Here's what Consumers Union found:
• TWC's revenues from broadband during the first three months of this year rose 11% percent over the first quarter of 2008, climbing from $994 million to $1.1 billion.
• At the same time, TWC's costs to provide broadband service to its customers dropped 18%, from $40 million to $33 million. That dramatic drop in costs came even though its number of subscribers grew from 7.9 million to 8.6 million.
• Overall, TWC's profits were down for the quarter, falling from $242 million to $164 million. But the company says the drop in profits was due mostly to restructuring costs rung up when it was spun off in March from its parent company, Time Warner.
Although consumer outrage forced TWC to shelve their metered broadband plans, it seems unlikely that they've given up. The company still argues that charging by use is more equitable — and that the current pricing structure is unfair to light users. When they shelved the plan, they claimed that they were just taking more time to "educate" consumers.
Consumers Union is having none of it.
If we may, we would like to offer TWC a little bit of advice: Stop trying to put one over on your broadband customers. There's no amount of "consumer education" that can change the fact that TWC is making a whole lot of money selling broadband service — without metered pricing.
Now Hear This Newsletter, April 30, 2009[Hear Us Now]
]]>The cable companies are scared shitless right now. They see consumers leaning more and more towards a completely on-demand system of watching TV and movies, be that via the internet or on the company's own OnDemand offerings.
Despite what people think, there simply is not enough bandwidth to accommodate this. They don't have the infrastructure to support everyone watching Hulu instead of regular TV and using Netflix instead of watching HBO.
Now, the big problem, and the turd in the scrambled eggs is that though they know this, and they see the future, they haven't really done much in the way of expanding bandwidth, improving infrastructure, or rolling with the tide instead of trying to stem it. Instead, they're trying to institute caps and metered billing not really to make more money, though that's a pleasant side effect, it's more to dissuade people from buying broadband cable and then just using it for web streaming, torrenting or other high-rate activities, instead of watching TV.
The reason is because Cable TV is brought to you by your subscription fee, AND by the channels that buy into the system. If nobody watches the cable channels, they won't want to buy into the system and the cable company loses revenue. Then the channels lose revenue and can't put the great shows you like to watch up on Hulu anymore.
What's really scary is that some channels are looking into an online, subscription-based system where you put in your name and password and you can watch anything you like. HBO had a nice presentation on this.
Cable companies see this as getting the same service they provide only without them really providing it. And they don't like it, so they're pouting and brooding instead of being proactive and on top of the situation, because that's how corporations act. That's the only way they can act because of how many people have to make decisions to get anything done. They can only be reactionary.
]]>lack of competition. Someone above said it. That's it right there. Open the markets. Get 3 or 4 internet/cable providers in any given market and watch customers everywhere benefit with lower rates and higher speeds.
]]>In NC TWC is trying to make it where cities can't do their own internet services. (SB 1004)
]]>Also Utility rates are capped by law, the water company can't go price-gouging.
]]>Simply put , in a competitive environment , what would happen is if it got scarce, costs would rise, then someone would come in and add capacity driving costs down. It would be a huge negative national economic externality if Broadband got treated as an inelastic good by monopolies.
Unfortately, Greensboro's Congressman (Howard Coble) is a dolt on anything technological, and impossible to throw out of office.
]]>Just keep this in mind guys.. There are those of us within the company that are trying to convince the big wigs to stop this nonsense.
]]>Broadband has pretty much been on the "buffet" model, where most people will pay for more than they eat, but a few will eat more than they paid for. When changing the model, TWC kept the buffet prices just with a few tweaks. Imagine if a restaurant you like switched from a buffet to a traditional style, but now 1 plate costs as much as all-you-can-eat. Sure, the few people who weren't that hungry can save by just buying appetizers, but it still seems like an insultingly bad idea. Add the fact that there's not much competition, and of course that's not going to fly.
]]>No one wants to pay $80 a month for fifty shopping and God channels and only about four or five that they actually watch.
]]>How are metered bandwidth and network expansion mutually exclusive?
]]>however, this financial shows that the company certainly has the capacity to upgrade infrastructure & just chooses not to. they would rather take the easy way out & leave their networks overloaded despite widespread increases in subscribers & usage.
i'll tell you right now, it's going to blow up in their face. it may appear as if abusers are responsible for this, but they're not. nodes can handle heavy use. what they can't handle is heavy aggregate use. if a whole node of average users decided to double their usage in a month, that node would be plagued by outages. & it shouldn't be, but TWC (like most other providers) has been exceeding industry standards for their hardware for YEARS!
& now, faced with the reality that it might kick them in the ass, their answer is...metered broadband. what a way to ignore the obvious.
]]>@ADismalScience: And what does it matter to you? I don't see any merit whatsoever in that question.
]]>Anything less is just hypocrisy. They are specifically claiming that the reason behind the metered system is that the current system is "unfair" towards "light users". They should be rectifying that situation (by slashing prices for those users) instead of complicating it (by adding tiers and metered bandwidth).
]]>If Internet users don't moderate their bandwith consumption, and providers don't put in caps on their usage, the Internet could start seeing "brownouts" by 2012, said Time Warner Cable's chief operating officer Landel Hobbs today.
That count?
]]>"And if there's less people watching the cable company's ads, the amount of money the cable company can charge to show those ads goes down.
]]>(Admittedly most local legislators are usually paid off by TW somehow so its fail/fail.)
]]>At this point its either "upgrade or die" and if these TW press releases are any indication of the future.... TW has apparently chosen... DEATH.
]]>Thank you. When TWC tries to pull this nonsense again here in Austin, we will use this against them.
]]>www.stopthecap.com
]]>@chris_d: Exactly, although they make FAR more on Cable Internet. They only make about 10% profit on cable tv, they make about 90% profit on cable internet. Atleast that was the case when I worked for cable.
]]>Are you saying that because it's most fair, or because you're a superuser?
]]>@Sean Masters: They have Road Runner Lite, they just don't advertise it. If they did a lot of people would probably go to that to save them some money. My girlfriend has it and its fine for basic websurfing or email.
]]>@Saboth:
I don't think they care about the content anymore - they have and always will used the power of their distribution network to sell to customers. You buy cable because that's how you get MTV - you buy internet service because that's how you get Hulu/Netflix.
I would agree with you that the install base is pretty substantial, though there is room for growth. Where we differ is on anticipated future usage - a major sticking point, because I think we're at the ground floor of video on the web. You haven't seen a Blu-Ray disc or 1080p streaming video pass through the internet yet on a large scale.
Even then, though, it becomes a question of how to best assign cost (and margin) to the customer. I think if you look at bandwidth usage per user you see huge deltas. A small population of individuals are rapidly driving the bandwidth needs of the entire consumer base upward. When you look at how to best charge those customers, does it make the most sense to continue forcing email users to pay for the 1080p-streaming NetFlix lover down the street? Or should we all subsidize the massive pipes needed for his torrenting majesty?
]]>"The company still argues that charging by use is more equitable - and that the current pricing structure is unfair to light users"
Does this mean I can only pay for the Channels I want to watch? Nooo, instead they force you to pay for packages of tiers to get the 1 channel of the bunch that you really want?
]]>If you looked closely, most, if not all, of TWC's metered rollout took place in areas with little to no competition, and certainly none from the likes of Verizon's FIOS or AT&T's U-Verse. In areas with decent competition, I guarantee at least 25% of TWC's customers would have jumped-ship as soon as these insulting caps showed up. That would certainly do something to TWC's bottom line, and might even get some of the ape-like executives who helmed this project to stop picking golden bugs off each other's backs and start scratching their heads.
Could competition not do any good? Possibly. It would be a disaster if the broadband conglomerates really started colluding with one another, and rolled-out caps and raise prices in parallel (though I'm sure that's illegal business practices). I just know that more government and the continued lack of competition would not solve the current issues with our nation's sorry, sad state of broadband pricing, coverage, and quality.
]]>why do you predict that we will be in a high-quality video revolution in the near future that dramatically outpaces our current transition? i would contend that we're in it right now, and that if they're making those kinds of profits now, they're be perfectly capable of upgrading their infastructure as the 'revolution' continues.
if they can afford to have 1/4 of their net income remain as profit, they can afford to begin upgrading their infastructure and improving user experience now. you dont use financial statements to definitely say if they should or should not do that, but certainly with this information you can decide whether or not its is absolutely necessary.
perhaps if they released the information they made the decision to begin metered internet with it wouldn't be an issue, but they haven't, and this is not what they made their decision based on--unless $200+ million somehow is equivalent to operating at a loss. they must have projections on cost, mustn't they? thats the only kind of education thats going to convince anyone that metered broadband is okay.
]]>Realistcally, if you use more electricity, you pay more. If you use more gas, water, propane or other utility, you pay more. Isnt cable and internet pretty much a utility to most people now?
While their pricing is way off, a metered system isnt a bad thing. I'd be through their caps in about 3 days, but I use more, so I expect to pay more. My mother uses about 30 MB per MONTH. She should expect a smaller bill. TWC is a BUSINESS (from the greek for "money taker"). They can and will charge whatever they want to to bolster the bottom line.
]]>...and yes, I imagine the voice of the Tootsie Pop owl whenever I think of evil corporate chairpeople ;)
]]>The market is pretty static now. You aren't going to get millions of new subscribers in the future. It just won't happen. Of the people currently using the internet, I believe their usage patterns will remain the same for the future. If you play online games 20 hours a week, download 3-4 movies now, you will in the future. So I don't believe their gloom and doom that we are going to run out of bandwidth in the future. The usage isn't scaling that fast. The only reason they want caps is to limit competition of better products (Hulu, Netflix, etc.) They want to continue their monopoly on video.
]]>They did claim that a few "super users" were making costs increase for lesser users. What this post shows is that costs are going DOWN, even for lesser users, and profits are up.
]]>Metering on it's own isn't IMO a bad thing if done properly. Have a basic service fee for providing service and then charge by some unit of measure, by the GB or 10GB or something.
The main problem is that TWC appears to want to use a pricing structure where they recieve substancially more than it costs to provide.
If they charged "reasonable" rates based on cost to deliver, maintain and upgrade their infrastructure coupled with accurate and reliable bandwith monitoring tools to let customers how much they've "spent" at any given time it could work.
Then again, we could probably see pigs flying before they implement such a reasonable scheme.
]]>It's not whether or not they're making money now. It's a strategic business decisions based on a perception of how costs will move going forward. If it's a bad idea to give bankers bonuses for products that can lose money in the future, it's a bad idea to pull today's financial statements to decry tomorrow's broadband cost structures. The inevitability of high-quality video distribution over the internet is an when-not-if question.
]]>