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Verizon gets closer to 'unbundling' with new customizable pay-TV service

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File: A Verizon advertisement is viewed outside of a store on June 7, 2013 in New York City.
Spencer Platt/Getty Images
File: A Verizon advertisement is viewed outside of a store on June 7, 2013 in New York City.

Starting this Sunday, Verizon will offer a stripped down, or “skinny” version of its TV packages, called FiOS Custom TV.

You didn’t used to have a lot of choice when it came to your cable or satellite TV subscription. You either paid for a ton of channels you didn’t ever watch, or you put some rabbit ears on the top of your set.

These days, there’s something called cord-cutting — rather than paying a fortune for channels like ESPN Classic College Water Polo, you can order off an a la carte menu. Dish Network now has a $20-a-month service that includes about 20 channels, and you can use Internet streaming services like Netflix, Hulu or HBO Now to tailor your channel lineup.

Now, another major media company says it’s going to give customers even more options. Starting this Sunday, Verizon  will offer a stripped down, or “skinny” version of its TV packages, called FiOS Custom TV. Customers start with the basics for $55 — which includes AMC and CNN — and then have the option to add packages for $10 each.

The Frame host John Horn caught up with Wall Street Journal reporter Shalini Ramachandran to get a better sense of what Verizon’s latest move means.

Interview Highlights

What is Verizon offering with this new skinny option for bundling?

“They basically want to give customers a way to customize their TV bundle. So [they] just have a base package and on top of that, you add whatever channel packages you want. Now this might sound familiar but what they do is they put into tiers all these popular channels that could be expensive... So they kind of give you a way to customize your package.

A recent Nielsen study said that most cable households receive 189 channels but typically watch just 17. So that’s kind of part of what Verizon is reacting to right?

“They found that... maybe people people will feel that they’re getting more value for the money they’re paying if they get to actually customize which packages they’re receiving.

How does what Verizon is doing right now fit into what HBO is doing with HBO Now, what Netflix and Hulu are doing?

“They’re definitely chasing. I think all the pay-TV providers are trying to adapt to the fact that all these premium channels like HBO, Starz, Showtime, they’re all looking at ways to sell their channels directly to customers. And what that means is customers will have the option, if they really only watch just HBO and nothing else, they can get that for $15 now and don’t have to buy that $90 bundle.”

Verizon, or any company that’s trying to unbundle, has to have some pretty difficult negotiations with the content providers themselves. What are they offering and are the content providers willing to play ball?

“The content providers now have been seeing cord-cutting accelerate... They’ve seen 'cord shaving,' where people are downgrading to skinnier bundles of channels. So you’ve seen big channels like ESPN and TNT lose something like 3, 4, 5 million customers, according to Nielsen, over the last few years. So all the content companies see this as a real threat, and they want to be in those skinny bundle packages.”

Does all of this give consumers more negotiating power?

“Definitely. I think consumers probably have more choices now than they ever have before. Sorting through all of it could be a hassle... But if you’re OK with catch-up TV and HBO, I think you could easily cut your cable bill in half today, and it’s something that probably couldn’t have been done a couple years ago.”

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