This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

The Age of Internet Bundling Is Here

If subscribers think they can escape this bundling through DirecTV (DTV), Liberty Media owns 38% of that, too.

Owning the programming is a sweet deal for a cable company, or an Internet carrier. It's the kind of vertical integration 21st Century Fox gets from its owned-and-operated TV stations. When Fox charges a Fox station for Fox programming, the money stays home.

Want to know why the cost of sports rights, and sports teams, keeps climbing? Vertical integration. Want to know why cable operators and phone companies are now bidding directly for sports programming rights? It's because of TV Everywhere.

When the U.S. Court of Appeals ruled the FCC's Net neutrality rules out of order, activists created an online poster showing a future Internet service bill, with subscribers being charged extra for access to various Web sites.

The assumption built into that was that the carriers would be charging the sites. The reality, however, is that the sites charge the carriers.

This has a huge impact on how investors should be looking at the Net neutrality issue. The fear is that AT&T (T) will charge Netflix (NFLX) for letting subscribers gain access to it. Netflix could easily charge AT&T, getting added to TV Everywhere to give AT&T's U-verse some differentiation.

Under the Court of Appeals ruling there are now all sorts of "bundles" that carriers, most of which already run cable television systems, could now make with Internet content, based on the TV Everywhere model.

Are local newspapers charging for access? Add them to a local bundle. Are magazines charging subscription fees for Internet services? Add a mix of them, maybe through an aggregator. If a carrier doesn't like the price Netflix is charging, it might add Hulu Plus to the bundle instead -- or even Amazon.com (AMZN) Prime. And don't forget Internet radio services such as Pandora (P). They might like to get into a bundle as well.

There's a Wild West atmosphere in all this, but the West was tamed long ago. It's a lot cheaper for an Internet site to take a big check from a carrier than to try and market to millions of individuals and bill them individually -- the deals are there to be made.

The only protest against all this is that subscribers don't get a vote on what goes into their bundles. They either buy the bundle the cable carrier is offering, or they buy the bundle the phone carrier is offering.

If Net neutrality buffs want to stop all this, or even slow it down, they should be demanding what the 1996 Telecommunications Act was designed to give them, the power to demand the rental of phone and cable lines to third parties for the creation of competitive Internet carriers. In short, make them common carriers, and make them compete.

Google (GOOG), which has launched an online campaign against the Court of Appeals ruling, will be watching that carefully.

At the time of publication the author owned shares of Google.


This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

 

Stock quotes in this article: DIS, TWC, FOX, CMCSA, LMCA, CHTR, DTV, T, NFLX, AMZN, P, GOOG 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs