Data Caps are Coming...Comcast Admits

Bravo to DSLreports.com 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.

AT&T Offered...What??

Great article on just how out of touch monopoly cable providers are with the consumers they are supposed to serve.

Excerpt:

At a time when concerns about the privacy of our web activity is at an all-time high, AT&T has offered a 300 megabits per second service in Austin (gigabit speeds are apparently forthcoming) where customers can pay $99 for the standard service or pay $29 less per month if they allow their web usage to be monitored and fed into ads.

Click here for the rest of the article.

Google Fiber in.......NEW YORK ?!?

The rumblings have started. Article from FoxNews:

Google's Next Conquest: New York City?

Raising Cable Modem Fees - Ripping Off Consumers

Why would the cable company arbitrarily decide to increase the modem rental fee that it tacks on to your bill each and every month? Because it is a veritable monopoly and it can!

Recently, Time Warner Cable increased its monthly modem rental fee to $6/month--a 50% increase just like that. Ignoring the useless claptrap explaining the increase to customers, this should be viewed as nothing more than a blatant, unilateral step by the corporation to increase revenue without providing any additional value to the customer whatsoever. Worse yet, there is really no justification for such a high fee given the true cost of these boxes as detailed in this article on Gizmodo.

Cable companies count on the unsuspecting, or technologically unaware, or too-busy-to-care consumer to just accept these types of insidious fee increases as a fact of life. The truth is that since the majority of cable modems in use are actually recycled boxes that have been used by one or more customers already, they're more than paid for. So these bloated fees end up being 100% profit for the cable company.

The whole idea of "leasing" network equipment to customers is really just bad business and would never even be discussed in an environment with true competition. To be sure, not charging a monthly fee would be one of the things that competitors would trumpet in an effort to win customers. For now, however, consumers have to grin and bear it.

When the Cable Company Decides to Offer Faster Broadband

The dominance of cable companies in the residential broadband space is an accepted fact of life. Those lucky few cities that are getting Google Fiber will get to enjoy a special perk--a not-so-dominant cable company. To get a sense of how the lack of competition hurts consumers, lets consider how a large cable company touts its new "high bandwidth" offerings.

The example we are going to be looking at is actually for commercial services offered by Time Warner Cable to businesses in and around the New York City area. The company will soon be rolling out "Wideband" data services that feature a new and improved top tier with (asynchronous) speeds of 100 Mbps (max) download and 5 Mbps (max) upload. How much will this increased bandwidth cost the average small or medium-sized business in Time Warner territory?

$403.99 per month. The price drops to $342.99 with a 2 year contract.

Without even considering any other fees or charges on top of those rates, think the marketability of such an offering in an environment where, say, a product like Google Fiber was also available. With synchronous 1GB speeds and an approximate cost of $70/month, it is clear that the cable company's offering would be absurd. The only thing that can spare consumers from the monopolistic stranglehold of the cable companies is true competition. It cannot come soon enough.

Google Claims to See Google Fiber as a Real Business

The big debate around Google Fiber of late is whether the company actually intends to pursue this business for the long haul. According to company officials it is a business that the company wants to be in and they expect it to be profitable at some point - see statement from Google Fiber VP Milo Medin here. Some observers and analysts contend that the capital intensive business of building a fiber network (beyond just a few hand picked cities) is way outside of Google's core businesses.

So a city as complex and difficult to work in as New York City may be way down the list of target cities. That high cost of doing business, however, comes with an upside--the incredible population density, per capita income, and profit potential. Google can't ignore New York City especially if it expects Google Fiber to: 1) be taken seriously, and 2) make money. The company will have to be creative when developing a deployment plan for NYC, which will look a lot different than the "stringing fiber on existing utility poles" methodology being used in the markets they have so far announced.

The combination of increased consumer demand for high-bandwidth, reliable broadband services and the incumbents desire to cap usage and increase prices will continue to be a driving force in the emergence of truly competitive providers. (Not to mention the horrible customer service reputations earned by both Verizon and Time Warner Cable) Whether it is Google Fiber or some other locally based entity remains to be seen.