Cable's numbers don't add up for metered billing
For an industry that's supposedly struggling to keep up with customer demand for more bandwidth, the nation's two largest cable operators seem to be doing pretty well.
This week Comcast and Time Warner Cable each reported strong earnings, in spite of the fact that Time Warner has said recently that it needs a new business model to handle growing broadband demand.
Comcast beat analysts' expectations and increased profits 5.4 percent to $778 million. Time Warner Cable's profits fell 32 percent, but this was mostly due to costs associated with the split from its former parent company, Time Warner. The company's revenue was actually up 5 percent to $4.4 billion when compared to the same quarter a year ago.
Comcast also increased revenue by about 5.3 percent to $8.4 billion.
Meanwhile, both companies reduced capital spending. Comcast cut capital expenditures by 19 percent to $1.16 billion. And Time Warner Cable cut its spending by 18 percent to $33 million. For broadband specifically, Time Warner increased revenues 11 percent to $1.1 billion.
The companies also increased subscribers. Time Warner added 225,000 new broadband users and 166,000 new voice-over-IP customers during the quarter. Comcast added 328,613 high-speed Internet customers, down 33 percent from the previous year, and it added 298,433 digital phone customers, also down about 53 percent.
Even though Comcast isn't adding new customers as quickly as it did a year ago and Time Warner's profits aren't as high as they were a year ago, the companies are still adding new subscribers and making money. And yet they are also cutting capital spending.
This financial reality is very different from the one Time Warner Cable has been touting recently, as it tries to explain why it wants to start billing customers based on how much bandwidth they use. Outraged consumers mounted loud protests when the company said it would expand trials of the new billing system. Time Warner backed off the plan for now. But the company still argues that it must do something because the current business model is "not viable."
Time Warner's views are shared throughout the industry. Kyle McSlarrow, president and CEO of the National Cable & Telecommunications Association, supported Time Warner Cable's trials in a blog post stating that they "may serve the vast majority of their customers better by reflecting the growing reality that some consumers utilize far more high speed bandwidth than others."
Smaller cable operators are already starting to meter bandwidth, according to a recent article by the Web site Broadcasting & Cable. Sunflower Broadband in Northern Kansas has been using metered pricing for the past four years. And Wave Broadband, which provides service in Oregon and Washington, is about to launch metered billing on its network.
The chief operating officer of Sunflower Broadband, Patrick Knorr, says bandwidth-based billing is the only way to manage infrastructure, the B&C article said. He believes that with all the high-definition content being downloaded that there is no way a cable company could keep up with demand at current flat rate prices. And like Time Warner's CFO, Landel Hobbs, Knorr says that consumption-based billing is "unsustainable."
But when cable operators add customers and cut capital spending on infrastructure, it doesn't seem as though they are even attempting to keep up with customer demand for more bandwidth. And the fact that they are still making profits also shows that they have the money to spend. So for consumers--who already feel they pay too much for broadband services compared to people living in other countries--Time Warner's argument that it has no choice but to meter traffic is a hard to pill to swallow, especially in this economy when so many people are financially strapped.
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
We need price controls and a moratorium/ban for the future of the world on bandwidth caps.
"In this world nothing can be said to be certain, except death, taxes and your cable bill going up."
I see AT&T is launching faster flat rate bundles. While UVerse TV has issues with compression in their HD signal, it is a pretty good system, and the FIOS is only getting faster. Maybe TWC & Comcast will re-think metered billing when people really start jumping to AT&T services.
I should be able to have any type of service that I want without regard to the type of box I have and now on top of that they nickel and dime me when they truly do not need to and the above comment that they do not meter their own service that they offer VS High Def video from competing services is 100% true and Someone needs to bully them back down into control
And this is all because of the greed that the media giants have for more revenue with less content. If I had a choice of only subscribing to HBO, without any other channels (like NBC, ABC, FOX, CBS...E!, TNT, TBS, Discovery, History...) I would gladly subscribe. Why waste money on packages when I hardly watch any channel.
Bleah. I don't know about Time-Warner, but the cable industry needs to reinvent itself to match the new needs of customers and 1980's era thinking isn't going to do it.
...but, that's not my problem and I shouldn't have to fix their problem.
First, you focused on Analog, which does indeed waste potential bandwidth when compared to a comparable digital signal, but Analog channels make up only a small portion if the channel lineup from my provider compared to the literally hundreds of digital streams. And let's be clear a 480i digital signal uses between 4 and 6 Mbps, while 1080i consumes between 15 and 25 Mbps. That's a pretty significant increase in bandwidth consumption.
But, you completely missed my point. The networks have completely oversubscibed their capacity by offering services like Broadband and Voice and then trying to acccomodate HD streams without a corresponding reduction in Analog channels (Thanks to the government) or old digital channels (which I don't get) means that the networks are way over capacity resulting is hacks like recompression and Channels Streams on Demand.
The ugly truth is they have squeezed every Megabit from the video content and cannot reduce voice, so that leaves broadband. So, they can raise prices and DSL will eat their lunch, they can reduce transfer speeds and again DSL will eat their lunch (my 3Mb DSL circuit has better average throughput than my 7 Mb Cable circuit), or they can introduce caps to better average out utilization.
Cable had the opportunity when they rebuilt their networks in the 80's and 90's around fiber based to dominate, but several critical design and technology decisions now leave them between a rock and hard place.
...And it is still not my problem to fix by paying more.
If they want to charge broadband customers based on bandwidth usage, customers should also have the option of picking and choosing exactly which networks they actually want to receive and be charged for.
You can complain about how companies shouldn't be able to do this or that, but largely that's a bunch of hot air. The most important thing is to make sure that there is competition--- eg FIOS vs Comcast. As the cost of the build-outs depreciate, it will work out increasingly favorably for consumers.
Just because someone else is using a service more than you does NOT mean that they should be paying more than you, especially if it's just because you haven't discovered the new services on the internet that they have, porn or not.
Until there is actual competition for providing bandwidth to consumers (most likely from WiMax or 4G) the telecom companies will continue to fill their wheelbarrels with cash and this country will lag behind the rest of the world in cost per Mbps. How much more evidence do you need before you admit that the "market" has failed and that consumers are being fleeced?
At least porn is giving a service to the world by helping people vent their sexual needs.... I don't see ANY purpose to American Idol, because they always pick some BAAAAAAAAD singers for that show!
Why not? If you use your cell phone more than I use my cell phone, you pay more than I do, don't you? That's shared bandwidth, just of a different nature, and nobody complains about it. You could pay for a really cheap plan with no "free" minutes, or a plan nearly 10x the price with unlimited "free" minutes, or whatever in between you want. The difference you pay is in part due to the load you create on the network. How is Internet access any different?
If all grandma does is download email and look at pictures of grandkids online, is it reasonable to give her cut-rate broadband because she's simply not stressing the service as much as the guy running torrents all day and watching hulu all night? What's wrong or immoral or unethical with pay-per-use? Nothing, except that you're not used to it.
The people who "abuse" [see note] unlimited uncapped bandwidth want to keep it, while those who don't fail to see what the fuss is about, as long as THEIR rates don't go up. It's just that one side of the debate is VERY vocal, while the rest aren't.
NOTE: "abuse" isn't a good word in this context if what's offered is supposed to be unlimited, but I'm not sure what's a good word that carries the appropriate connotation.
who is running and working at these companies? who's coming up with these brilliant ideas to increase profits? we are... trying to get ahead ourselves. it's an endless cycle.
That said, the providers would do better to offer some clearly defined choices. A limited but inexpensive broadband service level less than $20 for those with fewer needs will be a good choice for some consumers as long as it is clear what the limits mean. Monopolies should be required by law to be strictly clear and honest in their offerings and contracts. Other service levels could be made for new customers, but for those of us who have paid high broadband prices for a decade or more, should be allowed to keep the service we were promised years ago and are just now receiving in some cases and some times.
There is a lot of dark fiber in the ground. Software and hardware has gotten a lot better. Cable providers can now offer new services and products that were not possible not long ago. Some are building or buying into wireless, content and other businesses. Poor management, lack of competition and greed are the reasons for the price increases and lack of investment.
I am looking for other providers and have already cut off Cox cable TV, just kept broadband since no one else can offer it. Hoping for WiMax while I use 3G cellular broadband and WiFi to make do for now to fill mobile needs.
It's simply time for 40 dollar a month, totally unlimited bandwidth broadband internet, mandated by the feds and FCC.
More demand on gas usage, higher gas prices
More demand and addiction to game systems, prices don't go down too much while gaming systems at thrift stores are dirt cheap and yet still work great
More demand on milk and eggs and then prices on that starts going a bit up too
More corn syrup making everybody fat and cutting peoples lifespans and causing huge demand, prices go super high then you have to pay more to lose weight.
More demand on cable internet, higher prices and metered service.
Come on what ever happened to More demand means lower prices, I guess none of you brainwashed people here know what means anymore because anytime something has higher demand that means higher prices no matter what you say it won't matter.
So I guess this means the death of More demand lower prices, less demand higher prices. The reason behind this concept is that even though you don't make too much profit you make a bunch by selling a bunch your profit turnout goes up and with prices going cheap the poor can afford it but with higher prices hardly any poor person can affor it thus the economy becomes imbalanced and theres more homeless people and street gangs and drugs dealers and even people working under the table just to make it.
Stick with keep prices lower if you all want crime to end and everybody to be happy, quit up'ing the prices.
The fact is that for 75% of the world.... capitalism is a big ass, lying-in-a-pool-of-blood-and-feces.... FAILURE! It just hasn't worked for most of the world, even the United States it is not working because of.... lack of regulation. Hopefully, under Obama, we will get that necessary regulation, though I am not holding my breath because the Repukians will be kicking and screaming the whole way as he drags them from the depths of the black cave into the light!
All these Cable companies are demon owned but at least in some towns there is competition happening.
The telcos have spent millions lobbying to gut laws intended to increase competition.
I have seen this over and over since i bacame a ISP in 1995. For example my wholesale cost for AT&T DSL is higher than the retail price. When QWEST entered the dialup business, they lowered the price for a T-1 of modem lines from $1200 a month to $450 a month, but they created a new tarrif item for the identical product in order to get out of the price protection terms of their contracts with private ISP's.
COX cable, when asked by me for pricing on dark fiber, replied "we only sell dark fiber to hotels."
These continuing greedy abuses of their exclusive franchises is going to result in a repeat of the meltdown we saw in the financial industry. Some day consumers and competitors are going to make a lot of class action law firms very rich.
In the meantime, join with your neighbors in a pooled Internet brand connection. A one time investment in a few WI-FI routers, and you can share a single very fast pipe with 10 of your neighbors for a fraction of the cost of 10 slower connections. The cable or phone company will attempt to tell you its not permitted, but the fact is, once those bits are on your property you can do whatever you want with them.
Otherwise, they simply cannot use the Internet brand name on their product.
The FUNNY thing about Cable is in my area is it FAR less reliable than DSL or dialup. They are both service outages and no QOS (minimum bandwidth). My bandwidth BURSTs and stalls!
How can they have QOS for VOIP and not Broadband? All they need to do is guarentee 2-3KB per modem or 1KB per data connection.
If they do it they're toast!
- by renGek May 1, 2009 11:05 AM PDT
- I have always believed meter usage is cable's way of halting you from discovering tv content on the web. Once you get used to it and once its much more easy to figure out how to get that content on your tv, cable tv will fall. A full blown wide spread Hulu would be the death of cable tv very quickly. They are not prepare to lose all that revenue.
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(41 Comments)Comcast is doing business the way AT&T of the 70s/80s are doing business. Lack of competition lets them be as annoying as they think they can. But when technology catches up and there are choices, people won't forget the bad treatment and will dump them. When I dumped my land line they begged and pleaded with silly promises but I fully relished telling them what they can do with their wonderful phone service. Am looking forward to doing the same to comcast.