AT&T: Usage-Based Pricing 'Inevitable' → Re: AT&T greed...

I call it BS - it was the old mantra which has been proven completely false as most mega-corporations only did VERY BAD THINGS, DISSERVICES for the society as a whole while they almost never been held accountable.

Corporations ARE BAD beyond a certain size if not regualted - it's inherently roots in their profit-only nature. THEY ARE EVIL if unregulated.

I'd consider overuse of bold, caps, misspelling, and poor grammar to be evil, but that's probably just me.

Seriously, measured regulation has it's place in certain marketplaces, but making sweeping claims that corporations are evil and regulation is good is baseless and inaccurate. Furthermore, my point that you responded to was that TK's rationale regarding value of corporations being important for future investment is most definitely sound logic from anyone's point of view that has a basic understanding of money and how the real world works. If you'd like to discuss that point instead of ranting the same thing across numerous threads, let me know.

The problem is TK's data was misleading.

His numbers of the 1/2 point drop in margin are for the entire company (including all divisions like mobility), easily explained by a huge increase in construction spending which is 3X what it was just 2 years go, from just over $5 billion to $17 billion.

If you look at the annual report you will see that wireline and data services margins are continuing to increase. Data services revenues are up 30% while expenses are up 20% (most coming from the merger).

AT&T has no financial justification to cap. Data services is highly profitable and other than the merger, their highest jump in revenues came when they started selling their dirt cheap meterless DSL services.

FFH5 's point was that corporations must pay their investors at a sufficient rate to entice their continued investment. morbo claimed that nobody believes FFH5 's rationale. I responded that anybody with financial wherewithal understands and believes his claim before kamm popped off.

As for justification, obviously a financial justification does exist to begin capping/metering otherwise T wouldn't be testing the water.

The financial justification isn't curbing backbone costs. The data services division profit margins are increasing and have been increasing, without the need of caps.

I believe the financial justification is defending their new video services. It's certainly no coincidence that AT&T had no interest in caps until they got their own video services. And look at what other companies are looking to meter services...those with huge video revenues to protect. The straight ISPs in the US have not indicated any desire to cap (at least that I've seen/read).

AT&T executives aren't stupid. They're not going to wait for 3rd party internet video like Microsoft, DirecTV, Apple, Amazon and Netflix offers to become popular like iTunes music services is now. It would be impossible to kill without getting gov't attention and people flipping their wigs. And their traffic shaping and fight against net neutrality met huge resistance. Caps defend the highly lucrative video revenues with little resistance.

Hmmm, so there is a financial justification to cap.... Sufficient ROI for investors is what we're talking about here to help facilitate corporate viability and growth. It doesn't necessarily matter where the ROI comes from so long as it exists.

My point is there is sufficient ROI without caps. The 1/2 cut in company wide margin came from the 3 fold increase in capital expenses (construction). That construction brings it's own ROI.

IOW, caps aren't necessary to maintain ROI and bandwidth expenses aren't the reason for the 1/2 point drop in company-wide margin.

AT&T has been hugely viable without caps and AT&T is growing. And in the case of data services, revenue growth far exceeds growth in expenses.

Caps are unjustified by the financials and IMO constitutes abuse of their market position to defend their video services from competitors. I see it as greed and harms innovation in the marketplace. Ultimately I think it will backfire.