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CEA survey says 10 percent of pay-TV households will cut the cord this year

In a new report by the Consumer Electronics Association (CEA), researchers have found that about 10 percent of pay-TV households are planning to cancel their cable, satellite or telco TV service this year.

These so-called “cord cutters” are instead turning to Internet sources of content, not over-the-air broadcasts, the CEA said. Currently, 8 percent of all U.S. households — about 9 million homes — rely on broadcast television, a number that is steadily declining and has been since 2005.

The CEA’s researchers found that about 76 percent of respondents said they were “unlikely” or “very unlikely” to cancel pay-TV service in the next 12 months; 14 percent said they were “somewhat likely” or “somewhat unlikely” to do so; and 10 percent said they are “likely” or “very likely” to cut the cord.

Cable, satellite and telco TV services remain the most popular source for video content, according to 80 percent of respondents, followed by: Blu-ray/DVD (72 percent), free video-on-demand (45 percent), DVR (41 percent), paid VOD or pay-per-view (33 percent), online sources such as YouTube (31 percent), free online TV shows and movies such as from Hulu (27 percent), and paid online services such as Netflix (22 percent).

“American households are not cutting pay-television service. The cord that is being cut is the one to the antenna. The percentage of antenna-only households has been declining year-over-year since 2005,” the CEA said.

The television remains the most popular device for viewing content. CEA research found that nine in 10 (93 percent) of households view content on a television, followed by computers (49 percent), car video entertainment (13 percent), cell phones/smartphones (13 percent) and MP3 players (11 percent).

While viewing content on computers (all types) is growing, the television remains the central consumer electronics device for viewing television content.

The CEA has been lobbying the federal government to institute voluntary incentive auctions for broadcast spectrum. It has argued that the spectrum is a resource better used for high-speed wireless data services than broadcasting.

“Over-the-air TV was once the defining distribution platform,” CEA president and CEO Gary Shapiro said in announcing the survey results. “But using huge swaths of wireless spectrum to deliver TV to homes no longer makes economic sense. Congress should pass legislation to allow for incentive auctions so free market dynamics can find the best purposes for underused broadcast spectrum, such as wireless broadband.”

Contrary to the National Association of Broadcasters’ assertions, Shapiro said antenna sales are falling and cord-cutters are not shifting to over-the-air television but rather to the Internet. “The only cord being cut these days is the one to the antenna,” he said.

NAB spokesman Dennis Wharton said the CEA has zero credibility when it comes to calculating over-the-air TV viewership. “We trust an unbiased research firm over a survey paid for by CEA,” he said.