2012 prediction: The slow death of coax begins

You might have seen that Verizon (s VZ) uploaded a few new videos to YouTube (s GOOG) Thursday, discussing the future of TV and video in the home. Those videos highlighted two big trends occurring in the pay TV space:

  1. Set-top boxes are shrinking, and will eventually disappear altogether, as users are able to watch video on other connected devices.
  2. Wireless technology will eventually replace wired networking for video distribution in the home.

In both cases, what the videos speak to is a future in which the devices that viewers watch video on — whether they be TVs themselves, or a growing number of mobile handsets or tablets — are connected to that content wirelessly.

There are other reasons to embrace this change, and not just the ability to reach more devices. There’s a huge economic driver here for operators. Streaming live video wirelessly means that they can do away with costly set-top boxes that get installed in homes to decode video signals. While those boxes are typically leased by consumers and act as an additional revenue stream, it’s not clear that operators recoup their investment on that equipment.

Cable and IPTV operators would be able to operate much more profitably if consumers brought their own device with connectivity — which is one reason why Verizon (s VZ) is pushing forward to make its content available on Microsoft’s Xbox Live service, (s MSFT) as well as other connected devices like Roku streaming boxes.

But moving to wireless would also allow those operators to do away with coaxial cable — the stuff that connects every room in the house to TV programming today. Anyone who’s ever added a TV in a new room in his house knows how much of a hassle it can be to deal with coax. While one could theoretically run that coax himself (and some handy homeowners do so!), more often than not, running a TV line to your teenager’s bedroom when she gets a TV for her birthday usually requires a call to the local cable company, a truck roll and a lengthy installation process as a technician installs the new cable.

Those types of support calls are expensive. Certainly more expensive than hooking up a wireless receiver to a TV that connects directly to a single wireless gateway. More expensive than letting your customers hook up a Roku box in their kids’ rooms and downloading an app that will provide all the same content that used to be delivered over coax to a slow, ugly, MPEG-2 set-top behemoth.

Verizon isn’t the only operator looking to cut the coax: AT&T (s T) introduced its own wireless home gateway and wireless receivers earlier this year. We expect more carriers to follow suit in the coming year, as a way to both improve accessibility for consumers and lower costs for themselves.

Photo courtesy of (CC-BY-SA) Flickr user Akarsh Simha