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Posted: 6:00 a.m. Thursday, Jan. 23, 2014

Alternatives to cable TV and satellite are coming

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By Clark Howard

ClarkHoward.com


Amazon and Verizon both want to create the end of pay TV as we know it. But who will make it to market first?

Verizon has spent hundreds of millions buying something that was just vaporware last year. Intel had developed a new TV product called On Cue that would offer programming like cable or satellite but at fraction of the cost.

But Intel could not get On Cue launched because the programmers would not do business with them. They were too worried about offending the pay TV monopolies.

So what's different about the situation now that Verizon has bought On Cue? Analysts believe that because Verizon already has traction with FiOS, the monopolies won't be able to keep it bottled up this time.

Yet even if Verizon fails…Amazon is preparing to launch a pay TV service as a companion to their video content for Amazon Prime customers. The as-yet-unbranded service will let you watch traditional pay TV stuff but at fraction of cost.

Incidentally, what is the markup on pay TV? You might not believe it, but the typical cable company marks up programming 600%!! So when you pay your cable TV bill, you're paying 6 times the cost of the programming.

(Costco, by contrast, has an 14% average markup on what you buy in their stores.)

The thing about Amazon is, they don't care if they make money on pay TV! They're all about volume and getting you into their ecosystem. So if Amazon can negotiate with various content providers like ESPN, Lifetime, Discovery, et al., well, the price competition for pay TV will blow the roof off the place!

With either Verizon or Amazon, they will allow you the flexibility to watch programming wherever you are at a much lower cost. And then you throw into mix the Supreme Court decision on Aereo.

For those who don't know, Aereo gives you a variety of channels and a built-in DVR for $8 a month. You get live programming and time shifting capability.

So no matter what the monopolies do to try to bottle up the future,alternatives to cable TV and satellite are coming. And your wallet will smile when they arrive!

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