Is Amazon.com, Inc. Girding for War Over Net Neutrality Changes?

According to The Wall Street Journal, Amazon.com (NASDAQ: AMZN  ) may beef up its Prime streaming TV service to include live programming in an effort to disrupt the cable and satelliate industry. Fool contributor Tim Beyers says it's the first in what could be a high-stakes bandwidth war.

At issue are recent changes to the net neutrality rules, Tim says in the following video. Top tier TV distributors such as Time Warner Cable tend to bundle Internet service as part of their offering. Now, with softer requirements regarding net neutrality, they're in a position to hike fees on those who consume the most bandwidth. Think not only Amazon, but also Netflix and Google.

In teasing the idea of an online TV service, Amazon is threatening Time Warner Cable and its peers, whose profits are heavily influenced by broadcast and cable television retransmission fees. Giving programmers more distribution options could put pressure on what channels might be willing to pay the incumbents.

For its part, Amazon told the Journal that it doesn't plan to license programming or build a pay TV service. Fair enough. The mere threat of action may be enough to keep cable and satellite operators from gouging the big bandwidth consumers, Tim says.

Do you agree? Would you sign up to watch an Amazon-led pay TV service were it offered to you? Please watch the video to get Tim's full take, and then leave a comment to let us know whether you would buy, sell, or short any of the stocks mentioned in this article.

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  • Report this Comment On January 24, 2014, at 5:08 PM, dlwatib wrote:

    It certainly makes sense for Amazon to provide TV content to Amazon Prime customers. I don't have any cable or movie service and don't intend to sign up for one, and I'm not a member of Amazon Prime, but if I were interested in broadcast TV, then I would certainly consider Amazon Prime. I know some people are subscribing to Amazon Prime and Netflix instead of cable TV. The main thing the miss is sports.

    I consider Amazon to be greatly overvalued because until now it's looked like just a low-cost retailer, and it doesn't make sense to invest as heavily as Amazon does in research and development just to support low-cost retailing. But if they morph into a media company, that makes them something else entirely. That would make it a whole new ballgame.

  • Report this Comment On January 24, 2014, at 5:14 PM, Hookem2011 wrote:

    I am somewhat confused. Based on a MF article on the future of cable/sat tv, I think the big driver of the current model is live sports broadcasting. Most other tv programming can be delayed and watched at consumer's convenience but not live sports. With the contracts in place for the major pro and college sports, how do new live tv offerings by new companies such as Amzn, Google, and Netflix get this market. Why would a consumer want to pay for separate services especially if it were more than what they are paying now.? I thought the pay for view was not a good model.

    Am I missing something?

  • Report this Comment On January 25, 2014, at 2:21 AM, puppybone69 wrote:

    I'd be willing to pay to watch the Super Bowl on my Galaxy Note 3 if my money was good enough for anyone to care about selling me that opportunity, but apparently the NFL only thinks Verizon subscribers are worthy of that priviledge, and I'm a Sprint subscriber. So no live Super Bowl broadcast for me on my $300 smartphone, because none of my tricks to make Fox Sports online think that I'm accessing it with a PC or an iPad will work in my favor either. Now my only hope is for Amazon to offer the game to its Prime subscribers, since I am one, but I'm not holding my breath for that either. They can't even be bothered to tell people how to make Prime video work on an Android device that doesn't officially support Flash content, so I had to learn on my own about how to sideload Flash Player onto my device and then use Firefox browser just to take advantage of my $80 a year Prime subscription, after Amazon happily took my money without telling me that's the only way to make their service work on my phone. That's pretty relevant information that they should've given me beforehand, rather than leading me to believe that it works automatically on any phone! So here's an idea, how about the industry quit kissing Apple's butt for its measly 12% of the smartphone market and 40% of the tablet market and cater to the majority of people instead, who are all on Android? It's about time they acknowledged who the true industry leader is, and treat Apple like the niche market it is!

  • Report this Comment On January 25, 2014, at 4:14 AM, RMengineer wrote:

    I don't think there is anything to worry about regarding "net-neutrality" - there are just too many too disruptive technologies and too many ways to undermine CATV ISPs these days. Any ISP that tried to mess around that way would be signing it's own death warrant. ISP have too much to lose to try to play those games. They no longer have the degree of grasp on the market they once did and what they do have is rapidly eroding. They're probably a dying breed anyway and trying to manipulate the internet access to suit their own agenda would only serve to hasten their ultimate demise.

    I mean, sure, they ruled against net-neutrality, but that's a moot point because at this point it's really a third rail for the ISPs anyway.

    The internet has brought the demise or at least a great deal of weakening of many business models despite the players attempts to forestall the inevitable. Primarily I'm thinking of the music industry. They fought digital distribution disruption of their business model for so long until they finally acquiesced.

    I'm sure it won't be long before movies and TV goes the same route and then CATV will be left out in the cold. CATV is trying really hard to cling to the content providers (I'm think HBO's requiring GO subscribers to have a CATV subscription, for instance - why does HBO care if not for kick backs from CATV trying to forestall cable cutters?) But I'm sure before long they will no longer be able to ignore streaming only customers and will tell CATV to go pound sand.

  • Report this Comment On January 26, 2014, at 12:08 AM, spinod wrote:

    I hope Google keeps pushing their service. So sick of these ISP's. They constantly pretend to be low on bandwith, yet other countries run miles around us in technology at half the cost...... Ill jump ship for the first internet provider that gives me good speed for cheap.

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