The FCC has now opened the door for price increases across the live TV streaming market. Cable as well, for that matter.
The FCC today ruled that streaming services are "effective competition" to cable.
A ruling that appears to be the beginning of the end of rate regulation.
In reality, all the FCC did today is rule that in Hawaii and Massachusetts, AT&T TV NOW is considered competition to Charter.
However, this is one of those cases where ruling that one thing is something, determines that similar things are also the same something. In other words, the ruling that AT&T TV NOW is competition to Charter, effectively rules all streaming services as competition to all cable companies, in all locations.
It was Charter who sought the ruling in the first place. In the locations mentioned, Charter was the subject of rate regulation. That is, local regulations required Charter to provide a base level price tier.
This requirement was the result of The Communications Act and the suggestion cable companies have no "effective competition." Now the FCC has ruled one cable company does have effective competition, the previously enforced requirement is no longer enforceable.
Why the ruling matters?
Again, this particular ruling on its own means little outside of Hawaii and Massachusetts. However, there are implications and they are likely to be far-reaching. For starters, it's unlikely cable companies will be bound to providing access at certain prices. Therefore, there will be little stopping cable companies upping prices across all tiers.
The knock-on effect is there's no need for streaming services to also avoid price increases in the long-term.
Generally speaking, streaming companies have looked to out-price cable companies. However, if the average cable bill can go up, so can the cost of a competing streaming service. Especially as those streaming services will still be undercutting cable. Even at the higher price points.
Streaming services waiting for a chance to up the price
Now, this is not to say that definitely a price increase will come, and for all live TV streaming services. However, it's no secret that many streaming services are running on thin margins. A report last year pointed to YouTube TV as losing $9 per subscriber (on average) at the time.
Again, these low margins, and losses in some cases, are part of an international effort by streaming services to attract customers while they buildout the user-base.
Over the last year, almost every major live TV streaming service has increased its pricing. In fact, when one seems to, the others seem to follow and that's likely another example of the intention of streaming services to up prices at any available opportunity.
AT&T TV NOW has been one of the worst for this. Formerly, DIRECT NOW, AT&T TV NOW has been aggressively increasing plan prices during the last year, and the next one already appears to be only weeks away.
With this ruling, and the likelihood of similar rulings elsewhere, it seems likely as prices increases in general, other streaming services will follow suit.
On a positive note, the FCC has now acknowledged that streaming services are not only thriving, but legit competition.