Comcast Bundle Shakedown - Part II
from the still-going... dept
A few months ago we had a post on the Comcast bundle shakedown where they raised prices significantly for anyone who was using their cable modem service, but not their cable TV service. Now that the price increase has gone into effect, plenty of customers are pretty angry and accusing Comcast of abusing monopoly powers. The typical response from Comcast and their supporters is that this is just reasonable bundling, and people should get a "discount" for buying multiple services. There are a few problems with that argument. First of all, this isn't a discount for bundling - it's a significant price hike for something people ordered at a much lower price... Thus, it suggests a bit of "bait & switch". If this really is a "discount" for bundling how come no one received any lower prices? Second, in many areas Comcast is really a monopoly provider of high speed internet access. That means that people really have no choice but to accept this higher priced deal if they want high speed internet access. If there were true competition, then it wouldn't matter so much and people could vote with their money and move to another option. Hopefully, over time, the market will become more competitive, but for many people, Comcast is their only real option.
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Comcast "tying" not "bundling"
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The cable modem system operates independent of TV and was retrofitted on top of the cable TV system. They seldom even share any common back-office functions except at the highest level. About all they share is the cable, and that cost was sunk before cable modems were added. There are minimal economies of scope and that is the only way to justify a lower cost if you buy multiple services. Even then, the case is weak. TV is broadcast, to all people connected to the cable. Whether or not people subscribe to it (i.e. have a receiver hooked to it) doesn't change their operating costs at all.
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