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Road Runner
PC gaming GAMES
PC gaming Tech
| reply to espaeth
Re: Most profitable quarter ever... what?! You're missing the point. I think intentionally. Nobody's dictating how much profit Time Warner Cable should make. That's a straw man.
Time Warner Cable previously indicated that flat rate broadband pricing wasn't sustainable financially. Here we have repeated evidence that this isn't the case, all while Time Warner Cable stock has risen 40% this year largely on the faith of investors who like the financials. So.... | |
 espaethDigital PlumberPremium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2
 ·Clear Wireless
| said by Karl Bode:Time Warner Cable previously indicated that flat rate broadband pricing wasn't sustainable financially. Here we have repeated evidence that this isn't the case, all while Time Warner Cable stock has risen 40% this year largely on the faith of investors who like the financials. So... But that's a weak argument as well because it's short term growth.
To draw an analogy, the quantity of oil on Earth is fixed, and the argument has been raised that we could face shortages within our lifetime. Knowing this, it makes sense to start to look at alternate options now so that we're not forced to make bad decisions in a panic when our back is really against the wall.
You're essentially arguing that because the price of regular unleaded at my local gas station went down this month that any concerns about oil shortages are completely false because the drop in price clearly shows that supply is outpacing demand.
Just because TWC was profitable last quarter doesn't mean that will continue to be the case if demand keeps growing at its current pace and revenue doesn't track accordingly to create capacity. There isn't going to be a capacity crunch this year, probably not next year either, but at some point companies need to start devising strategies to attack this problem. | |
 a333A hot cup of integrals please
join:2007-06-12
Rego Park, NY
·Cingular Wireless
| Bad analogy... oil is a limited quantity that WILL run out at some point... backbone / last-mile capacity is not. Unlike oil, capacity on a broadband network (backbone or last mile) can be upgraded by denser DWDM (if it's a backbone issue) along with upgraded core routers and line cards. On the last mile, capacity can be (with somewhat higher expense / difficulty) be upgraded through removal of analog channels, node splits, edge bandwidth upgrades, DOCSIS 3.0, channel bonding, and further compression of HD channels using more efficient codecs. Ultimately, TW also has the option of slowly switching to an active FTTH network. They actually have quite an advantage over telcos, since a lion's share of their network is ALREADY fiber, all the way up to the CMTS. Case in point: Unlike oil, which we KNOW is a FINITE resource, broadband capacity, at least for the next few decades, is DEFINITELY not. While TW is whining about these upgrades and attempting to justify completely absurd usage-based plans (with over 10x bandwidth cost markup), they don't seem to realize that these upgrades are a fact of life in the telecom industry. You simply cannot survive by turning over all of your profits to investors and executives, leaving little for capex.
Now, it's not as if I don't support metered billing. However, TW's twisted version of it it a con act, pure and simple. IMO, the future either lies in uncapped (bandwidth-wise) and metered-by-usage, or the current unlimited and rate-limited system. Also, for metered billing to succeed, TW needs to realize that customers simply won't accept wildly marked-up overages per-GB. Many would say that these markups cover the supposed cost of the last-mile. However, it is my impression that that's the point of the initial per-month fixed cost. Just like electrical companies charge a fixed rate just for the line and overall maintenance, TWC ought to charge around $30 - $ 40 for the line itself, along with say, 50 - 75 GB of included data usage, with an overage of around $0.10 per GB. They could also make a killing selling extra usage in bulk. Obviously, TW executives are absolutely terrified of taking this fair route, since it would actually result in a DROP in profits. Solution? Make insanely low caps and outrageous overages, and subsequently go around "educating the consumer". Brilliant...
--
Physics: Will you break the laws of physics, or will the laws of physics break you?
If physicists stand on each other's shoulders, computer scientists stand on each other's toes, and computer programmers dig each other's graves. | | |
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espaethDigital PlumberPremium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2 Reviews:
·Clear Wireless
| I was using the oil analogy to describe forward looking strategy, not directly relating it to bandwidth being a limited quantity.
Yes, capacity can always be added for additional cost. The problem will result when the cost of augmenting capacity exceeds the revenue generated under the current pricing model.
I don't want to get specifically into TWC's test implementation of metered billing because enough data simply isn't available to make an educated evaluation of how "fair" that was structured. People like to relate the costs of operating a DOCSIS network to that of providing bandwidth in a carrier neutral data center facility. The equipment, design, and support models are completely different. That's like trying to compare the manufacturing production costs of producing shoes in a sweat shop in China to manufacturing shoes in a shop in Seattle that pays its workers a living wage. The shoes from the Seattle shop would indeed cost more, but that doesn't necessarily mean the profit margins are higher. | |
Host:
Road Runner
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2 edits | reply to espaeth
You're essentially arguing that because the price of regular unleaded at my local gas station went down this month that any concerns about oil shortages are completely false because the drop in price clearly shows that supply is outpacing demand. Thank you for telling me I'm arguing something I'm not arguing. First I'm told I'm telling Time Warner Cable how much money they should make (not true), now I'm arguing about oil shortages (both strange and not true)?
Is flat rate broadband pricing sustainable or not? Because again, Time Warner Cable just two quarters ago insisted to everyone it wasn't. Looking at both long and short term ISP numbers it certainly strikes me as a perfectly profitable business both today and tomorrow. References to some unmanageable, looming fantasy capacity implosion have also been repeatedly debunked as untrue constructs of PR and policy folk. | |
 RallyBah HumbugPremium
join:2000-10-27
Astoria, NY
 ·RoadRunner Cable
| reply to espaeth
7% isn't bad in this industry. Plus breaking away from Time Warner, this isn't too bad at all. When they were trying to get it's customer base to accept low caps and high overages, they claimed they had no choice but they wouldnt be 'able to turn a profit' etc..
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I tie a rope around my penis and jump from a tree. Dont you want to grow up and be just like me. | |
espaethDigital PlumberPremium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2 Reviews:
·Clear Wireless
| reply to Karl Bode
said by Karl Bode:Is flat rate broadband pricing sustainable or not? Because again, Time Warner Cable just two quarters ago insisted to everyone it wasn't. Sustainable over what timeframe? I don't have a crystal ball where I can see what technology advancements will be revealed in the 36-60 months that would drop deployment costs. Do you?
My point is that just because they turned a profit over the last 6 months doesn't mean the model will be profitable perpetually. A number of power utilities started out as a flat rate service and eventually broke into metered billing because demand forced the creation of new power plants (typically coal) which increased the costs of production. When everyone could run off the local hydroelectric plant alone the flat rate system made more sense.
What we know at this point is that demand continues to increase, and as much as we try to model the growth rate we're still not able to predict capacity demand far enough out into the future to plan sufficiently for growth. If you get too far ahead in capacity you end up like all the fiber network vendors who went bankrupt in the dot-com bust (at the benefit of giving us all access to now dirt cheap fiber assets recovered from bankruptcy proceedings), and if appropriate advancements don't come down from your DOCSIS / DSL / whatever equipment vendors then you're stuck building out capacity using building blocks that are more expensive than your business model may support. | |
| said by espaeth:said by Karl Bode:Is flat rate broadband pricing sustainable or not? Because again, Time Warner Cable just two quarters ago insisted to everyone it wasn't. Sustainable over what timeframe? I don't have a crystal ball where I can see what technology advancements will be revealed in the 36-60 months that would drop deployment costs. Do you? My point is that just because they turned a profit over the last 6 months doesn't mean the model will be profitable perpetually. A number of power utilities started out as a flat rate service and eventually broke into metered billing because demand forced the creation of new power plants (typically coal) which increased the costs of production. When everyone could run off the local hydroelectric plant alone the flat rate system made more sense. What we know at this point is that demand continues to increase, and as much as we try to model the growth rate we're still not able to predict capacity demand far enough out into the future to plan sufficiently for growth. If you get too far ahead in capacity you end up like all the fiber network vendors who went bankrupt in the dot-com bust (at the benefit of giving us all access to now dirt cheap fiber assets recovered from bankruptcy proceedings), and if appropriate advancements don't come down from your DOCSIS / DSL / whatever equipment vendors then you're stuck building out capacity using building blocks that are more expensive than your business model may support. Your post is pure FUD. Internet growth has been incredibly consistent and is extremely predictable. Bandwidth growth is the exact same thing. These ISPs have been making record profits while decreasing capex and network investment annually. With modern technology network congestion has been completely eliminated. For wireless:
"Glen Campbell of Merrill Lynch calculated bandwidth cost, traffic growth estimates, necessary capex, and the effect different pricing strategies. In an important paper, he concluded there is no crisis to fear. »bit.ly/bK5s4y. His paper was influential in the broadband plan, who independently came to a similar conclusion. Wireless speeds should be reliably at 5 megabits and above to a traffic load far higher than today but not unlimited in the short run."
And on landline:
"The minimal Comcast throttling is possible because they have essentially solved the p2p upstream congestion issue. Comcast top technical people have described how they've made inexpensive upgrades to 10-20 megabits from the 2 megabits of older systems. Explaining why they are moving slowly on DOCSIS 3.0 bonding, 4 CTO-level execs told Cable Show audiences they have essentially no upstream congestion these days. The speakers were in charge of several of the largest networks in the world. It's amazing how many in D.C., including just about all the cable lobbyists, don't seem to know the progress they've made."
So shut your mouth already. | |
a333A hot cup of integrals please
join:2007-06-12
Rego Park, NY Reviews:
·Cingular Wireless
| reply to espaeth
I actually addressed that very point in my post. Once again, the ideal billing model would take ALL last-mile costs into account in the fixed monthly fee all subscribers pay for the maintenance and upkeep of the last-mile network. Overages would then cover SOLELY any additional bandwidth required at a cost similar the actual costs at the edge of the backbone.
And BTW, justifications of 40-GB caps on a supposedly "high-end" cable network are quite hard to swallow, especially when small indie ISP's like TekSavvy in Canada can manage to provide caps in the 200+ GB range, and with reasonable (~ $0.10 / GB) overages without having to "educate" the consumer. Even Comcast here in the states has a 250 GB cap that will hopefully grow due to competition from companies like Verizon.
Again, I am not an all-you-can-eat plan zealot. However, I, along with others simply consider Time Warner's actions dubious, especially considering that the caps and overages they have set and justified with made-up statistics will actually RAISE many people's broadband bills, while the increased revenues do not go into capex but rather the pockets of CEO's and investors.
-a333
--
Physics: Will you break the laws of physics, or will the laws of physics break you?
If physicists stand on each other's shoulders, computer scientists stand on each other's toes, and computer programmers dig each other's graves. | |
espaethDigital PlumberPremium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2 Reviews:
·Clear Wireless
| reply to sonicmerlin
said by sonicmerlin:Your post is pure FUD. Internet growth has been incredibly consistent and is extremely predictable. Which is why so many individuals and companies have had issues coming up with a consistent prediction of growth?
...at the end of 2005, John Chambers, the CEO of Cisco, claimed that Internet traffic was growing at about 100% per year Boslet2005, and similar claims are common (e.g., Roberts2006). Chambers also predicted both in 2005 and in a keynote at the NXTcomm conference in June 2007 Chambers2007, Duffy2007 that growth might accelerate towards 300 to 500% per year, and that the internal Cisco corporate network traffic load is currently growing at such rates. On the other hand, in August 2007, Cisco released a pair of white papers Cisco07a and Cisco07b which estimate that worldwide Internet traffic growth has been around 50% per year over the last few years, and project similar growth for the next few years. (See also the article DW2007 that draws on the Cisco white papers and other sources.) Thus even within a single company, and one that plays a central role in making the Internet function to boot, there are wide disparities in growth estimates, between 50 and 100% per year for current growth rates, and between 50 and 500% per year going forward. Source: »www.dtc.umn.edu/mints/
A growth rate of 100% per year means traffic grows 1000-fold over the next 10 years.
A growth rate of 50% per year means 58-fold over the next 10 years.
Those are vastly different numbers to plan for -- and the "killer apps" that would influence growth over the next 10 years are still completely unknown. Just look at the evolution of the Internet in the last 10 years -- who, in 2000, would have predicted the rise of a site like YouTube?
said by sonicmerlin:These ISPs have been making record profits while decreasing capex and network investment annually. With modern technology network congestion has been completely eliminated. "The minimal Comcast throttling is possible because they have essentially solved the p2p upstream congestion issue. Comcast top technical people have described how they've made inexpensive upgrades to 10-20 megabits from the 2 megabits of older systems. Explaining why they are moving slowly on DOCSIS 3.0 bonding, 4 CTO-level execs told Cable Show audiences they have essentially no upstream congestion these days. The speakers were in charge of several of the largest networks in the world. It's amazing how many in D.C., including just about all the cable lobbyists, don't seem to know the progress they've made." "Record Profits" is a bad indicator because it's simply pulling out a single statistic without looking at the whole system. TWC has also had "Record Revnue" coupled with "Record Operating Expenses."
Look at the annual numbers for TWC: »www.google.com/finance?q=NYSE:TWC&fstype=ii
Revenue has gone up, operating expenses have gone up, net income has gone down.
Your quotes are also self contradictory. You appear to be making the argument that broadband ISPs aren't investing enough money in their infrastructure, and then you provide quotes that say they've invested in capacity so much that they've completely eliminated congestion.
DOCSIS 3.0 address the immediate demand for cable operators -- where is the cheap fix for DSL providers? | |
Reviews:
·T-Mobile US
·Cox HSI
| DSL providers are not what's up for discussion here, it's cable operators that are, and to be honest Copper was doomed from the beginning and we all know that.
Although Fiber to the Terminal is working quite well for qwest, im getting 40meg down/5mbps up on my "DSL" connection, and would personally never trade it back for Cable. | |
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