Craig Moffett Whines DOJ Cap Investigation Will Raise Rates
Ignoring That He's Been Pushing for Higher Rates for 10 Years
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:
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.
Bah Screw Craig Moffet.
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.
Caps and overages are different than metered billing
said by Karl Bode: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.
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?
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.
| |cdruGo ColtsPremium,MVM
Fort Wayne, IN
Craig Moffett Does Craig look as much of a douche in real life as he does in his publicity photo?
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.
Re: Talk about blackmail!
said by ISurfTooMuch: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.
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.
Mineral Wells, TX
Re: If broadband is going to remain a monopoly
said by IowaCowboy: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
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.
I for one hope the isp's get their day and I do think its almost here