Sure, you can sell channels a la carte, however say you purchase 5 channels - and you have 50 customers. Say every person of the 50 only chooses one to subscribe to, now you only have a ratio of payment for 10 customers per channel. This will likely put you in the red right there since each channel has a pretty steep licensing fee for distribution. Once you get to scale - this could work, but it would almost be easier for you to go in and buy out a small customer base instead of starting from scratch.
On top of all these considerations realize if you're offering Internet and/or phone you need CMTS and phone switching systems plus the engineering clout to run them. If you plan on spanning multiple cities then you have to deal with leasing or running your own fiber and then building out transport back-haul (Infinera is an awesome company for DTN platforms BTW).
Long story short - you need a lot of smart people to help you design and build this out, and if you've never worked with any ISP engineering verticals you've got a ton to learn. Keep in mind this equipment is pricey and the only way to make a good profit is to own your networks end to end (we were turning up 1 & 10 Gb circuits like hot cakes after we installed a new 1Tb system and since we owned all the infrastructure we were looking at tacking on another Tb right behind it to keep pace with demand - but keep in mind all the Tier 1 connectivity you need to support this as well).
Good luck!
P.S. If insanely ambitious ideas are within the project scope, your plan should probably be closer to YouTube/Spotify/etc for TV rather than actually running a cable company, because owning wire has little to recommend it if your primary concern is ability to negotiate Extraordinarily Favorable (TM) licensing terms. Buying $200 million of copper would make 0 progress to that goal.
By accumulating a nice user/audience base Aereo could then begin to add other channels like small to mid size broadcasters like Al Jazzera and possibly even AMC or a live netflix channel and more.
I am hoping they win this fight with broadcasters as I want to watch my local antenna channels via the net!
Also and recently I saw an article of Bit Torrent live streaming app, which could be another way to disrupt and destroy the cable business.
Update: I'm reading other entries and wonder if the OP actually wants to build a cable company the old fashion way, i.e. running wires and stuff? Seems old fashion to me, as opposed to creating the new cable industry using the net.
But it has been done before, many times, successfully...by the data companies (see e.g., Verizon FIOS).
Why is this always done by the companies that own the infrastructure? Why was Vonage, a company with preexisting no phone infrastructure, able to get into the VoIP business, but no one has been able to do that with TV?
Is it perhaps because some of the cable companies also own the content companies, and so they don't allow this sort of system to develop?
However, if you want anything (I mean, changing a single word in the agreement) nonstandard, then you need offer a decent size deal to make it worth the bother.
VoIP service providers are creating and selling their own "goods". Cable companies and "TVoIP" companies are resellers of something that is owned and controlled by others, and it's not a commodity. If a channel owner decides that they don't like TVoIP (or your particular TVoIP) for whatever reason, tough luck. You might convince them with a lot of money - but even Netflix and Hulu are not really enough for that.
Why not? By reducing my costs (by piggybacking on existing internet infrastructure), I could pass on (part of) the savings to the content sellers. So it would be a profitable decision for them.
And internet delivery is far from free. If you want live TV, the bandwidth and jitter requirements are enormous, the burst requirements for fast channel switching are a pain. We launched a small IPTV project last year, and IIRC our delivery costs were actually higher than those of a comparable cable operator - the benefit was flexibility and extra features, not cost.
I was under the impression that infrastructure buildout was very expensive and was the main reason why it took someone of Google's size to create a new fiber service.
> If you want live TV, the bandwidth and jitter requirements are enormous, the burst requirements for fast channel switching are a pain.
Netflix seems to be pulling it off OK. Do you mean that the costs are high for the business (in terms of bandwidth spent delivering content) or that the costs are high for consumers (in terms of getting a fast enough connection to make this realistically possible)?
I am speaking about the technical bandwidth burst + jitter requirements on the whole channel from your [caching] servers to the settopbox or equivalent.
Netflix is not available where I live, but as far as I know, it's not a TV service, it's a completely different animal. Launching a movie is trivial because it's done once. For TV, imagine a person on a couch with a remote pressing the 'next channel' button, browsing through 10+ live TV channels in one minute. It is a major pain to get this experience to feel pleasant on an internet TV setup.
Movies can have a small buffer for better viewing experience, but a live football game needs to be, well, live - so that you see a goal before getting a tweet or SMS about it.
The failure point is content. If you wonder where to start - try to figure out the content deals, because all other aspects (technical, customers, design, etc) are much easier and can be solved if you have money; but without [good] content, your TV service is useless.
Everyone gets x hours a month, the system wide number of hours watched on them gets paid out to the channel providers as our users would have fairly watched that amount..
If your subscriber watched 5 minutes of our football game last month, we'll invoice you full price for that subscriber for that month, thank you very much. Fairness doesn't matter - you can have different pricing terms if can you convince content owners that this will result in more $ per subscriber than before.
More subscribers is not an argument - they'll assume that each your subscriber is cannibalized off some other provider, so you'll have to extract as much or more from each subscriber.
Once you have a decent number of potential customers in a small area phone the content providers and find out how much it is to license the channels.
If you're still profitable you'll then need to estimate costs for building out your headend, source a location for your satellite dishes, call centres, etc. Find out costs for this. A lot of cable companies, especially Rogers in Canada outsource a lot of their infrastructure / install work, you should be able to find out from their builders rough estimates of build out costs.
Write a business plan and then find out if you can find someone to fund it. When you find someone to fund it, go build it, then sign up your customers.
But seriously the trick to this plan is to figure out how NOT to build out cable infrastructure, I'd look at piggy backing on LTE / Internet in the same way that hulu/netflix/youtube do.
You'd be far better off spending $50 million figuring out how to build synthetic aperture recievers / transmitters and figuring out how to transmit data over the wifi spectrum within the power limits outlined by the FCC rather than building $50 million in 1990s cable infrastructure.
Cable delivered via wire is considered to be a natural monopoly that in the united states cities (or other sub state level groups) grant one company the rights to string cable i.e. the Cable Franchise Fee. Running a second set of wires is expensive, and simple economics are going to have every existing cable company keep you out of their system. Google's fiber is the one set of to the house pipes that MIGHT let you use them. So unless you have lots of money doing it the "industry standard way" isn't going to be possible.
So long as you're tied to using wires cable systems are local monopolies and capital intensive, figure out a good way to bypass this any you may have a good business.
Go look at Comcasts financial statements if you want to see what the cost structures are. Note they're spending 13% of revenue on Capital expenditures. In 2011 they spent 40% of revenues on Programing ($19,625 in video revenue,$7,870 on programing).
http://www.cmcsk.com/earnings.cfm
Second, figure out if the content providers will even let you have the content.
Cable is a big market, a business that could disrupt it would do well.
There are different types of cable companies, but things you need to know are: 1) Coax costs more than fiber optics You might think this is a stupid statement but when you are rolling out over a wide area you will find this. Look at GPON technology, even small community cable companies in Spain are using this advanced technology. 2) You either use digital TV or IPTV technology to deliver the channels. Digital TV (like DVB-C), will allow you to use a lot of legacy technology but it will leave you stuck in a legacy quickly. IPTV will require using all new hardware but that hardware may be cheaper to invest. 3) TV networks often need heavy constraints on content security (encryption and DRM), don't think that you can change the world, the Hollywood/MLB/NFL/NHL/Premier League lawyers won't budge and even the TV networks have to bow to the rights holders. If you don't have security built in then you will fail to get content, poor security will result in you having to do a major swap out which could bankrupt you. 3) IPTV should be multicast in order to reduce the costs of delivery on the network. 4) You will need a big internet connection. 5) Employ some people who know what they are doing already, there are lots of semi-retired engineers who can help you achieve what you want and they needn't cost you the earth. Again, check LinkedIn for this.
You'd have a lot easier time going after LodgeNet, etc., with far lower engineering costs, and still have a chance of doing innovative licensing, than as a cable company doing residential service. After that, you can expand to IPTV for public exhibition (bars, etc.). Maybe partner with someone like Sirius who does radio for those environments and offer a video and vod service.
Several orders of magnitude less capex, a much smaller minimum feasible size (you could be profitable on ~20 big city hotels, I think), easier licensing, and far less regulation (at the local government level).
Now, you have two choices. "Easiest" is buying an existing, up and running cable company. There are quite a few: http://en.wikipedia.org/wiki/List_of_cable_television_compan..., and if you've got a hundred million or two in cash, I'd bet you can find a seller.
Much, much harder is finding at least one municipality willing to give you franchise rights. That's going to take a lot of time and a lot of lawyers. Franchise rights aren't cheap, and generally require an "OK" from a city council. Once you've got that, you'll can start running cables. Even more time, and plenty of that capital. Figure on a couple of years to get to the point of actually being able sign up your first customer.
However... if you want to start a cable company... the easiest way to make a million dollars is to first start with a billion dollars.
Also, the easiest way to make a million dollars is by doing what you love, nobody ever said losing 999m is easy.
All the service terms are detailed before they get the channels, and if you convince them to really change their mind, then they can (try to) negotiate these new rights for their next content term, which comes up every two-three years.
Build a cable company (there is local regulation about how that's done, you are not creating a 'new' thing, cities and states might already have guidelines and/or legislation on that subject - and the tech is already there) Sometimes that's not possible, because those services are state regulated that the spots are auctioned every zillion of years. A mile of cable coverage can cost more than 10k USD and it's not guaranteed that you will make any sales on that specific mile.
A single company usually owns many channels, they want to sell them all to you (based on your subscription numbers) those prices change based on your performance. You need to invest money to receive their signal, so it's usually better to receive the 'whole package' they are offering anyways. This is more or less how it works.
Our take on this (over a beer):
A pay-per-hour-view cable company. Using your alien negotiation skills you will convince all companies to give you all the channels and you will log what viewers are watching. You will charge viewers based on how much they watched. Prices would vary per channel and every ad watched would generate a 'credit'. You and the channel would split the revenues.
http://www.fcc.gov/guides/regulation-cable-tv-rates http://www.fcc.gov/encyclopedia/evolution-cable-television#s...
So I guess the real answer to his question 'Ask HN: I want to build a cable company. How would I get started?' is here.
If anything you are probably better off trying to build out something over the internet with many more potential customers now having the bandwidth to take advantage of.
Google for terms like "unbundling" and "a la carte" in relation to cable. You'll find that some cable operators are in favor of it, but enough cable operators and content providers oppose it to prevent it from happening.
Which means any opportunity for disruption are going to come from platforms like Netflix, BBC iPlayer, Vimeo, YouTube, CollegeHumor etc.
* Size of Hulu's A round
Firstly I don't think you understand the business you are trying to disrupt. YOU may not watch particular channels e.g. Fox but others do and they help to subsidise the unprofitable channels. So trying to break apart the channels will be impossible without a deep understanding of the economics of each individual channel and how that relates to your ability to sustain a profit.
Secondly it is widely rumored that Apple will be building a TV that offers an a la carte model. So something to be mindful of given how well their products sell.
Thirdly if the top two don't faze you then there is the fact that you picked a problem that is extremely high cost, low margin and with players who seem to get a kick out of destroying competition through financial and legal means.
But hey by all means give it a try. You learn more by trying and failing than not trying at all.
Is knowledge really your main problem?