Time Warner Cable Backlash Continues > TW pays only $40 mil TOTAL for bandwidth

TW pays only $40 mil TOTAL for bandwidth

To put that in perspective.

8.6 million subs X $35(guessed average)/month X 12 months/year = $3.6 Billion/year.

40Million / 3.6 Billion = 1.1%

reply to Lazlow
More proof that broadband is the highest profit margin item they sell. They make more on a broadband customer then they make on a customer who has all cable tiers + phone service... a lot more.
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini

reply to BF69
Can you dig one of these up for AT&T?

the pie graph that is...

reply to BF69
ya which is why they should invest more in it and less in TV

with such a big profit margen they could drop TV and say hay watch it on hulu and rack in the dough

reply to KrK
What is the context of this pie chart (source)?
Is a "contractual obligation" the same as total annual spend?
Lastly is the cost of bandwidth just their ISP transit costs (i.e. does not account for all the other network infrastructure)

Before you divide by a variable, make sure it is the right one and has all the right values.

reply to BF69
Nice Chart

If you read TW's 10-K, you will see they actually made 4.159 billion in revenue. Of which they spent $146 million for all the costs associated with delivering RR service (call centers, on site visits, network management and engineers, and connectivity costs). So apparently of that $146 million, their connectivity eats up less than a third of their cost to maintain service. Sounds about right.

So, they took in a little over 4 billion in profit after paying the bills, and this expensive bandwidth they are whining about only cost them an easy 40 million.

Keep in mind, a provider like TW doesn't pay by the gigabyte... they pay for x number of gigabits of edge capacity to exit their network, the general network rule is to have no more than 30%-35% capacity in use during "peak" usage times... (ie 6-9pm), therefore they can easily handle spikes in usage. So as you can imagine, during off-peak hours, when utilization is low, it really doesn't cost TW anything whether a user downloads 5GB or 300GB. It's just about maintaining an acceptable network utilization ratio during that 3-5 hour peak usage window every evening.

Since TW has their own backbone now (tbone), I'm not sure what their utilization levels are, however just a year or so ago when they were on the ATDN backbone, ATDN had about 500+ gigabits of edge capacity, and only used about 120 gigabits during peak hours. I'm sure tbone isn't far off from that.

reply to DarkLogix
The problem is that most subs start of with Cable... then add Internet/Voice.
They're subsidizing TV costs with everything else.

If you don't need TV, you probably could do much better.
Companies that can sell you wireless/voip should be looking at these charts.

reply to BF69
Their 10K: »investing.businessweek.com/resea···_HTM_301

The $146 million figure is from page 60 and the $4.159 Billion figure was from page 89.

reply to Sofa King

reply to BF69

skuv

That is really the point. The ISPs keep claiming that the caps will prevent the "bandwidth hogs" from destroying their networks. Since we all know that any downloading done during non peak hours costs them absolutely nothing, we know that what they are saying is untrue (monthly caps do not address congestion). So basically you can say that if the average user downloads 5GB/month during peak hours, those GB only cost $.08 each(transit costs).

If you ask me, $40 million a year for bandwidth to be distributed among 8.5 Million people is quite reasonable considering if you break that down, that's under $5 per user per year.

Sure, some users consume much more than other users, but that's life. Everyone's usage is going to be different, since the internet is many different things to many different people. You can't expect to mold everyone's bandwidth usage into your own idea of what it should be, as TW wants to do, that goes against everything that's human nature. Flat rate billing is what made broadband popular in the first place, and it's quite clear that it's still very (if not more so) profitable for cable companies than ever before. The need to shift to usage based billing is nothing other than a way to stab people that actually try to use their connection for anything other than basic surfing and email activity, which is the reason they got broadband in the first place. We're talking about charging upwards of an additional $75 per month for the bandwidth TW is essentially spending less than $5 per year per person on. It brings absurdity to a new level.

The only way to do true metered billing is to do it the same way the water, gas, and electrical companies do, and if that was applied to the broadband industry, it would totally collapse, because they wouldn't be getting their guaranteed $40+ from each customer. Electricity, water, and gas for the most part are consumed at roughly the same rate for all homes of the same reasonable size, while broadband usage can change drastically from one family to another and also vary wildly from one month to the next. If Broadband was metered like a utility, you would pay a $3-$5 connection fee and a 5-10 cent per GB transfer fee. And if the average user only consumed 5GB a month, then TW wouldn't be making their billions each year off RR. That's why with TW's version of metered billing, we still see people paying the same "Base rate" but then paying overage fees. It's nothing more than a way to penalize high usage customers that actually use the internet connection they already pay for.

I honestly think, most people that use the internet everyday and/or transfer much more data than the average person would be more than open to paying "a little more" for their broadband connection. I think if TW just tried their best to migrate the highest consumption users to their Turbo service would be more reasonable than smacking people with massive overage fees, or even just applying a few dollar tax if a user goes over a certain threshold. Why they couldn't do the same as Comcast and put a reasonable monthly limit on all connections is beyond me.

TW could have easily handled this like Comcast, but since they were bold enough to try something so unnecessary and universally unpopular, they are now fighting a battle with their customers. One which I can guarantee will never end, especially in this economic environment. They can try to "re-educate" all they like, but consumers are not going to back down because at least some of them realize how unfair their metered pricing plans really are.

reply to BF69