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 a333A hot cup of integrals please
join:2007-06-12
Rego Park, NY
 ·Cingular Wireless
| reply to espaeth
Re: Most profitable quarter ever... what?! 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...
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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
·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. | |
 RallyBah HumbugPremium
join:2000-10-27
Astoria, NY
 ·RoadRunner Cable
| 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. | |
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. | |
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