Comcast Loses Just $5.50 Per Month When You Cut The Cord Thanks To Its Growing Broadband Monopoly
from the insulated-from-competitive-harm dept
We've noted several times that the cable industry is somewhat shielded from the rise of cord cutting because of its growing monopoly over broadband. You see, as AT&T and Verizon give up on unwanted DSL customers they don't want to upgrade (as part of a pivot into content and ads), there are now huge swaths of the country where users really only have one option for broadband above 25 Mbps: cable. Users fleeing neglected DSL lines sign up for cable, and because TV bundled with broadband is cheaper than broadband alone, users sign up for TV service they may not even want.As this cable monopoly grows, these cable companies have less incentive than ever to compete on price across more than half of their footprint. And with ISPs literally writing state laws preventing public/private or community broadband, no market forces exist to prevent them from expanding the application of entirely unnecessary usage caps and overage fees. Most analyses overlook this, instead focusing on the scattered rise of Google Fiber and other gigabit deployments in highly-select areas.
One Wall Street analyst this week highlighted just how cushioned a company like Comcast really is when it comes to cord cutting. MoffettNathanson analyst Craig Moffett crunched the numbers and found that once you account for the higher costs you'll have to pay for buying broadband standalone, Comcast only really loses about $5.50 per month when a user cuts the TV cord:
"When a Comcast customer drops video, the MSO loses about $38 in contribution margin, Moffett estimates. But that customer ends up paying an extra $25 a month more for broadband when their bundling discount goes away. "Now, further suppose that half of those customers opt to upgrade to a higher speed tier at an average premium of $15 per month (implying a probability-weighted $7.50 benefit per cord-cutter)." The difference comes to $5.50.Moffett's analysis isn't perfect and Comcast's losses are likely higher. He comes to that $5.50 number by assuming the departing customer upgrades to a faster speed, which really isn't necessary just for streaming Netflix. And it's not clear he's included the revenues Comcast makes on households paying rental fees for numerous cable boxes, or the fees Comcast hides below the line (like the broadcast TV fee). Still, the point remains that Comcast is arguably shielded from cord cutting because of the high prices it charges for broadband -- only made possible by limited broadband competition.
And Moffett doesn't even touch on the fact that Comcast can further recoup any cord cutting losses via usage caps and overage fees, something Moffett and other investors have long embraced given it lets an ISP charge significantly more money for the exact same service. Nor does Moffett highlight how Comcast further benefits by counting all competitor streaming traffic against the cap, while it's own streaming video service remains cap exempt.
All told, cable providers are now adding 99% of the quarterly net additions for new broadband subcribers each quarter, at the same time that the sector is consolidating at an incredible rate. And these companies continue to have almost comical control over state legislatures, often allowing them to literally write wish-list legislation further insulating them from competitive harm. And time and time again the industry, and the policy folks it employs en masse to pollute public discourse, intentionally conflate enabling this protectionist dysfunction as the "deregulation of free markets" (often with no penalty from an unskeptical press).
So yes, if you live in a major, relatively-affluent city or upscale broadband development your broadband options may be improving, if you're lucky. But across more than half of the country, users are actually seeing less broadband competition than ever before. And with Trump listening to telecom advisors that don't believe monopolies exist and are keen on gutting net neutrality and all regulatory oversight of said non-existing monopolies, you're potentially talking about millions of consumers looking at higher prices and worse customer service than ever before.
The solution, again, is fighting for better broadband on the local level. If you want better broadband, you need to get behind the push to eliminate protectionist state laws that restrict towns and cities from making local broadband infrastructure decisions for themselves. These laws, passed in roughly 20 states, not only prohibit towns and cities from building their own networks (even in cases where nobody else will), but they often hinder the kind of public/private partnerships that are becoming necessary to shore up competitive gaps caused by the broadband market failure the industry will tell you doesn't exist.
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Filed Under: broadband, competition, cord cutting, craig moffett, monopoly, tv
Companies: comcast
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similar numbers
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Re: similar numbers
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No FCC No More
Maybe the best bet is to battle those same protectionist state laws and create municipal networks to force competition?
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Re: No FCC No More
Only if the ISP's let it happen. The FCC was about the only part of government supporting net neutrality.
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Re: No FCC No More
Just as the FCC did nothing, they will do nothing either. It's one of the things that gets me about TD and their sycophantic love for the FCC and its neutrality rules. The FCC created this mess, the new rules suck total dick and TD's neck is in a brace now!
I told them a long time ago to "don't bother celebrating yet" and no matter how right I am, no one listens!
Hey I could be wrong this time... you never know right?
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Re: Re: No FCC No More
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Why, just look at the number of state legislatures they have successfully bough to prevent local competition.
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Re: Re: No FCC No More
But the old rules were worse. The new ones, while still bad, are a considerable improvement.
The problem we're currently facing is not how bad the current rules are, but the fact that even the current insufficient set of rules are almost certainly going to be rolled back, and we'll have no meaningful constraints at all on anticompetitive and monopolistic behavior in these areas.
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Re: No FCC No More
"only made possible by limited broadband competition."
You see, I think broadband competition is needed alright but plenty of these woes we are seeing in the US (and elsewhere mind you) is driven by the fact that a single company can own the pipe AND the services that go through it. Of course this alone would not allow a monopolistic ISP from imposing caps and charging for overages and exemptions from their customers but at the very least they wouldn't be able to leverage their position even more through cap exemptions. It's a whole fucked up setup right from the beginning.
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I thought I should throw Clinton and Trump somewhere here because why not? :-D
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Re:
It looks to me that Hillary is getting far more acolyte levels of attention from her posse compared to Trump. Of course there has been a lot of ass kissing going on over at Trump Tower lately so maybe he can catch up and even pass Hillary, now that she seems to be washing out of politics finally. I guess that is at least ONE good thing I can say for sure that came out of a Trump Presidency. Bye Bye Hillary!
Though I am sure she will be resurrected somehow. Cockroaches can be hard to kill off!
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Re: Re:
If that's not "acolyte levels of attention," what is it?
Protip: don't build a cult of personality around your Glorious Leader; it makes [rhetorical] you look ridiculous.
It's true, though; the Dems are all over their fallen idol like flies on... that stuff... whingeing about the Russkies stealing the election and handing it to Trump. She's a neocon warmonger and we're better off without her.
Trump is a jerk.
There you go, fair and balanced.
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Sat internet will be better than nothing however but are a lot of logistics to work out compared to a simple wifi or cellFi blasting a wave a few feet or miles compared to 23,000 miles way way up through clouds and weather phenomenon!
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-$198/mo to Comcast
Now we should also add the costs... after all, surely they saved something in NOT providing me service. Well, it was my backup Internet connection so $0 on bandwidth, and it costs them $0 after the initial hookup to "also" provide me the same channels my neighbor gets.
So they went from a cost of $0 to a cost of $0 and a net of $198 to a net of $0.
I enjoy their weekly mailings offering me Xfinity or Comcast or whatever else... just not anything I'd ACTUALLY want like uncapped high-speed service with a static IP. Fortunately I have that from another provider.
E
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Re: -$198/mo to Comcast
We have that, actually.
My household - in what is considered a "semi-rural" area - has Comcast Business Class service: high speeds, no caps that I'm aware of, static IP address (though I believe that last comes at an extra fee).
Not sure what the monthly total comes to, but I would be surprised if it was higher than the $198, and it may well be lower.
Now, they certainly don't advertise that service to residential customers, but they will sell it to you if you ask them the right way. To the best of my awareness, they don't even demand any proof that you really are a business of any kind.
(They still send us fliers advertising Xfinity service, probably because - thanks to my father's minor cable-news addiction - we do have Comcast TV service. You'd think the different parts of the company would talk to one another...)
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And the FTC or the FCC can't help. Companies have infected local (state) regulators that pass laws that benefit the provider and hurts their own citizens. Want to bring in Muni Broadband? Guess what, your own state government probably has made that illegal.
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Old price, all in (cable, Netflix, Amazon, Internet, ...), was just under $240/mo. New price with 100 channels and internet is just under $100/mo. Save about $140/mo, comcast bill down from $220/mo to $70/mo.
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no duh
just like water generally seeks the lowest surface, companies will generally seek to maximize, or at least maintain, profits
only competition will end monopolies
boycott or bend over
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The government is their enabler.
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Comcast Loses Just $5.50 Per Month When You Cut The Cord...
Disconnected Customer Profit Recovery Fee.........$5.50
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But:
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