Cincinnati Bell Inc.CBB - a diversified telecommunications and technology services provider primarily operating in the Greater Cincinnati area - has introduced its latest MyTV service through its Fioptics high speed Internet service. The service involves providing channels and other TV content in leaner and more flexible package options for the customer, in contrast to traditional tiered TV packages that offer a higher number of channels for a fixed monthly fee.
Customers opting for the MyTV service have several package options to choose from. The basic starter package will cost $29.99 per month, comprising mainly local channels with popular ones like Discovery Channel, AMC etc. Other additional packages, depending upon one's genre/area of interest, can be availed with extra monthly fees ranging from $6-$25 per month. Moreover, customers will have the option to create customized packages at their own discretion. Also, the service can be taken as a standalone service or as a bundled service through the company's Fioptics Internet package.
The U.S. pay-TV industry is undergoing a transition with subscribers more inclined to pay only for what they watch, rather than spend money on channels and content which do not interest them. This has fostered the popularity of online video streaming companies like Netflix Inc. NFLX . Wireless carriers like AT&T Inc. T and Verizon Communications Inc. VZ have also joined the race, looking forward to an alternative source of revenue through their U-Verse and Go-90 offerings, respectively. Thus, it is only natural that Cincinnati Bell too wants to be a part of the action in a bid to boost its market share in the region. We believe the company's decision to offer smaller tailored TV channel packages can drive its top line as well as check churn rates vis-à-vis traditional pay-TV competitors.
However, we would like to reiterate that the offering through bundle packages with Fioptics Internet may attract net neutrality debates. If the MyTV packages is deemed a zero-rated package, whereby customers can use the TV service in an unlimited manner without exhausting the data allowance provided by the Internet service provider, people subscribing to rival streaming service providers such as Netflix and Hulu will be at a disadvantage, as the data consumption of their third party streaming service will be counted within their data cap. This will render third party streaming providers uncompetitive in comparison.
The Bottom Line
Cincinnati Bell has been witnessing a slower pace of ARPU growth lately. This is attributable mainly to increased competitive pressure and the industry's move toward more standard price bridging strategies for customers, away from promotional pricing. However, the MyTV offering may be a game changer for the company, as it competes with wireless carriers and other cable operators in the market.
However, Cincinnati Bell, along with its subsidiaries, is faced with a number of lawsuits, actions, proceedings, claims and related matters. While the company's MyTV is an attractive offering for customers, any future intervention from the Federal Communications Commission (FCC) relating to violation of net neutrality rules may jeopardize its future prospects.
Cincinnati Bell currently carries a Zacks Rank #3 (Hold).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.