celeritypc
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Premium
join:2004-05-15
Caldwell, NJ
| The real answer is...Yes...and No
In the long run, prices will not go down. They always go up. The programming costs are the same whether you are a cable co or a telco. What does happen (as is happening in states with cable/telco competition) is that consumers are in a better negotiating position with either company to get a deal. This process is a proactive one in which the consumer must pursue the deal. Consumers can't expect to wait for "prices to drop" as it will not happen. Also, it pays to bundle in order to get a deal. If you want cheaper tv, you have to take internet and phone as well from the same provider. If anything, there are options, but that is what life is about.
The real culprit here is the programming. Regulating or playing the providers off one another does nothing to stop the way companies like Disney, Viacom or NBC/Universal play with programming costs and force providers into taking other channels to keep the most popular ones. Also, sports programming a la ESPN et al is the single most expensive component of programming costs. Until people say "Enough is enough," we will continue to get hammered by these costs whether we view sports or not. |
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nasadude
join:2001-10-05
Rockville, MD
 ·Comcast
| you know, programming is one of the issues in pricing, but the cable and telcos could also take a smaller profit and lower prices.
that's actually a traditional way of getting new customers - offer a better price point than the competition.
Besides the fact that there isn't real competition with only two companies offering a service, neither company really wants to compete anyway. The preferred method of doing business seems more to rely on lobbying local and national government for advantageous legislation and offering bundles that make it difficult to compare features.
I would bet that programming costs could go down, but cable prices wouldn't go down. Programming costs are just a convenient excuse for raising rates. |
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TKJunkMail
Enjoy the sun
Premium
join:2002-03-03
Avalon, NJ
 ·Sprint Mobile Broa..
·Comcast
1 edit | said by nasadude  :you know, programming is one of the issues in pricing, but the cable and telcos could also take a smaller profit and lower prices. These industries - telecommunications(includes cable) and entertainment barely make a return on assets that is above what people can get with savings bonds. They can't LOWER prices without going out of business due to lack of investors. The ignorance of people on these forums about the financial aspects of business is truly appalling.
ROA by Industry
»money.cnn.com/magazines/fortune/···dex.html
ROA by company in telecommunications
»money.cnn.com/magazines/fortune/···s/2.html
ROA by company in entertainment
»money.cnn.com/magazines/fortune/···t/2.html
If investors can't get a return on their investment money, the money goes elsewhere.
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en102
Canadian, eh?
join:2001-01-26
Valencia, CA | Hasn't Comcast been producing high profits for the last few years ?
In general - I agree, investors want (demand?) a decent ROI, and why would investors pump money into something that will not bring a decent return. |
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TKJunkMail
Enjoy the sun
Premium
join:2002-03-03
Avalon, NJ
·Sprint Mobile Broa..
·Comcast
| said by en102 :Hasn't Comcast been producing high profits for the last few years ? Profit $'s yes. But their profit percentage on revenue was 4% and their Return on Assets was only 1%.
They have large revenues, but the cable industry has huge capital costs(in their infrastructure) and in operating costs to maintain that infrastructure. So profits are not any where near excessive. The profits are barely enough to keep investors from fleeing to other opportunities.
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HyPeRbAnD
join:2006-01-07
Stow, MA
| reply to TKJunkMail
said by TKJunkMail :said by nasadude :you know, programming is one of the issues in pricing, but the cable and telcos could also take a smaller profit and lower prices. These industries - telecommunications(includes cable) and entertainment barely make a return on assets that is above what people can get with savings bonds. They can't LOWER prices without going out of business due to lack of investors. The ignorance of people on these forums about the financial aspects of business is truly appalling. ROA by Industry » money.cnn.com/magazines/fortune/···dex.htmlROA by company in telecommunications » money.cnn.com/magazines/fortune/···s/2.htmlROA by company in entertainment » money.cnn.com/magazines/fortune/···t/2.htmlIf investors can't get a return on their investment money, the money goes elsewhere. You took the word right out of my mouth...
Anyway we complain about prices, we should look at Exxon Mobil and their profit. Lower the damn gas prices and we will have more to spend on entertainment. |
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en102
Canadian, eh?
join:2001-01-26
Valencia, CA
·RoadRunner Cable
 ·DSL EXTREME
| reply to TKJunkMail
You'll also find that most packages (bundled tv/hsi or phone/dsl) are not that different in price with the exception of intro pricing. When I was on Comcast, they were more expensive than POTS/DSL/DirecTv on every service except for digital phone, where their price was the same.
TimeWarner is more competitive, where their TV service (digital) is pretty much the same as DirecTv, and they have a lower priced tier for HSI (1.5/384), and offer bundle incentives. I can assume that the 'average' person (not highschool age, or gamer) doesn't need the 8Mbps/768kbps package. I do remote work on VPN/SSH/X-11/Remote Desktop, and 2.5Mbps/512kbps is fine for me... and I've been doing this for 3 years.
Having high availability tiers for those wanting to pay $$$ is a good revenue generator, especially if it isn't that difficult to implement. Having a low/basic tier for some (cable) is difficult, as they don't _really_ want low end options. |
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russotto
join:2000-10-05
Collegeville, PA
| reply to TKJunkMail
Yeah. Comcast isn't making money hand-over-fist. Sure it ain't. Pull the other one, it's got bells on.
They may appear to be getting a poor ROA, but if that's the case, they're probably holding on to a high book value for assets which are about as illiquid as you can get. Heck, they're probably counting the recent copper price increases as enormously increasing the value of their in-ground infrastructure (quite a bit of copper in RG-11), thereby reducing their ROA but not actually costing them money. |
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Ahrenl
join:2004-10-26
North Andover, MA
 ·Verizon FIOS
| reply to HyPeRbAnD
ROA is the wrong measure for "Investors"
You want to use ROE. Especially for large leveraged companies ROA will ALWAYS be tiny, because your denominator will be so large.
Examples:
Comcast
Return on assets 2.37%
Return on Com Eqty 6.22%
Verizon
Return on assets 3.47%
Return on Com Eqty 14.05%
AT&T
Return on assets 3.53%
Return on Com Eqty 8.64% |
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TKJunkMail
Enjoy the sun
Premium
join:2002-03-03
Avalon, NJ
·Sprint Mobile Broa..
·Comcast
| said by Ahrenl :ROA is the wrong measure for "Investors" You want to use ROE. Especially for large leveraged companies ROA will ALWAYS be tiny, because your denominator will be so large. Examples: ComcastReturn on assets 2.37% Return on Com Eqty 6.22%VerizonReturn on assets 3.47% Return on Com Eqty 14.05%AT&TReturn on assets 3.53% Return on Com Eqty 8.64% ROE is a good measure for Qtrly and Yearly measures and for investors that get in and out of the market based on stock price and projected earnings. ROA is a much better measure of a company's long term viability and its ability to cover the cost of capital and return consistent dividends. Both measures have their value. Institutional investors(pension funds especially) that look for good companies for long term investing consider ROA as a key measure.
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Ahrenl
join:2004-10-26
North Andover, MA
·Verizon FIOS
| As a good measure of a company, but not measure of return. The return to investors generated by the company is the ROE. ROA intermixes the return on assets that may have been generated by debt issuance, retained earnings, or, ahem, legislative handouts. Of course your nominal ROA on free assets will be lower, as they cost you nothing and distorted your NPV/IRR decision process.
Btw, welcome back from the "ignore posts" limbo... |
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NEP1611
join:2002-03-27
Northford, CT
| reply to TKJunkMail
I do think this guy is right, to a point. Regardless of how many players are in the game, people are still going to want ESPN and other high demand channels. These channels cost money, and it is not realistic to expect the cable and satellite companies to absorb the cost.
What this guy failed to mention is that in fact there already IS competition, in the form of DirecTV and Dish Network (setting aside whether some specific households may not have access to satellite) Adding another player at this point in the form of the telcos will not decrease prices, their effect would be to provide an additional option for customers.
Where the real benefit will be is as far as services provided. Companies may be more aggressive in rolling out high-definition DVRs, for instance, or bidding for exclusive rights on certain programming.
Regarding prices, what everyone forgets is that both the cable companies and satellite companies have various packages that are targeted at different price points, and they each offer a different mix of products. If you want to spend $50 a month on pay TV, chances are there is an option that is viable, if not exactly what you're looking for. |
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