The Netflix effect: what one video streaming service has meant for rural telecom providers, consumers and the programs they watch.

Author:Withers, Laura
Position:Cover story
 
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In a recent interview with Kevin Spacey, star of the hit Netflix original series "House of Cards," "Today" show host Matt Lauer shared a personal anecdote about his family's TV-watching habits that may sound familiar to operators of rural networks that support streaming video.

Lauer explained that his wife was watching an episode from the series' third season when he walked in the room to catch the last few moments of what he later learned was the final installment, potentially spoiling the episodes he had not yet watched.

Spacey's response to Lauer's story is characteristic of how the country's No. 1 video streaming service by share of audience has marketed itself to great success and, in the process, dramatically changed the way American consumers watch TV.

"Because you're in total control, you can go back and watch the previous episodes," Spacey said.

That "total control" over what to watch, when to watch it and how much to pay for it has given American consumers a huge edge in the push and pull of subscription video programming that has played out over the last decade. Unlike traditional cable TV services, which provide consumers with a predetermined menu of options that are broadcast at designated times, streaming services like Netflix and its closest rival, Amazon Instant Video, rely only on a robust broadband connection and a Wi-Fi-enabled device to open a flood of video viewing options--wherever and whenever possible.

The rapid rise in popularity of streaming video has proven to be both a blessing and a curse for operators of rural telecom networks. They reap the rewards of customers purchasing higher broadband tiers but must overcome the challenges of density and distance to provide reliable, high-speed connections. And all indications are that rural providers' challenge to keep up with consumers' growing appetites for online, on-demand video has only just begun.

Effect: Network Operations

When Twin Lakes Telephone Cooperative (Gainesboro, Term.) began giving broadband customers a free Roku for upgrading to a higher speed, Chief Executive Officer Jonathan West gave little thought to whether streaming services like Netflix--often called over the top (OTT) video--would cannibalize its traditional TV customers.

"We are OK with the customers that are cutting the traditional cord and moving over [to OTT] because it increases the value of our broadband," West said.

The next consideration driving Twin Lakes'...

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