Google ditches traditional TV packages for Fiber services

Google says it is ending traditional pay television packages for its Fiber service offered in a handful of American cities.

In a blog post on Tuesday, Google said its decision to abandon traditional pay TV bundles for its Fiber Internet service comes as consumers increasingly ditch cable and satellite services for online offerings.

“You no longer need pricey bundles that force you into paying for channels you’ll never watch, taking away your choice and control,” a Google executive wrote in a note to customers. “And you especially don’t need to be locked into one way to get TV in the face of continued price increases or contract battles when all you want to do is watch TV.”

Google had offered IP-based television packages as part of Fiber’s most-expensive Internet bundle and also as a separate service for cheaper Fiber offerings.  The package came with around 150 channels of live TV, including local channels.

But in many of the communities where Google offers Fiber, the company has local broadcast and regional sports distribution agreements for customers of its YouTube TV service. Unlike Google Fiber, which is available in less than two dozen markets, YouTube TV is available across the United States and doesn’t require a subscription to Google’s Internet service.

Now Google says it is abandoning its traditional pay TV packages for new Fiber subscribers, who will be directed to sign up for either YouTube TV or rival service Fubo TV. Google said customers can choose to sign up for other services, like AT&T TV Now or Sling TV, if they want, though those services will be billed separately.

“You’ve been telling us for a long time that you wanted more choice and more control,” Google wrote to customers. “You wanted no contracts and more flexibility. You made your voice heard with where and how you spend your money, and Google Fiber is listening.”

The move to abandon traditional pay TV service likely comes as Google seeks to expand Fiber beyond a handful of communities. In 2014, a Google executive said retransmission agreements with television programmers was “the single biggest impediment” to rolling out Fiber in other areas of the country. Google was reportedly paying more than twice the amount of established players in the pay TV space, according to a Washington Post report.

The cost likely wasn’t worth the effort: As of 2016, Google had only convinced around 15 percent of its Fiber Internet customers to either sign up for its most-expensive package, which included TV, or add it on separately. Google’s cheapest Internet plan — 100 megabytes per second for $50 a month — undercut similar offerings from Comcast and AT&T in markets where they were available, but didn’t allow customers to include TV service. Google has since discontinued the plan.

Whether YouTube TV or other streaming services are tenable in the long-term remains to be seen: Like its closest competitors, YouTube TV has been forced to raise its monthly subscription price while bowing to customer demand for added networks. It raised the price of its service from $35 a month to $40 a month after adding channels from AT&T’s WarnerMedia (TBS, TNT, Cartoon Network, CNN), then raised the fee again to $45 a month after adding channels from Discovery Networks (Discovery Channel, Animal Planet, Travel Channel, OWN).

Industry experts say the unit economics of streaming services are untenable when distributors seek to add popular news and sports networks, which are traditionally among the most-expensive channels to offer customers. Channels such as Disney’s ESPN and Fox’s Fox Sports 1 and Fox News are known to account for a large portion of the pay TV pie compared to channels offered by distributors who don’t air rolling news or live sports.

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