Comcast is inviting controversy launching a new live streaming TV service targeting cord-cutters while exempting it from its own data caps.

Comcast’s Stream TV is comparable to Comcast’s Limited Basic lineup, only instead of using a set-top box, Stream TV delivers online video over the Internet to Comcast’s broadband customers in Massachusetts, New Hampshire, Maine and the Greater Chicago area. For $15 a month, Stream TV offers a large package of local over the air stations, broadcast networks, and HBO, along with thousands of on-demand titles and cloud DVR storage. In Boston, the lineup includes:

WGBH (PBS), HSN. WBZ (CBS), NECN, WHDH (NBC), Community Programming, BNN-Public Access, WWDP-Evine Live, WLVI (CW), WSBK (MyTV), WGBX (PBS), WBIN (Ind.), WBPX (Ion), WMFP (Ind.), The Municipal Channel, Government Access, WFXT (FOX), WCEA (MasTV), WUNI (Univision), EWTN, C-SPAN, CatholicTV, POP, QVC, WYDN (Daystar), WUTF (UniMas), WNEU (Telemundo), Jewelry TV, XFINITY Latino, WGBH World, WGBH Kids, Trinity Broadcasting Network, WGBH Create, Leased Access, WBIN-Antenna TV, WBIN-GRIT TV, WNEU-Exitos, WLVI-BUZZR, WCVB (Me-TV), WFXT-MOVIES!, WHDH-This TV, WFXZ-CA, WUNI-LATV, WFXZ (Mundo Fox), WBZ-Decades, and WFXT-Laff TV + HBO. The package also qualifies the customer as an authenticated cable TV subscriber, making them eligible to view TV Everywhere services from many cable networks.

Comcast is offering the first month of Stream TV for free with no commitment to its broadband customers subscribed to at least XFINITY Performance Internet (or above). Up to two simultaneous streams are allowed per account and some channels may not be available for viewing outside of the home. Comcast claims it will expand Stream TV to Comcast customers nationwide in 2016. Comcast will not be selling the service to customers of other cable or phone companies, limiting its potential competitive impact.

Competitors like Sling TV offer their own alternatives to bloated cable TV subscriptions at a similar lower price, and they will sell to anyone with a broadband connection. Sling alone is partly responsible for Comcast’s loss of hundreds of thousands of cable TV customers who don’t want to pay for hundreds of channels many never watch. That Comcast might want to launch its own alternative online video package to retain customers is not a surprise. But Comcast’s decision to exempt Stream TV from the company’s data caps while leaving them in place for competitors is sure to spark a firestorm of controversy.

Comcast claims it is reasonable to exempt Stream TV from its 300GB data cap being tested in a growing number of markets.

“Stream TV is a cable streaming service delivered over Comcast’s cable system, not over the Internet,” wrote Comcast in its FAQ. “Therefore, Stream TV data usage will not be counted towards your Xfinity Internet monthly data usage.”

More precisely, Comcast claims it relies on its own internal IP network to distribute Stream TV, not the external Internet competitors use to reach ex-Comcast cable TV subscribers. Comcast’s premise is it is less costly to deliver content over its own network while Internet traffic comes at a premium. Critics will argue Comcast has found an end run around Net Neutrality by relying on usage caps to influence customer behavior.

For the moment, Netflix is reserving comment after being contacted by Ars Technica. But Sling TV and other services that depend on Comcast’s broadband to reach customers will likely not remain silent for long.

Comcast could effectively deter consumers from using competing online video services with the threat of overlimit fees if customers exceed their usage allowance. The cable company could even use the fact its services don’t count against that allowance as a marketing strategy.

Stop the Cap! has warned our members about that prospect for years. Preferential treatment of certain content over others by playing games with usage caps and overlimit fees could have a major impact on emerging online video competition. Since Comcast owns both the broadband lines and the online video service, it can engage in anti-competitive price discrimination. Competitors will also argue that Comcast’s internal IP network is off-limits to them, making it impossible to deliver content on equal terms over a level playing field.

The next move will likely come from the FCC in response to complaints from Comcast’s competitors. As Ars Technica notes, the Federal Communications Commission’s Net Neutrality rules allow for complaints against so-called zero-rating schemes, with the commission judging on a case-by-case basis whether a practice “unreasonably interferes” with the ability of consumers to reach content or the ability of content providers to reach consumers.

With Comcast’s usage caps and overlimit fees, the only reaching will be for your wallet. Consumers need not wait for Sling TV and others to complain to the FCC. You can also share your own views about Comcast’s usage caps by filing a complaint with the FCC here.

LOS ANGELES (Reuters) – Local TV stations are plugging one of the last major holes in mobile video: streaming their news to phones and tablets. The move presents yet another challenge to cable and satellite providers, which are grappling with the widespread online availability of content.

This fall, 112 U.S. stations will begin streaming live newscasts through an app called NewsOn, one of several planned “over-the-top” offerings delivered online without a pay TV subscription.

And Verizon Digital Media Services, which offers technology that enables streaming on a wide variety of screens, is in talks with owners of more than 300 affiliates that want to supply programing directly to consumers over the Internet, Ralf Jacob, chief revenue officer, told Reuters. Stations could use the technology to stream news or other local programing.

Local broadcasters, like cable networks, are trying to adapt to the changing preferences of viewers, who increasingly want to watch programs on their own schedules. The challenge for local news programs will be to satisfy demand for mobile video without undermining audience numbers for traditional broadcasts, which generate hefty fees from cable operators as well as higher ad rates than online programing.

After years of isolated experiments with mobile news, a critical mass of the local TV industry is seizing on the idea. If they are successful, they could both increase viewing by current consumers and attract new ones, especially a younger generation of viewers who prefer watching television programing on mobile devices. But if current viewers “cut the cord,” or drop pay TV service, broadcast stations and cable operators could both suffer.

Broadcasters are eager to follow audiences who are looking outside the television for news and entertainment, said Emily Barr, president and CEO of Graham Media Group, which owns five broadcast stations and is experimenting with mobile apps for newscasts.

Pay TV still reaches 100 million households, but the industry lost 0.5 percent of its customers in the 12 months through March, according to MoffettNathanson analysts. Distributors have countered by offering customers their own apps with broadcast and cable networks.

“It’s a hedge of where the marketplace is going,” said Justin Nielson, senior research analyst at SNL Kagan.

Local broadcasters receive fees from pay TV providers based on the number of subscribers, amounting to $6.3 billion in 2015, SNL Kagan predicts. Returns from advertising are forecast to reach $21.1 billion this year.

One illustration of the risks of getting it wrong is in Britain, where the British Broadcasting Corporation recently announced job cuts because viewers have moved from TV viewing to tablets and mobile devices, which cut its TV license fees.

NEWS LEADS CHANGE

Until recently, local U.S. programing was limited in over-the-top video, since the rights to much of what local stations run is held by other parties.

Local newscasts, however, are owned by the stations themselves, so they don’t need to negotiate streaming rights.

NewsOn, which will run ads, will offer live local newscasts from 84 U.S. markets, including eight of the top 10. The five station groups that have signed up are the ABC Owned Television Station Group, Cox Media Group, Hearst Television, Media General and Raycom Media.

Other stations plan to offer more news on their own apps or expand them to more devices.

In Cincinnati, E.W. Scripps sells a subscription for ABC-affiliated station WCPO with additional stories not seen on TV, as well as free movie screenings and other perks. It has an on-demand news app in Phoenix on Microsoft’s Xbox and Apple Inc’s set-top box.

Tegna, the broadcast and digital company spun off from Gannett, is considering streaming local entertainment programing such as video of a morning radio show. Stations can now reach viewers any time of day, said Dave Lougee, president of Tegna’s broadcasting division, and “we want to be ubiquitous.”

BIG PARTNERSHIPS

Local affiliates also are trying to join streaming video packages, but they don’t own all the rights to stream shows they broadcast.

CBS has signed up more than 100,000 for its $6-a-month CBS All Access online video subscription, with more than 100 local stations. But during NFL football, viewers get a message that says the game “is not yet available for live stream.”

Fox, CBS and NBC stations are on Sony Corp’s PlayStation Vue, a streaming package launched this year in five markets.

Satellite TV provider Dish Network Corp wants local broadcasters on Sling TV, an online service it launched in February, but needs to work out programing rights with dozens of affiliates.

Sling TV CEO Roger Lynch said he expects to work on sorting that out over the next twelve months. “Over time you’ll see us launching something local,” he said.

(By Lisa Richwine; Reporting by Lisa Richwine in Los Angeles; Additional reporting by Malathi Nayak in New York; Editing by Peter Henderson and Sue Horton)

Comcast will challenge cord cutting and entice cord-nevers with an online video package of about a dozen television channels it will sell for $15 a month and likely exempt from its usage cap.

“Stream” will offer about 12 channels — almost all over the air stations including NBC, CBS, ABC, PBS, Fox, The CW, Telemundo, Univision — and HBO to Comcast’s broadband customers and deliver the package over Comcast’s privately managed IP network, which it considers separate from the public Internet. That will also allow Comcast to offer on-demand programming, cloud DVR storage and access to Streampix, Comcast’s movies-on-demand feature it largely abandoned a few years ago.

Comcast’s new no-contract video service will begin in Boston by the end of summer, quickly followed by launches in Chicago and Seattle. Comcast plans to expand the service nationwide by early 2016.

Stream will target millennials and others that have turned their backs on traditional cable television. It will also directly take aim at competing Sling TV, which sells streaming cable TV channels for about $20 a month.

But at first glance, Comcast may have one up on its competition.

Comcast will deliver Stream over the same network it uses for content delivery to game consoles that does not count against Comcast’s trialed usage caps. Watching competitor Sling TV does count against your Comcast usage allowance because it is delivered over the public Internet.

That advantage alone may not help Comcast overcome some of the harsh restrictions it will impose on Stream customers that could prove major turn-offs:

• Viewing must be done from a web browser, tablet, or phone. Stream will not be available on TV-connected platforms like Roku or Apple TV;
• Viewers must stay inside the home to access live streamed content;
• Customers must subscribe to Comcast High Speed Internet service to buy Stream;
• Only Comcast customers inside a Comcast service area can subscribe;
• There are no cable networks offered, except HBO, for now.

Customers will be able to sign up for Stream (and cancel it) over the web with no service technician visit needed. Customers can cancel anytime.

In the last three years, several Wall Street analysts have called on cable and telephone companies to raise the price of broadband service to make up for declining profits selling cable TV. As shareholders pressure executives to keep profits high and costs low, dramatic price changes may be coming for broadband and television service that will boost profits and likely eliminate one of their biggest potential competitors — Sling TV.

For more than 20 years, the most expensive part of the cable package has been television service. Cable One CEO Thomas Might acknowledged that in 2005, despite growing revenue from broadband, cable television still provided most the profits. That year, 64% of Cable One’s profits came from video. Three years from now, only 30% will come from selling cable TV.

While broadband prices remained generally stable from the late 1990’s into the early 2000’s, cable companies were still raising cable television prices once, sometimes twice annually to support very healthy profit margins on a service found in most American homes no matter its cost. Despite customer complaints about rate hikes, as long as they stayed connected, few providers cared to listen. With little competition, pricing power was tightly held in the industry’s hands. The only significant challenge to that power came from programmers demanding (and consistently winning) a bigger share of cable’s profit pie.

The retransmission consent wars had begun. Local broadcast stations, popular cable networks, and even the major networks all had hands out for increased subscriber fees.

Rogers

In the past, cable companies simply passed those costs along, blaming “increased programming costs” in rate hike notifications without mentioning the amount was also designed to keep their healthy margins intact. Only the arrival of The Great Recession changed that. New housing numbers headed downwards as children delayed leaving to rent their own apartment or buy a house. Many income-challenged families decided their budgets no longer allowed for the luxury of cable television and TV service was dropped. Even companies that managed to hang on to subscribers recognized there was now a limit on the amount customers would tolerate and the pace of cable TV rate hikes has slowed.

For a company like Cable One, the impact of de facto profit-sharing on cable television service was easy to see. Ten years ago, only about $30 of a $70 video subscription was handed over to programmers. This year, a record $45.85 of each $81 cable TV subscription is paid to programmers. The $35.50 or so remaining does not count as profit. Cable One reported only $10.61 was left after indirect costs per customer were managed, and after paying for system upgrades and other expenses, it got to keep just $0.96 a month in profit.

To combat the attack on the traditional video subscription model, Cable One raised prices in lesser amounts and began playing hardball with programmers. It permanently dropped Viacom-owned cable networks to show programmers it meant business. Subscribers were livid. More than 103,000 of Cable One’s customers across the country canceled TV service, leaving the cable company with just over 421,000 video customers nationwide.

Some on Wall Street believe conducting a war to preserve video profits need not be fought.

U.S. broadband providers already deliver some of the world’s most expensive Internet access.

Analysts told cable companies that the era of fat profits selling bloated TV packages is over, but the days of selling overpriced broadband service to customers that will not cancel regardless of the price are just beginning.

Cablevision CEO James Dolan admitted the real money was already in broadband, telling investors Cablevision’s broadband profit margins now exceed its video margins by at least seven to one.

The time to raise broadband prices even higher has apparently arrived.

“Our work suggests that cable companies have room to take up broadband pricing significantly and we believe regulators should not oppose the re-pricing (it is good for competition & investment),” wrote New Street Research’s Jonathan Chaplin in a recent note to investors. The Wall Street firm sells its advice to telecom companies. “The companies will undoubtedly have to take pay-TV pricing down to help ‘fund’ the price increase for broadband, but this is a good thing for the business. Post re-pricing, [online video] competition would cease to be a threat and the companies would grow revenue and free cash flow at a far faster rate than they would otherwise.”

If you are already a triple play cable television, broadband, and phone customer, you may not notice much change if this comes to pass, at least not at first. To combat cord-cutting and other threats to video revenue, some advisers are calling on cable companies like Comcast, Time Warner Cable and Charter to re-price the components of their package. Under one scenario, the cost of cable television would be cut up to $30 a month while the price of Internet access would increase by $30 or more a month above current prices. Only customers who subscribe to one service or the other, but not both, would see a major change. A cable TV-only subscriber would happily welcome a $50 monthly bill. A broadband-only customer charged $80, 90, or even 100 for basic broadband service would not.

Neither would Sling CEO Roger Lynch, who has a package of 23 cable channels to sell broadband-only customers for $20 a month.

“They have their dominant — in many cases monopolies — in their market for broadband, especially high-speed broadband,” Sling CEO Roger Lynch told Business Insider in an interview, adding that some cable companies already make it cheaper for people to subscribe to TV and broadband from a cable company than just subscribe to broadband.

A typical Sling customers would be confronted with paying up to $100 a month just for broadband service before paying Sling its $20 a month. Coincidentally, that customer’s broadband provider is likely already selling cable TV and will target promotions at Sling’s customers offering ten times the number of channels for as little as a few dollars more a month on top of what they currently pay for Internet access.

Such a pricing change would damage, if not destroy, Sling TV’s business model. Lynch is convinced providers are seriously contemplating it to use “their dominant position to try to thwart over the top services.”

At least 75% of the country would be held captive by any cable re-pricing tactic, because those Americans have just one choice in providers capable of meeting the FCC’s minimum definition of broadband.

Even more worrying, FCC chairman Thomas Wheeler may be responsible for leading the industry to the re-pricing road map by repeatedly reassuring providers the FCC will have nothing to do with price regulation, which opens the door to broadband pricing abuses that cannot be easily countered by market forces.

Lynch has called on the FCC to “protect consumers” and “make sure there’s innovation and competition in video.”

Unfortunately, Wheeler may have something else to prove to his critics who argued Net Neutrality and Title II oversight of broadband would lead to rampant price regulation. Wheeler has hinted repeatedly he is waiting to prove what he says — an allusion to hoping for a formal rate complaint to arrive at the FCC just so he can shoot it down.