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Study: Caps And Overages Are About Ripping You Off
Not About Fairness, Recovering Costs or Saving Puppies

Back in January, former FCC boss turned cable's top lobbyist Michael Powell finally acknowledged that caps on fixed-line broadband networks weren't actually about congestion -- after the cable industry spent much of the last decade arguing caps were all about congestion. Powell did continue perpetuating the myth that caps and overages were about fairness, when most people at this point realize it's simply about driving up the price of data a. because a lack of competition allows it and b. to offset inevitable TV revenue losses to Internet video.

Powell last month also tried to argue that caps and overages were about recovering "high fixed costs" and the billions invested in carrier networks, apparently assuming the public was incapable of reading earnings reports. A new study by the Open Technology Institute (which takes money from companies including Google) argues that this argument doesn't carry water, either. According to the OTI's report, investment in networks has long-since been recouped through high prices, and overall investment in networks is down:
quote:
Yes, cable companies and others have invested billions in building networks, but they have received more than healthy returns on those investments for several decades. According to analyst estimates listed on the NCTA website, cable companies invested over $185 billion in capital expenditures between 1996 and 2011. But these networks generated close to $1 trillion in revenue in the same time period. Moreover, both Comcast and Time Warner Cable are now spending less on capital expenses relative to revenue than in past years.
The report also takes aim at the industry's constant assertion that caps and overages are about "fairness" or a desire to "experiment with creative new pricing models." As we've noted so often, creativity or fairness are never part of the equation when these new pricing models show up on your doorstep (go ahead, ask a Canadian friend). The report singles out Time Warner Cable's Internet Essentials tier (which I've also criticized) as a prime example of the fairness illusion:
quote:
Click for full size
Marketed as "Essentials Internet," the company offers a $5 discount on a $45 broadband plan for a package capped at 5 GB of data per month. To put the data usage in perspective, in 2012 the FCC reported the median cable broadband subscriber uses about 28 GB per month.11 Thus, for a modest 11 percent discount, an individual must reduce his or her data consumption by 82 percent compared to the median cable user. Is this “fair” pricing by anyone’s definition?
The obvious truth is that cable operators benefit from uncompetitive markets that allow them to use artificially imposed limits to gain market leverage and jack up prices. Industry executives can't just say they're burrowing their snouts deeper into the trough, so guys like Mike Powell are paid to pretend that usage caps and overages are about saving puppies, battling communism, or fighting evil wizard walruses (or whatever excuses the industry's paid distortion hounds concoct next week to justify charging $10 per gigabyte).
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shimonmor
Premium Member
join:2000-12-30
Sedro Woolley, WA

shimonmor

Premium Member

You don't say!

No new news here for those of us who follow BBR and those who actually care (probably about 2% of Americans...number generated unscientifically while sitting at my computer eating Doritos).

The real question is what can we do? Not much. Voting with our wallets isn't a choice for many people who have no choice (don't bring up satellite). Large corporations have large amounts of money and many lobbyists and many loyal congressmen in their pockets who do their bidding. They rest of us just need to bend over.

Sorry, feeling a little bitter...or is it indigestion from too many Doritos?

chip89
Premium Member
join:2012-07-05
Columbia Station, OH

chip89

Premium Member

Re: You don't say!

You said it no new news here!

cableties
Premium Member
join:2005-01-27

cableties to shimonmor

Premium Member

to shimonmor
Doritos are bad for you!
bad bad bad.
they are engineered to tell your tastebuds they are needed!
the sodium, the fat = awesome taste.

But they are bad. Just like Cellphone plans. Unlimited Doritos! But at what price.

Elsewhere in the news: no mention we are still in a recession and everyone got a -2% hit on their pay stub. But all the services we need have gone up by 4% or more.

"Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- decreased at an annual rate of 0.1 percent in the fourth quarter of 2012"
Rekrul
join:2007-04-21
Milford, CT

Rekrul to shimonmor

Member

to shimonmor
said by shimonmor:

No new news here...

Gee, it's amazing how you managed to reply to this story a full 21 hours before it was supposedly posted!

FFH5
Premium Member
join:2002-03-03
Tavistock NJ

FFH5

Premium Member

Cable wants MAX profits - what a shock

Cable pricing strategies are designed to maximize profits. That is called capitalism. If they charge too much, competitors WILL find a way to move in.
jjeffeory
jjeffeory
join:2002-12-04
Bloomington, IN

jjeffeory

Member

Re: Cable wants MAX profits - what a shock

How when there are monopolies and duopolies in the entire country? ( Oh you mean Dish or DirecTV).
There's a fine line between market forces and collusion...
SunnyD
join:2009-03-20
Madison, AL

1 recommendation

SunnyD to FFH5

Member

to FFH5
Hard to find a way to move in when the incumbents are paying for laws to be passed to prevent any competition from being able to move in and/or quickly "buying out" any potential competition that manages to spring forth.

FLATLINE
join:2007-02-27
Buffalo, NY

FLATLINE

Member

Re: Cable wants MAX profits - what a shock

All of that is reversible. It starts and ends with the consumer. We are in this position because we were ignorant. Were not so ignorant anymore. The facts are there for everyone to see. Now its time to put on the pressure. Pressure you ISPs for better service at a better price. Pressure you local politicians to listen to their communities. Our problem is not the lobbyists. They are irrelevant if we are doing our job as citizens.

DataRiker
Premium Member
join:2002-05-19
00000

DataRiker

Premium Member

Re: Cable wants MAX profits - what a shock

said by FLATLINE:

It starts and ends with the consumer. We are in this position because we were ignorant.

100% agree. I will never ever pay for television. Ever.

But with Internet, it gets a bit tricky because it is essentially a utility now.
jagged
join:2003-07-01
Boynton Beach, FL

jagged to FFH5

Member

to FFH5
what capitalism when cable is your only choice in town for many people?

whiteshp
join:2002-03-05
Xenia, OH

1 recommendation

whiteshp to FFH5

Member

to FFH5
Monopolies don't get competition. Free market doesn't work when corruption controls the marketplace. That is the WHOLE point. Competitors can't move in because monopolies control the backhauls and can charge ANYTHING their mood feels like to raise rates (per company) on anyone who would dare try and compete with them pricing them into bankruptcy. Their lobbyists create constant legal red tape for monopolies to bankrupt mom and pop startups. Then throw in monopolies sign non competing agreements with other big carriers to gouge their areas for constant unescapeable rate hikes unless you want to live cut off from the world.

This is WHAT has been happening for the last ten+ years and for the same time there is ALWAYS someone saying "The free market will very soon fix the bad things happening right now!" "So everyone stop worrying already!" News flash it's been 10+ years and we still have the same monopolies grinding startups into dust. Nothing is changing.

We DON'T have a free market anymore. All we have for communications in America is monopolies who have vast control in who can be elected and own said elected. Then by proxy they get to staff their own regulatory agencies!

djrobx
Premium Member
join:2000-05-31
Reno, NV

1 recommendation

djrobx

Premium Member

Re: Cable wants MAX profits - what a shock

News flash it's been 10+ years and we still have the same monopolies grinding startups into dust. Nothing is changing.

I think things are far worse from a competitive viewpoint than they were 10 years ago.

10 years ago, telephone companies were phone companies that also provided data services. Within DSL, there were lots of competitive sub-choices (third party CLECs, third party ISPs). There was a healthy rivalry between cable and DSL.

Today, the two biggest telcos are now providing video service (U-Verse and FiOS). That puts them in the same position as the cable companies - Netflix and satellite VOD competes with them, so limiting internet consumption gives their own service a competitive advantage. Their next gen networks are faster, but they're also closed to competitors.

The higher speeds are great, but they put a nail in the coffin to old, unlimited third party ADSL services and all of the competitors that don't own their own infrastructure.

The telcos are now looking at heavily capped wireless services as their new cash cow. Innovation from them has pretty much stopped. New U-verse and FiOS deployments have ceased. Without competition, what incentive do cable providers have to do anything other than offer sub-par service? They don't even do that well with TV service, where there is at least SOME competition.

I don't have a lot of hope for Google Fiber coming to my neighborhood, but I sure hope it or something like it takes off in the US. If it doesn't, I'm very concerned about the future of US broadband.

KrK
Heavy Artillery For The Little Guy
Premium Member
join:2000-01-17
Tulsa, OK
Netgear WNDR3700v2
Zoom 5341J

KrK to FFH5

Premium Member

to FFH5
Maximizing profits in an anti-competitive landscape means only one thing. Regulate.

Either 1) We must have open last mile and many options or 2) The providers should be regulated to prevent abuse.

Take your pick.

Option 3) None of the above is what we have now, and the abuse is just getting started.

Competitors? You mean Muni-Fiber? Of course not. That would be "unfair" now wouldn't it?
Rob_
Premium Member
join:2008-07-16
Mary Esther, FL

Rob_

Premium Member

DUHHH

Let's not forget telcos and their data crap. Boost Mobile only gives me 2.3 gigs of 4G data per month. Their service is horrible. I might be switching to CSpire which looking by their coverage maps, uses AT&T and TMobile.

-Rob
TBBroadband
join:2012-10-26
Fremont, OH

TBBroadband

Member

Re: DUHHH

You can thank Sprint for that 2.3gig cap since they're the true owners of Boost Mobile.

ilikeme
Premium Member
join:2002-08-27
Stafford, TX

ilikeme to Rob_

Premium Member

to Rob_
said by Rob_:

Let's not forget telcos and their data crap. Boost Mobile only gives me 2.3 gigs of 4G data per month. Their service is horrible. I might be switching to CSpire which looking by their coverage maps, uses AT&T and TMobile.

-Rob

C-Spire actually has their own network in the southeast (MS, AL, FL, and I think a few others). Elsewhere, they roam on Sprint and Verizon.

cork1958
Cork
Premium Member
join:2000-02-26

cork1958 to Rob_

Premium Member

to Rob_
said by Rob_:

Let's not forget telcos and their data crap. Boost Mobile only gives me 2.3 gigs of 4G data per month. Their service is horrible. I might be switching to CSpire which looking by their coverage maps, uses AT&T and TMobile.

-Rob

FWIW,
My Boost service is the best of any other carrier I've used and I've gone through most of them.

Regulation is the ONLY way there will ever be any competition for cable, plain and simple and I hope it starts soon. Unfortunately, we will have to get rid of all the pockets that have been lined in congress first!

motoracer
join:2003-09-15
united state

motoracer

Member

Duhhhh

Better technology decreases the cost for data transmission. Why then do prices keep going up and data caps keep getting lower? $$$$$$$$
elray
join:2000-12-16
Santa Monica, CA

elray

Member

Re: Duhhhh

said by motoracer:

Better technology decreases the cost for data transmission. Why then do prices keep going up and data caps keep getting lower? $$$$$$$$

The prices don't "keep going up", and data caps are non-existent or not enforced.

Our rates today are less than half what they were at the turn of the century, for 60x the speed.
axus
join:2001-06-18
Washington, DC

axus

Member

Re: Duhhhh

In 2000, I was on Earthlink DSL for less than I'm paying now, at 25% of the speed. Adjusted for inflation, probably about the same. Meanwhile, their cost to provide the service has gone down much faster.

Before that, I had a symmetrical 10Mbit university connection which cost us about $30 in fees for 6 months. I will be satisfied with the market when I can have that same deal again.

badtrip
Premium Member
join:2004-03-20

badtrip

Premium Member

Re: Duhhhh

said by axus:

... I had a symmetrical 10Mbit university connection which cost us about $30 in fees for 6 months. I will be satisfied with the market when I can have that same deal again.

I pay Sonic $80 a month for 30Mb/2Mb DSL. I am not happy with that price, I think it's too much, but I stay because I can't stand Comcast.

I would be happy to pay $80 for symmetrical 100Mb. Actually, I'd be so thrilled, I'm getting excited just thinking about it.
elray
join:2000-12-16
Santa Monica, CA

elray to axus

Member

to axus
said by axus:

In 2000, I was on Earthlink DSL for less than I'm paying now, at 25% of the speed. Adjusted for inflation, probably about the same. Meanwhile, their cost to provide the service has gone down much faster.

Before that, I had a symmetrical 10Mbit university connection which cost us about $30 in fees for 6 months. I will be satisfied with the market when I can have that same deal again.

Earthlink still sells DSL and cable service, and it is reasonably priced, if not downright cheap, depending on the offer. We have it at several sites.

When you return to the university and pay tuition, you can have cross-subsidized 10Mbit broadband again.

I'd rather we all pay the market price for service, so as to encourage as many sellers as possible to compete for our business and evolve their products.
34764170 (banned)
join:2007-09-06
Etobicoke, ON

34764170 (banned) to elray

Member

to elray
said by elray:

The prices don't "keep going up", and data caps are non-existent or not enforced.

Our rates today are less than half what they were at the turn of the century, for 60x the speed.

You're so clueless it is ridiculous.

El Quintron
Cancel Culture Ambassador
Premium Member
join:2008-04-28
Tronna

El Quintron

Premium Member

Re: Duhhhh

said by 34764170:

said by elray:

The prices don't "keep going up", and data caps are non-existent or not enforced.

Our rates today are less than half what they were at the turn of the century, for 60x the speed.

You're so clueless it is ridiculous.

Not so much clueless, but an unabashed industry mouthpiece, he works for AT&T or one of the CableCos...

(edit: wrong guy about cord cutter bit)
34764170 (banned)
join:2007-09-06
Etobicoke, ON

34764170 (banned)

Member

Re: Duhhhh

said by El Quintron:

Not so much clueless, but an unabashed industry mouthpiece, he works for AT&T or one of the CableCos...

(edit: wrong guy about cord cutter bit)

Hard to tell who is a corporate shill and who is just plain clueless but it is the same handful of people that post pretty much all nonsense around here, especially about certain topics (.e.g. Google, cable, caps, FTTH, wireless, etc.) and the clueless actually believe the stuff they spew.
elray
join:2000-12-16
Santa Monica, CA

elray to El Quintron

Member

to El Quintron
said by El Quintron:

Not so much clueless, but an unabashed industry mouthpiece, he works for AT&T or one of the CableCos...

I am but a consumer of industry product, but unlike 90% of the partisans here, I give credit where and when it is due, even to terrible companies like AT&T.

My opposition to the daily shrill cries for "more, faster, cheaper", are philosophical - not in support of industry, but in opposition to collectivist action and government oppression through unlawful takings, taxation and monopoly power.

I'm not against cooperatives and local tax districts used for last-mile and middle-mile efforts, so long as they're approved by a supermajority vote of the taxpayers. But we get into trouble when we invite the likes of City Hall to run the show.

El Quintron
Cancel Culture Ambassador
Premium Member
join:2008-04-28
Tronna

El Quintron

Premium Member

Re: Duhhhh

said by elray:

I am but a consumer of industry product, but unlike 90% of the partisans here, I give credit where and when it is due, even to terrible companies like AT&T.

My opposition to the daily shrill cries for "more, faster, cheaper", are philosophical - not in support of industry, but in opposition to collectivist action and government oppression through unlawful takings, taxation and monopoly power.

I'm not against cooperatives and local tax districts used for last-mile and middle-mile efforts, so long as they're approved by a supermajority vote of the taxpayers. But we get into trouble when we invite the likes of City Hall to run the show.

Sorry buddy I didn't get anything out of that except for some incumbent provider noise... must be something wrong with my monitor.
jjeffeory
jjeffeory
join:2002-12-04
Bloomington, IN

jjeffeory to elray

Member

to elray
Then why is the bill two or three times what it was at the turn of the century while most people's pay isn't?

newview
Ex .. Ex .. Exactly
Premium Member
join:2001-10-01
Parsonsburg, MD

newview

Premium Member

Just another lie ...

... perpetuated by the cable companies in order to screw their subscribers out of their hard-earned cash. The only thing that will solve this continuing problem is government regulation. Government regulation of the cabletv/phone/internet/wireless companies CAN"T be as bad as the screwing subscribers are getting now.

FFH5
Premium Member
join:2002-03-03
Tavistock NJ

FFH5

Premium Member

Re: Just another lie ...

said by newview:

Government regulation of the cabletv/phone/internet/wireless companies CAN"T be as bad as the screwing subscribers are getting now.

Wanna bet?

shimonmor
Premium Member
join:2000-12-30
Sedro Woolley, WA

1 recommendation

shimonmor

Premium Member

Re: Just another lie ...

said by FFH5:

said by newview:

Government regulation of the cabletv/phone/internet/wireless companies CAN"T be as bad as the screwing subscribers are getting now.

Wanna bet?

Pick your poison.

KrK
Heavy Artillery For The Little Guy
Premium Member
join:2000-01-17
Tulsa, OK

KrK to FFH5

Premium Member

to FFH5
It wouldn't be EXCEPT said regulation WOULD BE CONTROLLED BY THE INDUSTRY.

That's where the crap has to end. Regulators need to regulate and lobbyists need to be removed.
openbox9
Premium Member
join:2004-01-26
71144

openbox9 to newview

Premium Member

to newview
said by newview:

perpetuated by the cable companies in order to screw their subscribers out of their hard-earned cash.

Wow. So you're being forced into giving up your money?
jjeffeory
jjeffeory
join:2002-12-04
Bloomington, IN

jjeffeory

Member

Re: Just another lie ...

IF you want to participate in modern society, uh yea... This is like saying Oh so you're being forced to pay for rent or a mortgage. Good luck with that argument really...
openbox9
Premium Member
join:2004-01-26
71144

openbox9

Premium Member

Re: Just another lie ...

I'm not arguing anything. I'm simply taking issue with the use of "screwing". That implies these 'poor consumers' don't know whats happening to them or that they aren't receiving the services they pay for.
NOVA_UAV_Guy
Premium Member
join:2012-12-14
Purcellville, VA

NOVA_UAV_Guy to newview

Premium Member

to newview
said by newview:

Government regulation of the cabletv/phone/internet/wireless companies CAN"T be as bad as the screwing subscribers are getting now.

I've found that those who believe government control/intervention can't possibly make things worse in a particular situation are usually proven wrong. After all, inefficiency and laziness are hardly choice weapons to use in a battle against ruthlessness and greed.
15444104 (banned)
join:2012-06-11

15444104 (banned)

Member

LOL!

said by FFH5:

Cable pricing strategies are designed to maximize profits. That is called capitalism.

If they charge too much, competitors WILL find a way to move in.

LOL.

Not with the current system they won't.

There are simply not enough different providers to make this a reality in the USA.

As a result the FCC needs to impose more harsh regulations to make the companies behave in a more reasonable manner while still making a decent profit.

•••
whoyourdaddy
join:2013-02-20
Honey Brook, PA

whoyourdaddy

Member

now they

now they will have to come up with another idea to keep the CAPS in place like for the people the pirate movies and music and things so the caps will stay....
whoyourdaddy

whoyourdaddy

Member

Re: now they

PAY MORE GET LESS that's how this country works now congress cant do their job gas prices so high food prices going up and company's making record profets

Ericthorn
It only hurts when I laugh
Premium Member
join:2001-08-10
Paragould, AR

Ericthorn

Premium Member

Nothing will change...

The behemoth providers will continue to jack up prices and cap usage because it's how they "provide a better customer experience".

Until some federal agency or government mandates competition, it'll be business as usual, no matter what the facts show.
BiggA
Premium Member
join:2005-11-23
Central CT
·Frontier FiberOp..
Asus RT-AC68

BiggA

Premium Member

Depends on the market

This is a HUGE issue in many markets where cable effectively has no competition. However, for others, like in suburban Boston, this isn't an issue, as they have fierce competition from FIOS.

It will be interesting to see what Comcast does. It would look rather hypocritical to give certain markets unlimited, i.e. FIOS markets, while capping others, so maybe they will be forced to keep the caps off? They currently have a theoretical cap, but they even say they aren't enforcing it.

YukonHawk
join:2001-01-07
Patterson, NY

YukonHawk

Member

Caps are....

nothing but a big pile of hot, steaming poop!!!

IowaCowboy
Lost in the Supermarket
Premium Member
join:2010-10-16
Springfield, MA

1 edit

IowaCowboy

Premium Member

Protecting revenue

Caps are the industry's answer to net neutrality as they cannot throttle Netflix or charge Netflix (or other Internet video services) for access to their cable plants. Comcast, Time Warner, and other cable companies are TV providers as their core business. Being an ISP and phone company are like a side business to them. It's like a tavern that makes most of its money from drink sales but has a food offering to compliment their drinks. In Biddeford, ME there is a place called Mulligans that is mostly a bar but they have food as well and the reason they sell a whole plate of food for under $5 is they burn you on the drinks like nearly $3 for a soda with no free refills. I compare that to a cable ISP is they offer broadband at reasonable prices but they burn you on the TV so if you don't buy TV they charge more. I see using Internet video on a cable ISP like bringing your own drink to Mulligans where the drinks subsidize the food.

I am pretty sure eventually the cable ISPs will refuse to sell standalone Internet and require a minimum TV purchase although I will remain neutral on that issue. Verizon did the same by requiring a phone line to get DSL.

If you subscribe to basic cable ($5.76 in my area), it puts you on the books as a video subscriber and you get the cheaper Internet prices.

Like I've said before, they have the same infrastructure costs regardless of the products a subscriber subscribes to.

I just don't understand what is behind all the cord cutting. When I was young, many people gladly subscribed to cable. I was excited when I first got cable and I never looked back.

It would be nice if I could watch TV on my iPad, it will be nice when Comcast launches AnyPlay in my area.

••••
decifal7
join:2007-03-10
Bon Aqua, TN

decifal7

Member

um

Um, yeah no kidding folks... Any actual new news? lol

atuarre
Here come the drums
Premium Member
join:2004-02-14
EC/SETX SWLA

atuarre

Premium Member

RE

We already knew this. Just like we knew when the carriers were thinking about bringing LTE into the home for Internet access, it was just another attempt to screw the consumer over with ridiculously low caps and ridiculous overages.
tmc8080
join:2004-04-24
Brooklyn, NY

tmc8080

Member

newsworthy?

in other news, seasonal rises in gasoline prices are all about ripping you off and not due to supply/demand factors. why should gasoline prices rise in January to March (the "off" season for travel) only to jack even higher in the summer driving season (May - October)? Yes, you got it right, it's about ripping you off, then ripping you off some more!

welcome to the new economy your re-elected president & congress won't to a damn thing about it either. expect a lower quality of life than before 2003 due to all the corruption and wealth disparity around the world. this is the new "NORMAL". is it newsworthy that it's been infecting telecom for the last decade or more? why not report water is wet too.
Mr Matt
join:2008-01-29
Eustis, FL

Mr Matt

Member

Split the cable and telephone companies.

Split the cable and telephone industry into regulated wired connection providers and service providers. The wired connection providers would deliver the signal to the consumer. Each voice, internet and entertainment service provider would lease bandwidth on the wired connection providers network. That is the way dial up internet service worked. The cost of telephone service was regulated. The ISP subscribed to the number of lines required to provide adequate service to their customers. During the era of dial up internet there were many independent ISP's. Failure. In 1995 my employer charged $25.00 per month for a 14.4 Kbps dial up connection. By 2002 one could subscribe to a 53Kbps dial up connection for $9.95 per month. All of the subsidies to the telephone and cable industry should be transferred to the wired service providers requiring the wired service providers to use the money to enhance their networks.
turtlespeed
join:2013-02-21
united state

turtlespeed

Member

Where's the Fairness

I live in Oklahoma and we have Cableone for our Internet Service. The service is fast 50MB down & 5MB up, the Big Problem is there's a 50 GB Cap. Oklahoma City and Tulsa both have Cox Cable for their Internet Service their Cap is 400 GB's Our City is Getting Ripped off Big Time. I called to complain and a nice lady said they are thinking about Raising the Cap a Little Bit but she didnt know when. What our City Needs is Cox Cable!!!!

anon in tex
@verizon.net

anon in tex

Anon

this

you can get verizon DSL witout a phone service, it's called dryloop DSL, askfor it.
and cableone sux. they typically only deal with places they can invoke franchise contracts like tey did in sherman/denison area. the only other way to get internet in sherman/denison is, if in denison you may have at&t DSL as an alternative or in sherman you may have verizon DSL as alternative, this isby the franchise rules so there can be NO other competition.