Cable subscribers paying ever-increasing television bills for hundreds of channels they never watch may find some relief if Comcast decides its experiment in “a-la-carte” cable-TV is a success.

The company is testing a new way of selling service that delivers a basic package of channels for a lower price and then offers customers bouquets of add-on channels sold in “theme packs” for $10 apiece.

Comcast is testing what it calls MyTV Choice in parts of Connecticut, Massachusetts, Vermont and Charleston, South Carolina, and plans to expand it to the Seattle area soon.

Here’s how MyTV Choice works:

Customers start with a basic package of channels that Comcast calls “Get Started” ($24.95) or “Get Started Plus,” which sells for $44.95 a month.

What differentiates the two options are the networks they contain.  Inexpensive cable networks turn up in Get Started — A&E, Discovery, C-SPAN, Animal Planet, Daystar, Food Network, home shopping, and The Weather Channel are among the 32 channels that accompanies a basic package of local channels.

Get Started Plus includes all of those networks plus sports — the budget-busting networks that help keep cable bills growing.  ESPN and other regional sports channels are included in the more expensive package.

Missing from the basic package of channels are kids shows, news, movies, and niche networks.  That’s where Comcast’s “Choice” packs come into play.  Customers can add a 19-channel News & Info pack, 31-channel Entertainment & Lifestyle pack, 16-channel Movie pack, and/or an 11-channel Kids pack for $10 each.

That’s where the “choice” ends.  Customers cannot skip the basic channel package to select only one of the theme packages, individual channels are not for sale, and anywhere outside of Charleston, customers also have to buy phone and Internet service from Comcast. HD also costs extra.

So much for a lower bill.

In fact, Comcast sells a digital cable package incorporating a full lineup of basic cable channels for just under $60.  If your family loves sports, has kids, and needs news channels, sticking with the digital cable package is actually cheaper than MyTV Choice.  That’s because the latter will require a $44.95 base package, plus three theme packs for an additional $30 a month.

Comcast denies their experimental a-la-carte package has anything to do with cord-cutting Internet viewers.

“It’s more or less responding to feedback from customers that they want more choice,” Comcast spokesman Bill Ferry told the Post & Courier.

While Ferry and others argue the pay-per-channel is not economically feasible, Christopher C. King, a telecom analyst for Stifel Nicolaus in Baltimore told the newspaper that is the trend.

“Certainly the industry’s moving more toward an a la carte model,” King said.

Theme-packs are not a new concept for some pay television viewers.  In the 1980s and 1990s, consumers owning large 6-to-12 foot satellite dishes routinely encountered the channel bouquet concept.  Customers would purchase a basic package and then select from a dozen or more mini-tiers, usually made up of networks owned by one company.  Want TBS and TNT?  Turner Broadcasting sold an add-on with those two channels.  Wanted a superstation package?  Channels uplinked by cable companies like TCI from Denver could be purchased as a small package.  So could stations like WSBK in Boston, WWOR and WPIX in New York, KTVT in Dallas and KTLA in Los Angeles.

Comcast has “simplified” things with a much smaller set of choices.  But that also dramatically limits any potential savings.

The concept of a-la-carte cable horrifies cable companies and their Wall Street shareholders, because a true “pay-per-channel” offer would dramatically cut the average revenue earned per subscriber if customers took a hatchet to the bloated channel packages most customers receive today.

Cable operators have resisted the concept because every channel would have to be encrypted to sell individually, billing would become more complicated, and the business model of niche-oriented networks supported by more popular fare would end.  That’s why programmers hate the idea as well.  While A&E, TNT, and CNN would have no trouble surviving, networks like Current TV, TV One, Hallmark, Cloo, and LOGO probably would not.

More importantly, many subscribers might find savings elusive from a-la-carte, because the most expensive cable programming networks also happen to be among the most popular.  ESPN and Fox News Channel, for example, have dramatically increased their rates to cable companies, who helpfully pass them along to you.  But if cable operators suddenly stripped those networks out of basic packages, while leaving the much cheaper networks together in broad-based theme packages like “lifestyle and entertainment,” subscribers may howl in protest or accuse the cable operator of playing politics.

It gets even harder when the cable companies selling the big packages of channels customers never watch also happen to own some of the networks found within those packages.  Comcast shareholders may not like the cable side of the business kicking lucrative NBC-owned and operated cable networks like The Weather Channel, USA, E!, Cloo, and other owned networks to a-la-carte Siberia.  Every cable subscriber pays for Cloo and E! today.  How many will choose to pay for those networks under an “a-la-carte” model is an open question.

Only two cable operators have expressed an interest in switching to a true, a-la-carte model to date — Suddenlink and Mediacom — both small, regional players that have no programming interests and lack sufficient buying power to score the kinds of discounts available to companies like Comcast and Time Warner Cable — discounts they can have if they agree to keep as many channels bundled in one digital cable package as possible.

Hours before a two-week extension on contract talks was set to expire, Time Warner Cable and Sinclair Broadcasting announced they had a deal to avert the loss of dozens of Sinclair-owned stations on Time Warner Cable.

No terms were disclosed, but industry watchers predicted Sinclair held the weaker hand and probably made some concessions to the cable company, especially on issues related to Time Warner’s focus on expanding cable programming to portable devices and allowing more shows to be “started over” or made available on-demand.

The length of the new agreement was also not disclosed, but many believe a 12-24 month extension was likely.

Time Warner Cable also negotiates programming deals on behalf of Bright House Networks, and a separate, similar agreement was anticipated to be reached sometime this week.

Despite hours of threatening video crawls on several Sinclair-owned stations and full page ads purchased in local newspapers by the cable company, no programming was ultimately impacted by the threatened blackout.

This most recent retransmission consent battle could be among the last if the Federal Communications Commission manages to write new rules to keep customers out of the middle of such disputes.

The FCC plans to consider drafting reforms to current regulations as early as next month.  The Commission seems to be leaning towards the cable, satellite, and phone companies’ view that would leave stations and networks on the cable dial while negotiations are underway, preventing the kinds of blackouts that left suburban New York Cablevision subscribers without access to Fox programming for two weeks in 2010.

In case you forgot, Time Warner Cable and Sinclair Broadcasting only agreed to extend talks for two weeks on reaching a long term retransmission consent agreement that will keep 33 Sinclair-owned stations on the cable lineup.

On Thursday night, the latest deadline will expire, and Time Warner Cable is signaling negotiations are continuing, but do not look too promising.

In a prepared statement, Time Warner says Sinclair has summarily rejected every offer and has repeatedly claimed to “terminate” negotiations over the past three months.

The cable company has spent part of the last two weeks arranging for alternative program feeds from all four major networks should negotiations end without a final agreement.  That could be an important distinction for customers, most of whom watch Sinclair stations primarily for network programming.

“We will provide all available Big 4 network programming in the event that Sinclair takes away its signals,” said Rob Marcus, President and COO of Time Warner Cable. “We want our customers to remember that we’re fighting hard to contain the rising costs of broadcast programming. We are also still working to reach a long-term agreement with Sinclair before our current contract ends tomorrow night, and in fact discussions between the Time Warner Cable programming team and Sinclair have taken place as recently as this morning and are ongoing.”

But the two are still trading barbs.  As recently as today, the two were debating about how many customers would be impacted by a loss of the Sinclair signals.

The cable company said Sinclair was “inaccurately portraying” the number of impacted customers.

“Time Warner Cable has approximately 4 million customers who receive local broadcast stations owned by Sinclair Broadcasting,” a cable company statement said.

Charter's dumping ground for sneaky rate increases can be found in the Adjustments, Taxes and Fees portion of your monthly bill.

Charter Cable is literally passing the buck onto its cable TV subscribers.

Effective this October, Charter Cable customers will pay about a dollar more per month thanks to a new junk fee the company is adding to subscribers’ bills.

Federal law allows local U.S. broadcast television stations (i.e., affiliates of networks such as CBS, NBC, ABC, Fox, etc.) to negotiate with cable and satellite providers in order to obtain “consent” to carry their broadcast signals (Cable Television Consumer Protection and Competition Act of 1992).

As a direct result of local broadcast, or “network-affiliated,” TV stations increasing the rates to Charter to distribute their signals to our customers, we will be passing those charges on as a Broadcast TV Surcharge, in the Taxes and Fees section of the billing statement. These local TV signals were historically made available to Charter at no cost, or low cost. However, in recent years the prices demanded by local broadcast TV stations have necessitated that we pass these costs on to customers.

For most customers, the fee will average $0.94 per month, but in some areas it will be as high as $1.31 per month.  Charter argues the fee is not arbitrary. claiming it represents the average price the company pays – per subscriber – for local broadcast stations in the communities it serves.

Stop the Cap! contacted Charter this morning and learned the company intends to impose this new fee even on customers with Charter’s Price Guarantee Package, which is supposed to guarantee customers no change in pricing for up to two years (see notes at the end of the article for an update).  A Charter representative we contacted claimed the company will impose the fee on all customers, including those on contract, because of a clause in the terms and conditions which says, “The guaranteed price does not include the cost of installation and equipment, any applicable franchise fees, taxes or late fees, or costs for other ancillary services that you may order.”

Of course, the new fee is completely arbitrary and is neither a franchise fee or tax, nor is it for an “ancillary service.”  We predict a closer review of Charter Cable’s thinking on this matter by state regulatory agencies and Attorneys General.

Charter’s FAQ seeks to pass the blame for the new fee to the federal government and local broadcasters:

Federal law treats [cable networks and over-the-air TV stations] differently. Unlike cable TV networks, local broadcast TV stations distribute their signals over the air, using free spectrum granted to them by the federal government. In effect, taxpayers are subsidizing the distribution of broadcast TV signals. These same broadcast TV stations are then allowed by the government to charge for their signals — and if we don’t agree to pay, broadcasters can force us to drop their channels, thereby adversely impacting our customers.

“Given cable’s well-documented history of raising rates 4-6 times the annual rate of inflation, it seems rather disingenuous for them to now claim their rate hikes are coming as a result of broadcast TV stations, which provide the highest-rated entertainment and local news programming on the cable line-up,” National Association of Broadcasters Executive VP Dennis Wharton told Multichannel News in response to Charter’s move.

The new Broadcast TV Surcharge will appear in the Taxes and Fees section of your bill, joined by other junk fees Charter has invented to pass along the ordinary costs of doing business to cable subscribers while claiming they are not increasing rates:

Charter’s “It’s Someone Else’s Fault We Charge These” Junk Fees

• TV and Internet Late Payment Fee — A late fee will be assessed for past due unpaid Charter TV and Internet charges.
  
• Phone Processing Fee — This fee is assessed when Charter does not receive payment for the full balance of your phone charges.
• Regulatory Cost Fee — The cost of doing paperwork and whatever else the company deems.
• State Telephone Relay Charge — Funds a Telecommunications Relay Service for hearing impaired/speech disabled residents.
  
• Federal Communications Commission (FCC) Fee — The FCC charges an annual regulatory fee for cable operators.
  
• Franchise Fee — Local communities collect a percentage of revenue from cable operators in return for doing business in the community.
  
• Public Education and Government Channels (PEG) Fee — Many cable franchise agreements ask cable operators to help fund the operations of these channels.
  
• Public Utilities Commission (PUC) Fee — Some states ask regulated providers to defray the costs of utility commissions that oversee providers on the state level.
• County 911 Charge (9-1-1 fee) — Some counties ask telephone providers to help pay to administer emergency 911 service.
  
• Telephone Right Of Way Fee (Municipal right-of-way fee) — A fee used to compensate municipalities for the use of their rights-of-way.
• E911 Equalization Surcharge (9-1-1 equalization fee) — A fee charged in wealthier, urban areas to help subsidize the costs of 911 service provision in rural and poor areas.

(Those fees in blue represent completely optional “junk fees” that hide revenue enhancements.)

(Those charges in red are fees mandated by government entities, but traditionally deemed “the cost of doing business.”  Nobody requires these fees be billed directly to subscribers on a line-by-line basis, and most cable operators used to include them in the monthly price for service.  But in a quest for increased revenue, cable companies began breaking them out of cable package pricing, charging for them independently.  That effectively raises your total bill without changing the price of the programming package.  It’s comparable to an airline charging for your airline ticket, but then padding the price with a Seat Rental Fee, a Boarding Fee to enter and exit the plane, an FAA Cost Recovery Fee to pay the Federal Aviation Administration for its services, a Flight Plan Filing Surcharge to cover the costs of filing a flight plan, and a Control Tower Charge to defray the expense of dealing with air traffic controllers.  Snacks and soft drinks are extra.)

Charter Cable has been notifying subscribers about the new fee in mailings sent to subscribers.  The company’s argument that broadcasters and the federal government conspired to make subscribers pay more may have some merit, but nobody forced Charter Cable’s hand to add a new junk fee to customer bills.

Local broadcasters are in an enviable position because federal government rules have given them all the cards to charge whatever they want for cable carriage.  Government policy forbids most cable systems from taking their business elsewhere — perhaps to a station in a nearby city or network affiliate delivered via satellite that is willing to accept less than what local stations demand.  Network-affiliated stations need not compete for cable carriage because they can demand cable systems not go outside of the area for an alternative.

Broadcasters do not enjoy “free spectrum granted by the federal government.”  Television stations pay license fees and taxes just like other spectrum users and are mandated by the federal government to meet certain minimum programming standards and decency rules.  Unlike other private license holders, broadcasters are supposed to serve the public interest, although what exactly defines that has evolved and eroded over the years.  Cable programming is not regulated.

Charter Cable’s claim that “taxpayers are subsidizing the distribution of broadcast TV signals” is dubious at best.  Broadcast radio and television preceded the paid television industry by decades, and was created to deliver unique “local service” to communities where stations were licensed in the public interest.  Should Charter argue that broadcasters should bid for auctioned spectrum, they’d have much more to complain about when those costs are passed on in considerably higher broadcast carriage fees.

As usual, regardless of who wins the spat over local broadcast carriage fees, it’s Charter’s subscribers who will lose thanks to the higher bills that follow.  But not our readers.

If you follow our advice, you can save far more than a dollar a month.

Score a new customer promotion and save far more than Charter hoped to collect from its new Broadcast TV Surcharge.

Stop the Cap! has been in touch with several Charter subscribers who successfully argued their way to considerably lower monthly bills, often by $20 or more a month.  Here’s how you can let the bully boys argue over someone else’s money:

Gather Information

Get out a copy of your latest Charter Cable bill showing your packages, programming fees and the taxes and surcharges piled on at the end of the bill.  Then, visit DISH Network or DirecTV’s website and gather pricing information for a comparable video package using their promotional pricing for new customers.  Also visit your local phone company website for pricing for their phone and broadband services, taking note of any new customer promotional pricing and gifts.

On a sheet of paper, list the costs for Charter’s services on one side and the prices you would pay with their competitor(s) on the other and determine how much you would save with the competition.

Armed with this information, you’re now ready to sit down, call Charter, and talk business.

Sit Down And Make the Call

When you call Charter, select the option to cancel service or just say the word “cancel.”  This will transfer you to Charter’s “customer retention” department.  This group of customer service representatives have been specially trained to talk you out of dropping your service.

Explain that you are calling to cancel your Charter service after you received word of the latest fee increase.  Tell them it was the last straw after years of rate increases and that you’ve been comparison shopping.

A Sample Conversation

You: “My husband/wife and I carefully considered an offer we received from [competitor] last night and decided it was time to make a change.  It’s really all about the pricing.  This economy has been killing us and we simply cannot handle a higher bill.  When we looked at [competitor’s] offer, we discovered we could be saving $20 (insert amount applicable to you) or more a month over your own pricing.  But I’ve been a Charter subscriber for a long time and I decided I should call and see if there was any way we could stay as a customer, if we could only negotiate a lower bill.”

Charter: “I see you have been a customer for a long time.  Did you know that Charter delivers… (expect a comparison about the differences between satellite and phone company competition and Charter at this point.  Your goal is to patiently wait until they finish and then stick to your guns that it’s really all about the monthly cost).

You: “I understand all that but you have to understand the only reason we are calling to cancel service is because of your prices.  I am really giving you a last chance to see if we could stay and pay a lower price.”

Charter: “Let’s review your bill and see if we can drop any services you may not be using or perhaps sign you up for a different tier of broadband service.”

You: “The thing is, with [competitor’s] service, I don’t have to drop anything and I will still get a much lower price.  Let me suggest an alternative idea.  You could save our family as a customer if you could sign me up for the same kind of package pricing new customers pay.”

Charter: “I’m sorry, but those prices are only for new customers.  But perhaps if we credited your account for a year’s worth of the fee you are upset about, that would help?”

You: “No, not really.  Not after I saw what we could be paying by switching.  Again, we’ve really already decided on making this change, but I decided it would be fair to give Charter a last chance to come closer to the prices I would be paying with your competitor.  Isn’t there anything you could do to sign me up to a new customer promotion?”

Charter: “Well, let me put you on hold and talk to my supervisor.”

At this point, you may or may not get your request granted.  Sometimes the representative will try and negotiate dollar amounts, try to sell you a bundled package of services to deliver “more savings,” or offer you a lower discount.  Stick to your guns, but always remain polite.  Sometimes their counteroffer may not deliver new customer pricing, but will still leave you saving far more than when you started, and keeps you off a term contract.  If you are uncomfortable with the progress of the negotiations, or find an unsatisfactory outcome, politely end the call telling the representative you would like some time to think about it.  It’s your chance to call back and speak with someone else.

In general, the more seriously they sense you are ready to commit to the competition, the better the offers will get to stay.  Feel free to let them know you’ve already scheduled an installation with the “other guy” or would like information about where to drop off your cable equipment.  If you are queasy about playing hardball, blame it on your spouse, letting Charter know “he/she will never go for that.”  Stay friendly with the representative at all times — try to make them your advocate by encouraging them to find an even better deal for you and that you appreciate the time they are spending working with you.  It’s a lot easier to get a better offer when you are not screaming at the representative that can’t wait to get off the phone with you.

A Charter customer e-mailed this segment of their bill to clarify whether or not customers under a Price Guarantee contract would also pay the dollar fee.

If you find stubborn resistance to discounting your bill, consider showing up at the local cable office with your equipment and try negotiating one last time.

Charter Cable allows customers to cancel service and, after 30 days, sign up under a new customer promotion, so asking them to waive the 30 day requirement when it will save them money to reinstall service may be something they’ll consider.  You could also re-establish “new service” under a spouse’s name for an even faster turnaround.

As Charter has taught their subscribers, it’s all about business with them.  Turnabout is fair play, so give them the business about their pricing and demand savings.

[Updated 9:42pm ET — A Charter subscriber e-mailed Broadband Reports a copy of their latest Charter Cable bill saying the fee would -not- be applied to customers under a current Price Guarantee contract, in direct contradiction to what a Charter representative told us this morning.  This is not much of a surprise, considering it took eight calls to Time Warner Cable last week to get the straight story about their DVR price hike in upstate New York.

Perhaps we should start calling cable companies not less than five times for answers to basic questions and then average the responses we get.  As we said last week, we’ll believe the bill over what company representatives say any day.

Thanks to our reader Gabe and Broadband Reports for for alerting us to this development and helping clarify matters.]

[Update #2: 10:52am ET 9/16 — A Charter customer on Broadband Reports shared an online chat he had with Charter that shows I’m not the only one getting inaccurate information about this fee:

Scott: I heard that charter decided to add a new fee to user bills for “broadcast tv surcharge” even for customers that have locked in rates.

TTD Straissan : Yes. That is correct. The locked rates are for the services that are included on the locked promotion. Taxes and fees are not part of the locked promotion we have.

TTD Straissan : Broadcast TV Surcharge
Federal law allows local U.S. broadcast television stations (i.e., affiliates of networks such as CBS, NBC, ABC, Fox, etc.) to negotiate with cable and satellite providers in order to obtain “consent” to carry their broadcast signals (Cable Television Consumer Protection and Competition Act of 1992).

As a direct result of local broadcast, or “network-affiliated,” TV stations increasing the rates to Charter to distribute their signals to our customers, we will be passing those charges on as a Broadcast TV Surcharge, in the Taxes and Fees section of the billing statement. These local TV signals were historically made available to Charter at no cost, or low cost. However, in recent years the prices demanded by local broadcast TV stations have necessitated that we pass these costs on to customers.

This surcharge displays in the Taxes and Fees section of the bill statement.

Scott: when will this be on my bill?

TTD Straissan : Expected increase will be around October 1, 2010 on some areas.]

Sezmi set top DVR box, antenna, and remote control

While most of the pay television industry forces huge basic cable packages on subscribers containing dozens of channels never watched, an innovative California company thinks it has the perfect solution for those who want to cut cable’s cord but still keep some of their favorite cable channels.

Sezmi combines a super-sized 1 terabyte DVR set-top box ($149.99) with a digital broadcast receiver to deliver every local television signals, 23 popular cable channels, on-demand movies, video podcasts, and YouTube content for $19.99 per month.  Don’t care about the cable channels or live outside of Los Angeles?  The price drops to $4.99 per month.

Sezmi’s inventors believe the marketplace is ripe for a compromise between paying enormous cable bills or simply going without popular cable series and 24/7 news.

Besides, Sezmi’s founders argue, with free digital television stations increasing the amount of programming they offer and Americans wanting to watch more of their favorite shows on-demand, Sezmi’s super-sized DVR may provide enough live and recorded programs to more than satisfy average viewers.  If not, a budget-priced package of two dozen popular cable channels could give people enough courage to cut cable’s cord forever.

At its core, Sezmi’s set top box offers an enormous capacity hard drive that can store up to 1400 hours of SD (standard definition) and 340 hours of HD (high definition) programming.  It can also record one channel while watching another, and its software gives each member of a viewing family their own personal menu to access, record, and view the programming they want.

[flv width=”446″ height=”270″]http://www.phillipdampier.com/video/Sezmi All-In-One Personal TV Service.mp4[/flv]

A promotional reel introducing shoppers to Sezmi and its services.  (3 minutes)

Sezmi’s founders future-proofed their technology to be immune from broadband providers with Internet Overcharging schemes in mind.  Unlike other cord-cutting alternative set top technology that relies on broadband to access programming, Sezmi receives its live TV and cable network programming entirely over the air.  That keeps your local cable or phone company from stopping all the fun by imposing broadband usage limitations or charging steep penalties for watching too much of a competitor’s service.

Sezmi’s unique way of bypassing the local broadband provider is both innovative and challenging at the same time.  In the Los Angeles market, currently the only city where Sezmi provides cable networks, it leases leftover capacity from local stations to transmit the encrypted cable networks over the air to Sezmi receivers.  As long as you get a signal from a local station, the cable signals come along for the ride.

While that can work in Los Angeles, which has at least 26 full powered broadcast stations in the market from whom it can potentially lease capacity, most American cities have fewer than eight full power local channels.  If those stations can’t or won’t lease out their extra bandwidth, the cable programming service simply won’t work.

Part of the original business plan for Sezmi was to provide the set top box as a solution for phone companies like Frontier and other independents who want to deliver a video package without improving their current copper-based networks to deliver it.  Because the box will work reasonably well with a broadband connection of 3.1Mbps or higher, companies selling DSL broadband packages to customers could use Sezmi to deliver video content to subscribers.  In rural areas, relying on broadband delivery may prove more effective than over-the-air reception, and since the provider offers the service themselves, there is little chance they’d limit their own customers’ use of Sezmi.

Now Sezmi is directly being sold to consumers on Amazon.com and in Best Buy stores in the 35 U.S. cities Sezmi serves.

Sezmi's cable channel lineup is currently only available in Los Angeles.

Buyers are pre-qualified before purchase to determine if they’ll be able to receive a suitable broadcast TV signal required for Sezmi to operate.

A lengthy beta test in Los Angeles revealed many consumers loved the concept of Sezmi, but definitely discovered some flaws:

• There is no wireless connection supported for broadband.  You must use a supplied Ethernet cable to connect to a router;
• The remote control and its functionality was frequently reviewed as unintuitive and slow to respond to commands;
• Cable networks arrived only in standard definition video;
• Reception varied considerably depending on where one lives in relation to local broadcast transmitters.  Where TV stations use different transmitting locations, reception problems for one or more stations can be an issue unless you regularly reposition the antenna;
• Sezmi’s antenna module looks like a small bookshelf speaker and was more obtrusive than many thought necessary;
• Sezmi’s online viewing options are limited to YouTube and Sezmi-partnered content.  No Hulu or Netflix access is supported.
• Some reviewers felt charging $5 a month for a Sezmi package that only included free, over the air broadcast stations was unjustified when they also had to purchase the required set top box.  Many of these comments came when the box was priced at $299, however.  Sezmi has reduced the price of the set top box by half, so it’s likely the monthly fee includes some hardware cost recovery;
• The cable networks chosen do not include a lot of sports, although the company is currently negotiating with ESPN;
• Love it or hate it, one of America’s favorite cable channels – Fox News, is not included in the lineup although CNN and MSNBC are.  Their asking price may have been too high.

Sezmi’s co-founder probably expects that detailed level of critique considering the company’s business plan targets technology-minded “early adopters” who are well versed on technology and very opinionated about how it works.  They also feature prominently in the group of consumers that are now spending less time watching live television and less-willing to pay the asking price for it.

“The Sezmi offering is geared toward the next wave of consumers who want a very high-quality experience and the latest technology features, but are not willing to overpay for that,” said Phil Wiser, co-founder and president. “We’ve limited ourselves to really focus on that segment who are value-oriented and tech-oriented.”

Those who are value-oriented have responded positively to Sezmi.  Stop the Cap! reader John in Sherman Oaks, Calif., who notified us about Sezmi’s local media blitz says it’s exactly what he was looking for, and he’s enjoying some shows he missed from USA, TNT and Discovery.  But his wife misses her favorite HGTV and Food Network shows, which Sezmi doesn’t carry.

“I told cable to take a hike,” he writes. “I only watch perhaps a dozen channels and Sezmi has most of them covered for about 1/3rd of the cost the cable company charges, not including the fees, taxes, and renting cable’s set top boxes.”

John adds 24/7 access to live news programming was the one thing that held him back from dropping cable before Sezmi arrived.

Sezmi's Los Angeles Coverage Map (click to enlarge)

“I wasn’t going to give up CNN and MSNBC for breaking news,” he said.

Wiser’s comments to the San Francisco Chronicle seem to match John’s perceptions about the service.

“The key thing we realized with Sezmi is that consumers would not be ready to drop a paid TV experience purely for Internet offerings,” he said. “You need a bridge that includes a traditional cable experience with a more on-demand interactivity.”

Although John says he has few problems getting good broadcast signals from Mt. Wilson, where most Los Angeles-area broadcasters maintain their transmitters, some  residents further east in Riverside say their experiences were considerably worse.

“If you walked in front of the antenna, reception would drop out,” wrote one reviewer.  “A rooftop antenna is really a smart idea if you need reliable reception to make sure your shows get recorded,” wrote another.

The potential impact Sezmi could have on cable and phone company pay television packages varies depending on which analyst you choose.

Mike Jude, with Frost & Sullivan, told the Chronicle devices like Sezmi will probably remain niche products that will have trouble attracting interest from traditional cable subscribers.

But Gerry Kaufhold, an analyst at In-Stat, said Sezmi’s innovative approach could find a significant audience especially with more casual TV viewers. He said 15 percent of viewers don’t pay for TV while 35 to 40 percent of cable users pay about $40 for basic cable. Both could find a lot of utility in a product like Sezmi, he said.

“Anyone that gets a big digital cable (package) is unlikely to leave, but people who get basic cable may be willing to make that jump and cut some 20 bucks off their bill,” Kaufhold said. “They can also get people who don’t pay for TV to try it.”

With a Yankee Group study looming that estimates one in eight Americans will disconnect or downgrade their paid TV services by April, devices like Sezmi could threaten industry profits even sooner than some analysts think.

Service Coverage – Click links for respective channel lineups

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Sezmi Services Described.flv[/flv]

Sezmi Explained: This series of videos walks you through all of Sezmi’s features and services.  (12 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Sezmi Setup.flv[/flv]

Sezmi’s setup is explained in this video, guiding you through the process of hooking up the equipment.  (10 minutes)