Lines Between Cable, Phone and Internet Get Even Blurrier

(Bloomberg Gadfly) -- Another thing the internet is destroying is the once-bright lines that divided the U.S. companies that sell TV service, landline and mobile phone plans and internet access. 

U.S. cable TV companies started adding phone and internet access to their offerings about 15 years ago. Now the two biggest U.S. cable companies are getting into mobile phone service, too, though only in places where they already offer TV and other services for now.

At least one of them, Comcast Corp., will also soon sell a collection of channels similar to cable TV but delivered over the web. Satellite TV companies Dish Network and AT&T Inc.'s DirecTV are already selling such internet TV packages in addition to their more conventional TV offerings. Technology changes may mean people's mobile phone providers will also be able to give them home internet connections.

Confused? It's understandable. The landscape of America's TV and communications providers is becoming a jumbled mess. The potential thrill from this shake-up is how it could inject more competition, more choices and lower prices in what has been a fairly stuffy market. Maybe. Or maybe it entrenches powerful companies even more, sows confusion and pushes prices higher. Isn't the future grand?

For now, TV service has become the most dynamic area of the communications and entertainment market, most likely because of the revenue up for grabs and the particular pressures from changing consumer behavior.

Cable, satellite and phone companies that sell TV service generated $116.3 billion in revenue last year in the U.S., according to Kagan, a group within S&P Global Market Intelligence. The revenue for internet access was about two-thirds of that size, Kagan estimates. At the same time, more people don't want conventional TV packages that cost on average $83.40 a month at industry leader Comcast , and instead are opting to ditch TV service or trade down to lower-priced options.

That's one reason DirecTV is introducing online TV packages, soon to be joined by Comcast and Verizon. For them, options like DirecTV Now are a hedge against a future when many more people dump TV. Technology companies are jumping in, too, by offering packages of TV channels similar to cable TV, or giving people options to assemble their own collections of TV entertainment or watch TV programs tailored for Snapchat. 

Internet service is not as competitive, in part because of the costs of building pricey networks to spread internet access to U.S. homes and businesses. But potential shake-ups are possible here, too.

Mobile phone service was stodgy for a long time, and then a revived T-Mobile US Inc. changed all the industry's rulesno sure thingAmazon

But it's also possible the jumbled mess of TV and communications could be a letdown. It's not clear there is a motivated challenger like T-Mobile was in wireless that has a big incentive to reshape TV or communications to Americans' benefit. 

The cable companies at the moment are sticking to their existing pockets of the country for new wireless service and online TV options. That means Comcast and Charter most likely see their new products as ways to keep existing customers and squeeze more from their monthly bills -- not as a way to shake up the ways most people buy entertainment and communications.

Apart from Netflix and Amazon, demand for new types of TV entertainment doesn't seem robust at the moment, and that could stop future TV experiments from getting out of the gate. Home broadband is the linchpin for nearly every future entertainment or communications service, but most Americans have very few choices of providers and pay a lot for subpar service. That doesn't seem likely to change soon.

All this means the future might be dynamic and exciting, or the future could turn out not too different from our frustrating present.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Shira Ovide is a Bloomberg Gadfly columnist covering technology. She previously was a reporter for the Wall Street Journal.

1. For a glimpse of how TV is still the big moneymaker, Comcast generates on average  $47.80 monthly for each internet customer and $83.40 for TV service.

2. Google looked for a while like the best tech contender in internet and mobile phone service. But its Google Fiber TV, internet and landline service seems stuck its Project Fi wireless service doesn't appear to be a big seller.

To contact the author of this story: Shira Ovide in New York at sovide@bloomberg.net.

To contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.net.