Charter Communications has introduced internet-delivered cable television packages that its cable TV subscribers have requested for years, including one offering a true a-la-carte lineup of network TV channels and the customer’s choice of 10 cable channels for $25 a month.

Spectrum Choice was soft-launched this week and is a companion to a larger internet-delivered package of TV services targeting cord-cutters called Spectrum Stream, which is also available in many areas.

Although Spectrum customers can visit the order page to sign up for Spectrum Choice immediately, when we tested it this afternoon we found the website was not able to complete an order. It turns out Spectrum is initially “hand-selecting” about 100,000 customers in selected areas for Spectrum Choice, but won’t disclose exactly where those areas are. We know from some reviews, it is available in parts of Ohio.

For now, would-be customers can try building their own package from at least 65 cable networks, including several networks Spectrum usually bundles into higher cost Silver and Gold packages. For example, Turner Classic Movies, Hallmark Movies and Mysteries, and FX Movie Channel are all available to choose. Spectrum Choice also offers all three major cable news networks as well as Spectrum News (where available). ESPN, ESPN II, FOX Sports, NBC Sports Network, and NFL Network are also available for sports fans. Even Music Choice is included.

Spectrum Choice customers are not tied down with a bloated package of channels, except for the included large bundle of local stations, which includes ABC, CBS, NBC, FOX, CW, MyNetworkTV, PBS, and independent/foreign language over the air stations. The availability of public television is a rarity among online cable TV alternatives. In most areas, digital subchannels like Grit and MeTV are also included, depending on what networks are provided by stations in your area. You will also get several shopping channels, C-SPAN I, II, and III, and local Public, Educational, and Government Access channels as seen on your local cable system.

If you visit their website can complete an order online, you are qualified to receive their service. If there is no option to move forward to complete an order, you are not qualified to sign up at this time, but check back later or call Spectrum and ask.

The service relies on the Spectrum TV app (available on iOS, Android, Roku, and Xbox One) and the Spectrum website to stream video programming to customers, and no set-top box is required. DVR service is not worth the effort or cost. It requires a traditional DVR set top box and you can only watch recorded shows on the television connected to the DVR. Be aware there are also restrictions viewing some channels outside of the home, just as Spectrum’s cable TV customers already understand:

Linear OOH: Watching a live channel while away from home
VOD OOH: Watching on-demand content while away from home
TVE App Name: TV Everywhere App Name – Independent apps used by programmers or viewing on their websites
VOD Parity: Cable TV and Spectrum Choice customers get access to the same on-demand programming options.

Details (click the name of the package for more information):

Spectrum Choice TV

If you don’t mind Charter/Spectrum choosing your channel lineup, a second option offers more channels for about the same price.

• 7-day money back guarantee/trial, then $15 for the first month
• To get the service, you must have an internet-only plan or an internet + voice plan from Spectrum. You cannot be a current traditional cable TV subscriber
• After the first month, the service costs $25 per month for the first two years, including the Broadcast TV Surcharge, but excluding tax
• After 24 months, price increases to $30 a month
• Your assigned Spectrum TV username and password will also work on websites that authenticate you as a qualified cable TV customer
• Premium channels are $7.50 each for HBO, Showtime, The Movie Channel, Starz, and Starz Encore or bundle all-five for $15 a month for two years. Epix is also available a-la-carte.

Spectrum Stream TV

• $21.99 a month (not including $3 Broadcast TV Surcharge) for 25+ pre-selected channels including local stations and major basic cable networks
• All features included with Choice TV work similarly except the lineup is not a-la-carte. But you may get more channels at a comparable price.
• After two years, the price increases to $26.99. Starting in year three, the price rises again to $34.99.
• The same $15 promotion for five premium movie networks noted above applies, if interested.

Spectrum’s promotion of Stream TV. (1:00)

Charter Communications CEO Thomas Rutledge is fed up with customers sharing their passwords to unlock television streaming services for non-subscribing friends and family and promises to lead an industry-wide crackdown on the practice in 2018.

“There’s lots of extra streams, there’s lots of extra passwords, there’s lots of people who could get free service,” Rutledge said at an industry conference this month.

Password sharing used to be limited to services like Netflix, HBO, Showtime and Hulu, but since the cable industry opened up its “authenticated” TV Everywhere services to viewing outside of the home, unauthorized viewing by non-subscribers has allegedly exploded.

Three typical tweets exemplify the problem for Rutledge. One sought to trade for a Spectrum user ID and password, another thanked a friend for sharing their Spectrum TV user credentials to unlock a channel showing the World Series. A third delighted in the fact he managed to hack his parent’s Spectrum account password and now watches cable television for free.

Rutledge complained that password sharing is now so rampant, one unnamed network authorized 30,000 simultaneous streams using a single customer’s login credentials.

Rutledge believes many non-paying customers are now enjoying Spectrum TV and other services as a result of the practice. Shareholders and Wall Street analysts are also concerned, particularly as cord-cutting continues to take a toll on cable TV subscriber numbers and revenue.

Rutledge

Bloomberg News reports there is divergent thinking about password sharing and how serious it actually is. Top executives at Time Warner, Inc., which owns HBO and Turner Broadcasting, have shrugged about password sharing in the past, believing it is a good way to introduce potential customers to their services and eventually become paying subscribers.

Password sharing “is still relatively small and we are seeing no economic impact on our business,” said Jeff Cusson, a spokesman for HBO.

But anecdotal evidence at networks like ESPN, owned by Walt Disney Co., suggests millennials have no moral dilemma routinely sharing their passwords, even with strangers. At one focus group targeting younger sports fans, all 50 participants raised their hands when asked if they shared passwords, according to a fuming Justin Connolly, executive vice president for affiliate sales and marketing at ESPN.

“It’s piracy,” Connolly said. “It’s people consuming something they haven’t paid for. The more the practice is viewed with a shrug, the more it creates a dynamic where people believe it’s acceptable. And it’s not.”

The TV Everywhere “authenticated subscriber” concept has traditionally required pay television customers to re-enter their username and password for each authorized device at least once each year, although some cable operators require subscribers to re-enter their credentials monthly, and actively discontinue access as quickly as possible when a customer downgrades or cancels their cable television service.

Many cable providers offer their own live streaming apps and on-demand streaming service showcasing the cable TV lineup for in-home and out of home viewing on desktops, tablets, and portable devices. Some limit the number of channels that can be viewed outside of the home and do not allow multiple users to concurrently stream programming. But most cable TV networks that support authentication do not limit concurrent streams or offer generous limits on how many services can be streamed at the same time over a single account.

(Source: Consumer Reports)

Charter is now taking the lead on demanding cable TV network owners tighten up their apps and online viewing to limit password sharing. Some of the toughest negotiations took place this past fall between Charter and Viacom, owner of Comedy Central, MTV, and Nickelodeon. Viacom pushed hard for Charter to restore its basic cable networks to Spectrum’s entry-level “Select” cable television package. In 2016, many Viacom networks were pushed to the much more expensive Gold package, which meant significant losses in audience as Time Warner Cable and Bright House customers switched to Spectrum’s TV plans. Time Warner Cable included Viacom-owned networks in all the company’s popular TV tiers, but most customers lost access to those networks when they switched to a Spectrum TV plan.

Viacom successfully negotiated the transition of its networks back to the Select TV plan beginning in late January, 2018. But those networks’ online viewing platforms and apps will now include stream limitations to keep simultaneous viewing and password sharing to a minimum.

ESPN, which has been dropped from the lineup in a number of slimmed-down cable TV packages, has also experienced plenty of password sharing, and has begun limiting the number of simultaneous streams allowed per customer. Originally, one account could launch 10 concurrent streams. That number has now been cut in half to five and the sports network is currently considering further reducing the stream limit to three simultaneous sessions.

One research group, Park Associates, estimates almost one-third of internet-only customers are streaming cable television networks and programming using someone else’s subscriber credentials. They estimate the cable TV industry will lose $3.5 billion from unauthorized viewing this year, rising to $9.9 billion by 2021.

Companies like Adobe Systems have begun selling services to cable TV providers that track the use of usernames and passwords and the location of those accessing online streams. They suggest cord-cutting is fueling unauthorized viewing as customers seek access to cable programming for free.

Much of the password sharing seems to be occurring among friends and relatives, especially children away from home. For now, most cable TV executives are fine with in-family sharing. What concerns most is when those passwords are further shared with friends or sold to strangers. It is uncertain if customers are always aware that their user credentials are being sold or traded by third parties. When an account that saw no streaming activity before suddenly generates 50 simultaneous streams in multiple states, hacking by an unknown party is usually suspected.

The cable industry remains undecided about exactly how many concurrent streams are appropriate for consumers. Netflix allows between one and four streams, depending on the plan chosen. HBO permits three simultaneous streams, DirecTV Now allows two while DirecTV’s satellite customers get up to five streams.

A Wall Street media analyst called today’s television model of high returns and relentless rate increases passed on to pay television customers unsustainable.

Sanford Bernstein media analyst Todd Juenger told attendees of The Independent Show (courtesy: Multichannel News) in Indianapolis that media companies expecting to profit from linear TV’s increased advertising revenue and retransmission or carriage consent fees are going to get slapped in the face soon as consumers revolt.

Juenger, like BTIG’s Rich Greenfield, is becoming increasingly pessimistic about today’s costly bundled-TV model. Juenger warns high revenue and profit expectations are only going to accelerate the growth of disruptive technologies like on-demand, online video.

Juenger notes cable and television networks never seem satisfied with the massive amounts of revenue they are already earning, and keep seeking ways to raise prices further. The TV business, Juenger notes, already enjoys some of the highest profit margins of any U.S. business in modern history.

“This is a very, very rare thing,” Juenger said. “Companies are not supposed to make that kind of money.”

Most cable networks now expect 40% annual revenue increases and a 30% return on capital, which is what causes runaway programming rate increases to be passed on year after year to consumers. Yet the quality of those networks has not significantly improved in many cases, and consumers are gradually shifting away from watching live television (and the commercials that accompany it).

Viewers, starting with younger generations, are increasingly ditching linear-live television and finding on-demand content to be more appealing. Much of that viewing isn’t taking place on the cable industry’s on-demand or TV Everywhere platform, which has become as littered with advertising as live television. Instead, viewers are drawn to original productions produced by Hulu, Netflix, Amazon, and other content platforms — often commercial-free, and on-demand network shows on platforms like Hulu.

“The whole reason for being for networks is called into question,” Juenger said.

Juenger dismisses the current industry trend of creating virtual online alternatives to cable television bundles — skinny or otherwise — for streaming online. Those efforts, like Sling TV, DirecTV Now, and PlayStation Vue still depend on linear television as their core product, and cord-cutters are showing a growing lack of interest in this model.

Cord-cutters and cord-nevers don’t want smaller, more economical bundles of cable networks delivered online, according to Juenger.

“I don’t think there is anybody who wants these products on an incremental basis,” Juenger said. “If the purpose of these services is to recapture subscribers that were lost, they’re not going to work.”

Viewers want an entirely new model, built around on-demand access to individual shows without viewing restrictions or having to pay for unwanted channels. Many are also willing to pay a little more to avoid commercials altogether.

Apple TV

Apple’s ability to successfully force its way into the pay television business with a cord-cutter’s streaming TV solution has been left languishing since 2009, thanks to some of America’s largest cable and entertainment companies who think Apple is arrogant and out of touch.

The Wall Street Journal today published a story showing how Apple’s plans to challenge the cable TV industry much the same way it revolutionized digital music has rubbed the big and powerful the wrong way. Apple’s desire to launch a cheaper streaming video service with a slimmed down TV lineup and robust on-demand options has flopped, because executives have no interest in bending to Apple’s way of thinking.

In 2009, Apple decided it wanted in on the streaming pay-TV business. At the same time Time Warner Cable began experimenting with data caps, Apple was approaching local stations and broadcast networks and offering them premium payments — higher than what the cable industry itself paid — for Apple’s choice of stations and cable networks. The deal meant Apple would alone be free to pick only the channels it wanted to carry, a major departure from the industry practice of contract renewals that bundled popular networks with spinoff and lesser-known channels cable operators didn’t want to carry. Apple’s hard-charging negotiator, Eddy Cue, seemed to believe that if Apple was at the negotiating table, that alone would be enough to get a deal done. It wasn’t.

Two years later, Time Warner Cable approached Apple seeking to launch a joint TV venture that could compete nationwide with satellite and phone company competitors. The talks were at the highest levels at both companies, involving Time Warner Cable’s then-CEO Glenn Britt, Cue, and Apple CEO Tim Cook. Cook also approached Brian Roberts, CEO of Comcast, promising him the service would only be sold through cable operators — good news for Comcast but bad news for open competition.

This time, Apple sought money from the cable companies, not the other way around. Cable operators were told they would need to pay $10 a month per subscriber to Apple, with no guarantee that fee would not increase in the future. Just as concerning was Apple’s insistence that subscriber authentication would require customers to use their Apple IDs, a departure from the cable industry’s push to adopt TV Everywhere, where customers could unlock streaming video from any cable network simply by logging in with the username and password they set up with their pay TV provider. Apple was also characteristically secretive about their user interface and left cable industry executives flummoxed when they asked Apple to sketch out what the service would look like on a napkin. An Apple official would only respond that their interface would be great and “better than anything you’ve ever had.” The fact Apple refused to answer the question did not go unnoticed.

Nor did Cue’s unconventional way of negotiating with some of the most powerful entertainment executives in the country. When Jeff Bewkes, CEO of Time Warner (Entertainment) agreed to meet with Cue about Apple licensing Time Warner’s critical networks — which include HBO, CNN, and TNT — Apple’s negotiator showed up 10 minutes late. While Time Warner’s negotiators were smartly dressed in business attire, Cue turned up wearing jeans, a Hawaiian shirt, and sneakers with no socks. It went downhill from there, because Apple insisted on valuable on-demand rights to full seasons of hit shows and permission to let viewers store their favorite recordings on a massive cloud-based DVR that included features like automatic recordings of hit shows and advanced ad-skipping technology.

Crickets.

More than a few programmers used to having their way with cable operators were shocked by Apple’s ‘arrogance’ and unconventional way of doing business. The newspaper reports one former Time Warner Cable executive watched with amusement as stone-faced programmers were unimpressed with Apple’s demands.

Jon Lovitz offers a visual hint what Mr. Cue must have looked like meeting with high-powered execs at Time Warner (Entertainment)

“[They] kept looking at the Apple guys like: ‘Do you have any idea how this industry works?'” said the former executive.

Apple responded ‘doing new things requires changes that often are unsettling.’

A year later the negotiations were on life support, as Apple struggled with the arrival of 2015 with no slimmed down streaming TV package to offer Apple TV owners.

Apple’s demands flew in the face of decades of cable industry business practices, which give channel owners virtual guarantees of rate hikes with each contract renewal, the right to force their spinoff networks on the cable lineup in return for a comfortable renewal process, and the cable industry’s right to an assurance everyone was getting the same kind of deal (except volume discounts). Any deviation from this would result in panic on Wall Street, as investors’ dependence on perpetually improving quarterly financial results based on revenue boosts from new or higher fees would come crashing down if a company like Apple got a better deal.

One industry insider suggested once a company like Apple got a deal on sweetheart terms, every other distributor would demand the same deal (and many have contract provisions that require it). Apple may have assumed that because it managed to get the recording industry to agree to its iTunes digital music distribution deal 15 years earlier, so the cable industry would go. Except the road to cut-throat deals for entertainment programming is littered with dead-end business plans that had to be quickly modified when the discounts ended.

Netflix and Starz both learned expensive lessons when early discounts on licensing deals ended after Hollywood saw how much money those companies made from streaming. When licensing contracts expired, entertainment companies sought massive increases in licensing fees to “fairly share” the proceeds. Netflix ended up walking away from several studios, seriously impacting their online streaming catalog. Eventually, Netflix decided if they cannot beat the studios, they should join them, creating original programming to attract and keep subscribers.

Cue in real life

After almost a decade spent trying to get into the online cable business, Apple now seems more likely to follow Netflix, Amazon, and Hulu, and devote time and money on developing its own original programming. Instead of trying to license and bundle network programming, Apple TV today supports independent apps created by various networks. Viewers still get to watch their favorite shows, Apple does not have to pay for streaming rights, and there is a joint effort to create and support a single login so viewers can get access to content without constantly re-entering usernames and passwords.

Apple’s original shows include “Planet of the Apps,” a reality series, a miniseries being developed by Dr. Dre, and a spinoff of CBS’ “Carpool Karaoke.” The shows serve a dual purpose — entertaining viewers and helping push sales in Apple’s App Store and streaming music service.

Also under consideration are big budget, critically acclaimed original shows and series that could generate positive buzz for Apple TV, like “House of Cards” has done for Netflix.

Developing programming keeps negotiators like Apple’s Mr. Cue from having to challenge a very profitable pay television industry on their terms and spares Apple from creating a cable package of linear TV channels subscribers increasingly don’t care about. Viewers want on-demand access to the shows they want to see and don’t care that much about who supplies them and how.

So in the end, the intransigence of Big Cable and Hollywood studios that are now worried about cord-cutting may have done Apple an enormous favor, sparing them from being entangled in a business that buys and sells channels to fill a bloated and expensive cable television lineup more and more consumers are now deciding they can do without.

Updated: Link to WSJ story corrected.

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.