Friday, May 16, 2014

Data Caps are Coming...Comcast Admits

Bravo to and Karl Bode for an excellent article on just what Comcast has in store for its customers. The cable giant has been testing so called data, or usage, caps in certain markets where flat fee broadband service is 'flat' up to a certain point, after which the meter kicks in and bills users for each megabyte or gigabyte above the limit. Obviously this is very unpopular with consumers as Time Warner Cable learned previously, and for good reason. Caps on data usage will increase cable bills, limit choice, increase complexity and stifle innovations that consumers want--all good things for the monopoly cable providers.

Reading the quotes from David Cohen, identified in the article as a Comcast lobbyist, is eye-opening to say the least. For instance when he says that, "We are trying to go slowly here because we have no desire to blow up our high-speed data business", what he really means is that "customers hate this but since they don't have a choice we'll implement it slowly so as not to create too much of a negative response from consumers and regulators".

Consumers are like sitting ducks just waiting for the next slap from these mega-monopolies precisely due to the lack of real competition. The cable companies are basically cash machines protected by the lack of competition and political cronyism at all levels.

Mr. Bode astutely points out at the end of the article that the real, substantive reason for usage caps is the cable industry's absolute need to protect its antiquated subscription TV business structure. Even beyond the idea of a la carte TV channel packages tailored to consumers' wants and needs is something even more destructive to the bloated channel lineups. That's internet video enabled by fast broadband pipes.

Of course, the way to prevent the monopolies from behaving badly is to introduce and stimulate competition. Google Fiber is a neat idea and is even becoming a nice little side business for the search/advertising giant as evidenced by the survey performed by Bernstein Research. But what may be even more significant has been the reaction of the entrenched cable providers in cities where Google Fiber is rolling out its services. When a company like Time Warner Cable, with its horrendous customer service, announces higher speeds and (somewhat) better pricing in markets that Google Fiber has entered into, the real benefits of true competition become apparent.

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