said by myokitis:
I'm sick of all of this carping about corporate "greed" on this site and elsewhere. IMO, TWC is trying to manage a complex, capital-intensive business in a highly competitive environment.
Consider these factors:
- Demand for bandwidth is growing rapidly as customers use more bandwidth-intensive applications like video, and in the near future, HD video. This would certainly put strain on backend networks.
- TWC is carrying a massive amount of debt dumped on it upon divestiture from the larger Time Warner corporation. I wonder if they have the financial ability, in tight credit markets and under intense competition from VZ & DirecTV/Dish, to make massive capital investments to beef up their network.
- Changing customer habits to increased video streaming/downloading puts their entire video business model at risk.
I think I understand why they're doing this. It has nothing to due with greed and everything to do w/ long-term survival. Unfortunately, caps would probably cause increased churn, so in my estimation they're between a rock and a hard place.
A highly competitive environment?!? I have two choice, my local ILEC or TW, some have AT&T (DSL, not even U-Verse yet) or TW. That is called a duopoloy and is hardly "highly competitive." In how many areas does Time Warner actually have to compete? Why aren't they rolling out the usage based trials in THOSE areas if they are serious about it? Why are they rolling them out in their extremely UNcompetitive markets? Perhaps because they know the consumers in those markets have little choice but to accept the slop they're fed?
Secondly, Time Warner has turned a $7 or $8 billion profit year after year. That's net, not gross. They took a huge writeoff last year and contrary to what you think, will probably make an even larger profit next year due to the separation from Time Warner Inc. $45 a month internet accounts and $60 TV bills pushed across decade old infrastructure equals a very nice profit margin.
The proof of this is right in their 10-K filing and I've heard it out of the mouths of local engineers when I was given a tour of their local RDC. They make an absolutely BOATLOAD of money on TV and VoD services. Hulu, Netflix, Amazon Unbox, all are eating not only into their TV profits as consumers downgrade cable packages, but they state it's expected to cause their advertising revenue to fall.
There is absolutely nothing wrong with trying to protect that revenue stream, but at least make a reasonable effort and be very clear about your reasoning. The caps and outrageous overages were designed to discourage use of these online services, but were also designed to increase existing revenue. So in the middle of the largest recession most can remember, Time Warner wants to eliminate the ability for you to save money and simultaneously pop the average family with an extra $5-$10 a month on their cable bill in overage charges.
It is absolutely ludicrous and the fact they thought they could just slip it in under the noses of 8 million customers and technical minded people shows the arrogance and complete disregard for consumers that is prevalent throughout corporate america.