[telecom] Price-gouging cable companies are our latter-day robber barons

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Monty Solomon

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Jun 9, 2013, 2:53:45 PM6/9/13
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Price-gouging cable companies are our latter-day robber barons

Monopolistic cable providers make internet access an unaffordable
luxury for tens of millions of Americans

Heidi Moore
guardian.co.uk
4 June 2013

Last year, about 1% of American households cut off their internet
service. That's not as surprising as experts may suggest.

The internet - which promised to connect all Americans with
everything from educational opportunities to Facebook status updates
- has become, unfortunately, a luxury even for the middle class.
Cable companies that have functioned as oligopolies have made it that
way.

Naturally, more Americans would cut off internet service considering
how absurdly expensive it has become to pay to stay connected. The
median income for a household in the United States is just over
$50,000, which has to support a family with basics like food,
mortgage or rent, a car and gas. Inflation has steadily driven up the
price of food and gas, which has meant that American wages have
actually dropped since the recession. School costs, healthcare and
other costs mean many families depend on credit cards on occasion.
That doesn't leave a lot of room for splashy purchases.

Yet, strangely, internet access - which is a necessity in homes where
children get their homework online and parents may telecommute - has
become the splashiest purchase of all. In many big cities, internet
access can easily become a budgetary sinkhole for families. Think of
$100 a month for cable and internet, another $50 a month for a
smartphone, $40 a month for an iPad or a similar device; if you
travel, add $70 a month for some kind of wireless hotspot like
Verizon's Mi-Fi.

...

http://www.guardian.co.uk/commentisfree/2013/jun/04/price-gouging-cable-companies

***** Moderator's Note *****

Wow: I thought I was the only one who noticed. It's nice to see that
the Guardian is still allowed to point out the obvious: this reminds
me of when I was a teenager, and how I used to listen to the BBC
shortwave broadcast to get the news.

Of course, this begs the question of just how obvious the
U.S. economic debacle is to the rest of the world.

Bill Horne
Moderator

Garrett Wollman

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Jun 10, 2013, 1:22:41 PM6/10/13
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In article <p06240815cdda7f6926e4@[10.0.1.13]>,
Monty Solomon <mo...@roscom.com> quoted Guardian journalist Heidi
Moore, who wrote:
>Yet, strangely, internet access - which is a necessity in homes where
>children get their homework online and parents may telecommute - has
>become the splashiest purchase of all. In many big cities, internet
>access can easily become a budgetary sinkhole for families. Think of
>$100 a month for cable and internet, another $50 a month for a
>smartphone, $40 a month for an iPad or a similar device; if you
>travel, add $70 a month for some kind of wireless hotspot like
>Verizon's Mi-Fi.

Most of these are not even remotely necessary. You can do totally do
without "an iPad or a similar device" (I do), and while I don't travel
as much as expense-account journos do, I have never had the need for a
portable wireless hotspot. (If I did, I would turn on that function
in my smartphone, which costs closer to $80 a month for a relatively
minimal but unlimited-data postpaid plan.) I have cable, but
television is not by any means a necessity of life.

-GAWollman

--
Garrett A. Wollman | What intellectual phenomenon can be older, or more oft
wol...@bimajority.org| repeated, than the story of a large research program
Opinions not shared by| that impaled itself upon a false central assumption
my employers. | accepted by all practitioners? - S.J. Gould, 1993

Neal McLain

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Jun 11, 2013, 12:26:40 AM6/11/13
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RE: Price-gouging cable companies are our latter-day robber barons
[telecom]

> ... They rationalize it like this: even though the cable
> companies have a gross profit margin of around 97% - meaning
> 97 cents of every dollar they make is pure profit - they still
> have to pay to service cell towers and invest in broadband.
> They have expensive equipment to maintain, see? That's not
> monopoly pricing power. That's just basic subsistence.

Service cell towers? 97% profit? Wow ... the industry sure has
changed since I was a cable guy!

If a cable company is indeed making 97% profit, that implies that the
other 3% covers all other costs. Little things as payroll, employee
benefits, programming fees, retransmission-consent fees, internet
connection charges, administrative overhead, advertising, customer
care, customer billing, maintenance, public relations, government
relations, insurance, legal services, rent and lease expense,
utilities, vehicle expense, franchise acquisition and compliance,
franchise fees, copyright royalties, FCC registration and compliance,
operation and maintenance of video-signal reception and processing
facilities ("headend"), operation and maintenance of cable modem
termination system, distribution and maintenance of video converters,
distribution and maintenance of cable modems, outdoor distribution
facilities ("outside plant") extending from the headend to every
customer's premises, utility-pole attachment fees ("pole rental") for
aerial outside plant, contractor-hotline ("one-call") notification
services for underground outside plant, verification of the technical
integrity of internal wiring inside customer premises (even though the
company may not own it), access control (accurately connecting each
subscriber), detecting and prosecuting unauthorized connections.

And yes, "servicing cell towers." Many cable companies rent tower
space to PCS carriers, so obviously they have to maintain them. But
does the writer actually believe that cable companies use cell towers
to distribute their signals?

Neal McLain
Retired Cable Guy

T

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Jun 12, 2013, 8:41:59 PM6/12/13
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In article <p06240815cdda7f6926e4@[10.0.1.13]>, mo...@roscom.com says...
>
> Price-gouging cable companies are our latter-day robber barons
>
> Monopolistic cable providers make internet access an unaffordable
> luxury for tens of millions of Americans
>
> Heidi Moore
> guardian.co.uk
> 4 June 2013
>
> Last year, about 1% of American households cut off their internet
> service. That's not as surprising as experts may suggest.
>
> The internet - which promised to connect all Americans with
> everything from educational opportunities to Facebook status updates
> - has become, unfortunately, a luxury even for the middle class.
> Cable companies that have functioned as oligopolies have made it that
> way.
>
> [Moderator snip]
>
> Yet, strangely, internet access - which is a necessity in homes where
> children get their homework online and parents may telecommute - has
> become the splashiest purchase of all. In many big cities, internet
> access can easily become a budgetary sinkhole for families. Think of
> $100 a month for cable and internet, another $50 a month for a
> smartphone, $40 a month for an iPad or a similar device; if you
> travel, add $70 a month for some kind of wireless hotspot like
> Verizon's Mi-Fi.
>
> ...
>
> http://www.guardian.co.uk/commentisfree/2013/jun/04/price-gouging-cable-companies

If you read Susan Crawford's "Captive Audicence" you'll see she lays out
what it really costs the providers to provide the service. For net
service it's not ever 3% of what they charge you. So they could
essentially charge you $10 a month for good net service and still make a
profit.

And I'm hoping Google eventually wires up the entire U.S. It would put a
shot across the bow of the likes of Verizon, at&t, Cox, Comcast et al. I
mean, you've got options with Google like pay a $300 construction charge
and get 3mbps/1mpbs service in perpetuity. Or pay for higher bandwidth.

But it would FORCE in my case Verizon and Cox to play nicely.

Neal McLain

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Jun 13, 2013, 10:47:29 AM6/13/13
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On Jun 12, 7:41 pm, T <kd1s.nos...@cox.nospam.net> wrote:
> If you read Susan Crawford's "Captive Audicence" you'll see she lays out
> what it really costs the providers to provide the service. For net
> service it's not ever 3% of what they charge you. So they could
> essentially charge you $10 a month for good net service and still make a
> profit.
>
> And I'm hoping Google eventually wires up the entire U.S. It would put a
> shot across the bow of the likes of Verizon, at&t, Cox, Comcast et al. I
> mean, you've got options with Google like pay a $300 construction charge
> and get 3mbps/1mpbs service in perpetuity. Or pay for higher bandwidth.
>
> But it would FORCE in my case Verizon and Cox to play nicely.

So what does Google actually charge per month for an internet
connection? Since I don't live in the KC area, there's no way I can
"pick a plan" from their website.

I've heard that Google also offers a cable-TV like television service.
What does that cost per month?

Neal McLain

Ron

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Jun 13, 2013, 8:10:45 PM6/13/13
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Neal McLain <nmclain.r...@and-this-too.annsgarden.com> wrote:
>So what does Google actually charge per month for an internet
>connection? Since I don't live in the KC area, there's no way I can
>"pick a plan" from their website.

Huh?
Gigabit + TV $120/mo $300 waived construction fee
Gigabit Internet $70/mo $300 waived construction fee
Free Internet $0/mo $300 construction fee
(one time or $25/mo for 12 mo)
.
Free internet is:
Up to 5Mbps download, 1Mbps upload speed
No data caps
Free service guaranteed for at least 7 years
http://fiber.google.com/about/

--
Ron
user rrcnom.de.plume
in domain antichef.com

Harold Hallikainen

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Jun 14, 2013, 8:44:03 AM6/14/13
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On Thu, 13 Jun 2013 20:10:45 -0400, Ron wrote:
> Neal McLain <nmclain.r...@and-this-too.annsgarden.com> wrote:
>> So what does Google actually charge per month for an internet
>> connection? Since I don't live in the KC area, there's no way I can
>> "pick a plan" from their website.
>
> Huh?
> Gigabit + TV $120/mo $300 waived construction fee
> Gigabit Internet $70/mo $300 waived construction fee
> Free Internet $0/mo $300 construction fee
> (one time or $25/mo for 12 mo)
> ..
> Free internet is:
> Up to 5Mbps download, 1Mbps upload speed
> No data caps
> Free service guaranteed for at least 7 years
> http://fiber.google.com/about/

That's interesting! I'm currently paying $70 per month for 6Mbps
DSL. I wonder how the cost of providing the service costs out. What
was total construction cost? What percentage "penetration" is achieved
(how many people subscribe)? What is upstream cost? What is
maintenance cost? What is ROI? Is this a good business investment? Can
others do it?

Harold

--
FCC Rules Updated Daily at http://www.hallikainen.com - Advertising
opportunities available!
Not sent from an iPhone.

Neal McLain

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Jun 14, 2013, 10:39:21 PM6/14/13
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On Jun 14, 7:44 am, "Harold Hallikainen" <har...@hallikainen.org>
wrote:

> That's interesting! I'm currently paying $70 per month for 6Mbps
> DSL. I wonder how the cost of providing the service costs out. What
> was total construction cost? What percentage "penetration" is achieved
> (how many people subscribe)? What is upstream cost? What is
> maintenance cost? What is ROI? Is this a good business investment? Can
> others do it?

Interesting indeed.

I suspect there's a minimum contract period for customers that sign up
for a package that waives the $300 construction fee.

Back in my cable TV days, we charged an "install charge," with no
specified contract term. But marketing people were continually coming
up with "free install" sales promotions, so the de-facto install
charge was essentially zero.

Every September, when 10,000 or so college students returned from
summer vacations, we'd have to do hundreds of installs in a week. But
students rarely stayed in the same place more than a year. I never
thought that selling cable TV to college students was much of a money-
maker, but under the terms of our franchise with the city, we were
required to do it. Students not only got free installs, they were
continually tampering with our facilities, often paid their bills
late, and sometimes skipped town without paying the final bill.

A $300 "construction fee," with a minimum contract period of one year,
would certainly have put a stop that that kind of nonsense.

Neal McLain

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