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Craig Moffett Whines DOJ Cap Investigation Will Raise Rates
Ignoring That He's Been Pushing for Higher Rates for 10 Years
by Karl Bode 07:46AM Friday Jun 15 2012
Over the last ten years there's been no bigger champion for low caps and high per byte overages than Sanford Berstein telecom analyst Craig Moffett, whose clients obviously like the idea of subscribers paying more money for the same product -- while the cost to deliver that product continues to drop. Moffett urged AT&T to eliminate unlimited data (they did), and championed Time Warner Cable's effort to impose ridiculously low caps and absurdly-high overage fees.


Like any good short-sighted investor, Moffett has urged companies to not upgrade their networks, insiting that caps and overages are the "next generation of communications." The irony of course is those telcos who listened and didn't upgrade their networks are now having their lunch eaten by cable providers on a massive scale, which, if Moffett's firm and client investment interests lean heavily toward cable operators, is something that's working out rather well for him and them.

Less network investment, less competition, higher prices. Great for investors, not so great for you.

It's with that background in mind that it's amusing to see him respond to this week's news of a DOJ investigation into usage caps by telling anyone who'll listen that the investigation means higher rates for consumers. Peter Kafka at All Things D listened, breaking down Moffett's argument as such:
quote:
Broadband providers are already moving away from broadband plans that charge everyone the same price, as long as their use stays under a certain cap, and toward usage-based pricing....A federal investigation means that all the cable guys move [toward usage based billing], with speed. “Additional scrutiny from the DOJ would likely definitively end caps… and instead usher in a regime of [usage-based pricing] that would ultimately be even more threatening to online video providers than caps themselves."
In other words, a stock jock who has aggressively been pushing for rate hikes for consumers for the past ten years believes that a regulator doing its job will result in rate hikes for consumers. Moffett's been hoping for caps and overages for as long as this website has been around, and now that he's finally getting them he's complaining that a government investigation into caps and overages will result in -- caps and overages? Makes perfect sense. If you're an inhalant abuser.

Anyone pretending that ISPs need any excuse to raise rates or impose new per byte price hikes (government or otherwise) hasn't been paying attention. What will actually happen is the government, who has already given their breathless support to these price hikes, will ask a few questions, then write off these efforts as simple "creative" billing, ignoring the fact they're anti-consumer and are being used to choke over the top video alternatives.

What actually does drive steep per-byte pricing fees isn't government -- it's competition, or the lack thereof. Companies in markets with limited competition will engage in price gouging, and ISPs in markets with competition won't.

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digitlman

join:2009-12-29
Cary, NC

2 recommendations

Bah

Screw Craig Moffet.

Asshole.

Harddrive
Proud American and Infidel since 1968.
Premium
join:2000-09-20
DFW
kudos:2

Craig Moffett

Industry shill. I wonder how much he's paid under the table from all teleco's and cableco's for such idiocy?
openbox9
Premium
join:2004-01-26
Germany
kudos:2

1 recommendation

Re: Craig Moffett

He's just an industry analyst that Karl continues to put on the front page. He doesn't need to be paid under the table since his clients already pay his firm a bunch of money for his analysis of the telecom sector. Investors still need to accomplish their own due diligence since firms and analysts may have conflicts of interests with their own positions.
openbox9
Premium
join:2004-01-26
Germany
kudos:2

Caps and overages are different than metered billing

said by Karl Bode:

Moffett's been hoping for caps and overages for as long as this website has been around, and now that he's finally getting them he's complaining that a government investigation into caps and overages will result in -- caps and overages?

Seem to me that Moffett (and Kafka?) is suggesting that if regulators dissuade ISPs from capping service, that the ISPs will migrate toward metering service. Such as, if you don't like paying $60/mth for up to 250 GB of data, then get ready for something like $40/mth for service with 0 GB of and then $2/GB over that.
said by Craig Moffett :

“Additional scrutiny from the DOJ would likely definitively end caps … and instead usher in a regime of [usage-based pricing] that would ultimately be even more threatening to online video providers than caps themselves.”

said by Peter Kafka :

Broadband providers are already moving away from broadband plans that charge everyone the same price, as long as their use stays under a certain cap, and toward usage-based pricing. That move has been blessed repeatedly by federal regulators.

Wilsdom

join:2009-08-06

Re: Caps and overages are different than metered billing

No problem regulating that too. Electricity companies would surely love to charge $2/W, but the government actually forces them to just pass on their cost from the generator and limits what they can add on for delivery based on their actual overhead. The ISPs are making a lot more money with flat-fee unlimited plans than they would with true metered service, regulated by market competition or monopoly oversight
openbox9
Premium
join:2004-01-26
Germany
kudos:2

Re: Caps and overages are different than metered billing

I doubt that ISP capping/metering will be regulated any time soon...at least as long as the ISPs don't go totally insane with pricing structures and rate increases. Raising rates incrementally over time seems to only mildly irritate consumers, not regulators.
Kearnstd
Space Elf
Premium
join:2002-01-22
Mullica Hill, NJ
kudos:1

Re: Caps and overages are different than metered billing

I think we would only see full head on regulation if the ISPs went to a completely metered system with no initial cap.

usage based billing will completely destroy rich media internet advertising. not that such is a bad thing but nobody will want some web site's video ad chewing up their bill.
--
[65 Arcanist]Filan(High Elf) Zone: Broadband Reports
Cobra11M

join:2010-12-23
Mineral Wells, TX

Re: Caps and overages are different than metered billing

and thats prob why they wont, cause most of them make side money threw that.., but they are playing a very risky game with the internet in time it will bite back and hard, this will more than likely go to usage based completely but no flat fee, instead you pay by the gigabyte maybe a little over but still.. now that alone would crush the cable industry they would become full out dumb pipes. As we see now their trying to do whatever they can to stop that but the more they push the more the internet and the people will push back and eventually it will come to reality I personally do not see the cable companies being so called bundle everythin companies in the next 10 years, they will only be offering internet service maybe tv still but wont be as a big push as it is now cause it will be completely over the internet

now of course the infrastructure to support that idea isnt quite their so maybe 10-15 years but either way their models will have to change weather they like it or not, all of them keep crying for more money and lower caps just wait and see what happens in the future!

Alex J

@apexcovantage.com

Seem to me that Moffett (and Kafka?) is suggesting that if regulators dissuade ISPs from capping service, that the ISPs will migrate toward metering service.

The ISPs are already migrating toward metering service, in no short part due to investor pressure from guys like Moffett. Moffett predicts everything will lead to metered usage, because he wants metered usage.

Besides, the feds wont' do anything. Ripping people off without empathy and sticking a knife in the side of your competitor (often with the help of the government) is the very bedrock of this great nation.
Sammer

join:2005-12-22
Canonsburg, PA

Re: Caps and overages are different than metered billing

Metering requires standards that are verified by an independent standards organization or the government. ISPs who don't like regulation are not ready for that.
openbox9
Premium
join:2004-01-26
Germany
kudos:2
Most of the ISPs are implementing caps with somewhat metered overages. That is not the same as metered service.

88615298
Premium
join:2004-07-28
West Tenness
said by openbox9:

then get ready for something like $40/mth for service with 0 GB of and then $2/GB over that

That's a bit hyperbolic don't you think? $2 per GB? Comcast's proposed overages and at&t overages are $10 per 50 GB. So it would be something closer to that. But it would mean people like me who use over 100 GB and sometimes 200 GB a month would pay more.
openbox9
Premium
join:2004-01-26
Germany
kudos:2

Re: Caps and overages are different than metered billing

The numbers weren't meant to be accurate, rather they were to demonstrate a potential scenario. I don't know what the numbers will be, but just like the new VZW plans, whatever new pricing structure comes about, it won't lower costs for most consumers.

cdru
Go Colts
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join:2003-05-14
Fort Wayne, IN
kudos:7

2 recommendations

Craig Moffett

Does Craig look as much of a douche in real life as he does in his publicity photo?
firedrakes

join:2009-01-29
Arcadia, FL

Re: Craig Moffett

i hope he gets nickel and dime from hes isp for overage cost in the hundreds
praetoralpha

join:2005-08-06
Pittsburgh, PA
Thinking the same thing.
Uncomm0n

join:2005-04-21
Centreville, VA
He is no doubt the biggest douche on the planet. Someone needs to end his dumb ass and shut him the fuck up.
ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL

Talk about blackmail!

This scenario would be like going to a mechanic who quotes you an outrageous price for fixing your car, and, when you begin to question whether it's justified, he tells you that, if you keep asking him questions, he's going to raise his price even more.

Gee, I thought that the ISP's had good reasons for these caps and overages--reasons that would stand up to scrutiny. I guess not.

But let's look at Moffett's motivation. He wants telco and cableco profits to go up, and he's advocated things to increase those profits for years. Now, it's pretty clear that he doesn't want a DOJ investigation; otherwise, he wouldn't make this threat. If such an investigation would indeed cause the ISP's to raise prices further, that would translate into bigger profits, which is supposedly what he wants. Then why would he be trying to forestall such an investigation if it would lead to what he wants? One possibility is that he knows the caps and overages couldn't be justified, and the political pressure would forces ISP's to back away from them. Another possibility is that the ISP's big profit margins would be revealed, which could prompt other companies to enter the market to try to get a slice of that pie. That would be bad for the incumbent players and bad for their investors.

Basically, the takeaway here is that, if Craig Moffett is against it, whatever it is, it likely benefits consumers.
Sammer

join:2005-12-22
Canonsburg, PA

1 edit

Re: Talk about blackmail!

said by ISurfTooMuch:

This scenario would be like going to a mechanic who quotes you an outrageous price for fixing your car, and, when you begin to question whether it's justified, he tells you that, if you keep asking him questions, he's going to raise his price even more.

Actually it's more like someone who knows a mechanic who has been charging to replace parts that didn't need to be replaced. People who are selling something that isn't honest don't like investigations. If there is no anti-competitiveness to find the DOJ investigation can't have any effect on rates.

IowaCowboy
Iowa native
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Springfield, MA
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Reviews:
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If broadband is going to remain a monopoly

If broadband is going to be a monopoly/duopoly, then it should be a regulated utility like electric and natural gas (which are regulated monopolies) and then broadband ISPs should have to answer to state departments of public utilities and have to justify any rate increases and/or caps. I also think they should have to file rates with DPUs. I personally think Internet access is becoming as essential as basic telephone service.

The reason state DPUs were established is to regulate utilities that are natural monopolies by the nature of their business and broadband is becoming a natural monopoly by design. There was a good reason that telephone service had to be regulated by state DPUs and the abuse by broadband ISPs reminds me of the behavior of AT&T and Bell system before the 1984 divestiture.
Cobra11M

join:2010-12-23
Mineral Wells, TX

Re: If broadband is going to remain a monopoly

said by IowaCowboy:

If broadband is going to be a monopoly/duopoly, then it should be a regulated utility like electric and natural gas (which are regulated monopolies) and then broadband ISPs should have to answer to state departments of public utilities and have to justify any rate increases and/or caps. I also think they should have to file rates with DPUs. I personally think Internet access is becoming as essential as basic telephone service.

The reason state DPUs were established is to regulate utilities that are natural monopolies by the nature of their business and broadband is becoming a natural monopoly by design. There was a good reason that telephone service had to be regulated by state DPUs and the abuse by broadband ISPs reminds me of the behavior of AT&T and Bell system before the 1984 divestiture.

very true, isp's will get their day, it maybe soon it maybe 10 years from now but it will happen as we look at AT&T's past and what theyve tried to do here recently people still remember the past and refuse to give them any ok sure u can merge

I for one hope the isp's get their day and I do think its almost here
tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
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unlimited or go out of business!

shareholders perk up your ears!

»www.youtube.com/watch?v=EL8e2ujXe8g

GlennAllen
Sunny with highs in the 80s
Premium
join:2002-11-17
Richmond, VA

Craig Moffett whines...

(that is all)

ARGONAUT
Have a nice day.
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join:2006-01-24
New Albany, IN
kudos:1

Hostage taking Moffett

And that's what they call blackmail.