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Moffett: Cut The Cord And Cable Will Meter Broadband
Because incredibly profitable ISPs are never profitable enough...
by Karl Bode 10:07AM Monday Nov 01 2010
A day after insisting that customers who cut the cable cord are middle aged nobodies eating dog food for lunch (after previously denying they existed at all), Sanford Bernstein analyst and cable stock fluffer Craig Moffett tells CNET that if customers cut the cord, cable broadband companies will simply turn around and begin metering broadband customers' bandwidth. In fact, Moffett goes so far as to insist ISPs will have "no choice" in the matter as streaming services like Netflix gain popularity.
quote:
Iinstead of simply raising prices on cable broadband, Moffett said it's more likely that cable operators would move toward usage-based pricing. That way consumers who use more bandwidth to stream movies and TV shows end up paying more per month for service than people who may be getting their video from the traditional cable TV network. Time Warner has tested usage-based billing, but the company faced a huge backlash from consumers. Still, Moffett said that broadband service providers may have no choice as bandwidth-intensive video streaming services like Netflix become more popular.
CNET doesn't do anything to counter this false argument that providers have "no choice." Most infrastructure is paid for and cable DOCSIS 3.0 upgrades are relatively inexpensive. Terrestrial bandwidth and hardware costs also continue to drop. The myth of a bandwidth apocalypse caused by video if carriers can't meter service (aka the Exaflood) has been repeatedly shown to be a myth.

Flat rate broadband is very profitable -- it just isn't profitable enough for Wall Street (by nature, nothing ever is). As such, should cable start to lose video revenue they'll want to take their pound of flesh in some other fashion -- and have that luxury in a U.S. broadband market that in many locations is not competitive.

What consumers think of being over-billed of course doesn't matter to Wall Street. In an age when ISPs are continually stripping away free perks like newsgroups, and have their hands in everything from home security to behavioral ads -- they obviously have a "choice" as to where they find new revenue. As consumers showed when Time Warner Cable tried to impose steep per gigabyte overages trying to take it out of consumers' hides via overages might not be their best bet.


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