be on dealing with big tech.

Among the discussed issues was how the government will deal with intermediary liability provision Section 230.

Lawmakers have wondered whether the provision — which protects platforms from legal liability for posts by their users — offers too much protection to social networks when it comes to content moderation and disinformation. This central premise has spurned calls for a reform of Section 230; a number of Democrats have proposed their own bill to keep much of the protections except for paid posts.

“I do not believe 230 needs change, but that doesn’t mean I don’t have concerns,” Haro said. “I believe there is collective agreement this is still a necessary law, and it has worked. It has allowed the internet to build do what has become, good or bad.”

Haro pointed to the congressional hearings into Facebook’s handling of the Cambridge Analytica scandal three years ago, which saw the scraping of millions of user accounts without their consent. The result did not see substantial progress on regulations. “We might need another crisis to spur Congress into action,” Haro said.

Michael Drobac, principal at the law firm Dentons, said “we are not there, and I would say the thing that has been most present and clear is that in most of these hearings” the members of Congress are still trying to understand the technology to make a meaningful impact.

“The reality is that section 230 is as important today as it was when it was passed,” Haro said.

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Big Tech

Regulatory Commission Needed To Monitor Big Tech Collection Of Consumer Data, Professor Says

Derek Shumway

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Screenshot of Robin Gaster from Henry George School of Social Science

April 8, 2021 — There needs to be a digital regulatory commission created to ensure big tech cannot run wild with consumer data, said Robin Gaster, a George Washington University public policy scholar.

Gaster, who’s also president of Incumetrics, a data and program evaluation consultancy, published a book that was released this month about Amazon’s rise from an online bookstore to everything else.

Gaster sat down with Broadband Breakfast on Wednesday and talked about the e-commerce giant’s reach into industries like healthcare and its rapid collection of more consumer data. The solution, he proposes, is creating a “new digital deal,” which would see a sort-of digital Federal Communications Commission — an entity which has the resources and the person power to match Amazon’s growing force.

Amazon’s reach into health care needs to be met with proper oversight and ethics to ensure it really will protect consumer privacy, he said.

The e-commerce behemoth acquired PillPack, a prescription delivery company, developed the Amazon Halo, a competitor device to Fitbit, and launched Amazon Care, a telehealth app service. Add Amazon’s own Alexa AI platform into the mix and it has a stream of access to valuable data.

“I would absolutely imagine that five years from now, if you sprain your knee, you probably will not go on the Internet and look for things and trying to figure it out. You will say, ‘Alexa,’ I sprained my knee. What should I do?” said Gaster.

Amazon’s breakneck growth into healthcare is concerning because no one knows exactly what could or intends to do with all the data it possesses, Gaster said. With so much aggregated data across its products and services, Amazon needs to be held accountable for its actions so that if something goes wrong, there are ways to fix it that are open and trustworthy.

Gaster said governments and companies alike are playing “privacy theater” – they talk about protecting privacy, but it’s a mere performance put on to make it seem like they care about it, he said.

Alexa takes in all sorts of data from voice-commands and people’s Amazon accounts. It may as well be a virtual doctor someday, but people don’t know how or if they can control their data recorded by Alexa, Gaster said.

The notion that people can control their data is ridiculous, said Gaster. “We are walking across the digital plane naked. We have no clothes!” he said, adding no one can wade through the legalese in the terms and conditions and privacy statements.

Gaster’s book is entitled Behemoth – Amazon Rising: Power and Seduction in the Age of Amazon.

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Courts

Supreme Court Declares Trump First Amendment Case Moot, But Legal Issues For Social Media Coming

Benjamin Kahn

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Photo of Justice Clarence Thomas in April 2017 by Preston Keres in the public domain

April 5, 2021—Despite accepting a petition that avoids the Supreme Court deliberating on whether a president can block social media users, Justice Clarence Thomas on Monday issued a volley that may foreshadow future legal issues surrounding social media in the United States.

On Monday, the Supreme Court sent back to a lower court and ruled as moot a lawsuit over whether former President Donald Trump could block followers on Twitter, after accepting a petition by the federal government to end the case because Trump wasn’t president anymore.

The case dates back to March 2018, when the Knight First Amendment Institute and others brought a case against former president Trump in the Southern District of New York for blocking users based on their political views, arguing the practice is a violation of the first amendment.

The lower court judge agreed, and the decision was upheld by the United States Court of Appeals.

In accepting the petition by the government, Justice Thomas stated that adjudicating legal issues surrounding digital platforms is uniquely difficult. “Applying old doctrines to new digital platforms is rarely straightforward,” he wrote. The case in question hinged on the constitutionality of then-President Trump banning people from interacting with his Twitter account, which the plaintiff argued was a protected public forum.

Thomas stated that while today’s conclusion was able to be vacated, that likely would not be the case in the future. He went on to say that digital platforms exercise “concentrated control of so much speech in the hands of a few private parties.”

He continued: “We will soon have no choice but to address how our legal doctrines apply to highly concentrated, privately owned information infrastructure such as digital platforms.”

Even though Facebook and Google were not the platforms in question in this case, Thomas pointed to them as “dominant digital platforms” and stated that they have “enormous control over speech.” He stated that Google, Facebook, and Twitter have the capabilities to suppress information and speech at will, and referenced the “cataclysmic consequences” for authors that Amazon disagrees with.

Thomas also rejected the notion that other options exist.

“A person always could choose to avoid the toll bridge or train and instead swim the Charles River or hike the Oregon Trail. But in assessing whether a company exercises substantial market power, what matters is whether the alternatives are comparable.”

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