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Time Warner Cable: No Consumer Demand For Gigabit Internet 573

Posted by Soulskill
from the give-the-people-what-we-have dept.
Freshly Exhumed writes "Chris Welch at The Verge tells us: 'Speaking at the Morgan Stanley Technology Conference moments ago, Time Warner Cable's Chief Financial Officer Irene Esteves seemed dismissive of the impact Google Fiber is having on consumers. "We're in the business of delivering what consumers want, and to stay a little ahead of what we think they will want," she said when asked about the breakneck internet speeds delivered by Google's young Kansas City network. "We just don't see the need of delivering that to consumers."' The article goes on to quote her: '...residential customers have thus far shown little interest in TWC's top internet tiers. "A very small fraction of our customer base" ultimately choose those options.'"
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Time Warner Cable: No Consumer Demand For Gigabit Internet

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  • by radiumsoup (741987) on Thursday February 28, 2013 @09:58AM (#43033541)

    The article goes on to quote her: '...residential customers have thus far shown little interest in TWC's top internet tiers. "A very small fraction of our customer base" ultimately choose those options.'"

    Um, yeah - that's because it's waaaaaaaay overpriced.

  • by Anonymous Coward on Thursday February 28, 2013 @09:59AM (#43033557)

    If it was capped at 10GB per month, I wouldn't see a need either tbh. Thank Christ I live in a country where capping is unheard of. That's what actual free markets do for you.

  • by Sponge Bath (413667) on Thursday February 28, 2013 @10:00AM (#43033577)

    "We just don't see the need of delivering that to consumers."

    That is the core problem. Thanks to TWC for stating it so well.

  • by TrekkieGod (627867) on Thursday February 28, 2013 @10:05AM (#43033627) Homepage Journal

    There are two factors involved in a customer's decision. That which they get, and the price at which they get it. What's going on here is that most customers are not willing to shell out $50-$70 for Time Warner's top tiers, as the extra speed doesn't justify the cost over the lower tiers. On the surface, this would seem to back up Time Warner's assertion that customers don't want faster speeds for the most part. The analysis is missing one important factor, however: Time Warner has no real competition in most markets. As a result, they get to set the prices to dictate customer demand, not the other way around. To maximize their profit, Time Warner has chosen a price point at which most people will want to purchase the tier they're willing to provide minimizing the amount of investment in their infrastructure they would have to provide to support more people at higher tiers.

    In a more competitive environment, other ISPs would compete by offering lower prices and faster tiers. Then we would see whether customers chose to pay less for the same speeds or get a faster internet for the same price.

  • by Farmer Pete (1350093) on Thursday February 28, 2013 @10:06AM (#43033641)

    35mb its faster than any consumer will ever need!

    Can I quote you on that in 10 years? I remember when 756 kbps was faster than any consumer would ever need. It didn't last long.

  • by Jason Levine (196982) on Thursday February 28, 2013 @10:07AM (#43033653)

    When they price a service out of reach of the average consumer, of course few will take it. The same will be done if they ever offer ala carte TV. You will be given a "cable connection" for a base fee and then each channel will be a certain amount more. Of course, the way it will be priced, you will quickly top the bill for regular, bundled cable TV if you add even a handful of channels. Then, when few people take them up on this "deal", they will declare that there is no demand for it and kill the project.

  • Cable Replacement (Score:5, Insightful)

    by pellik (193063) on Thursday February 28, 2013 @10:08AM (#43033669)
    Of course TWC customers don't need that much bandwidth. Right now the amount of bandwidth they'll give you is generally not enough to stream HD video reliably. This would be a problem for many people, but since their customers all subscribe to cable it clearly doesn't affect them. Streaming 1080p video to multiple devices simultaneously over the internet would kill their core business. Bias is expected.
  • by AikonMGB (1013995) on Thursday February 28, 2013 @10:09AM (#43033683) Homepage

    Precisely; her comments have absolutely nothing to do with the demand of higher speeds and quality service, but rather the supply. Her argument is circular -- we don't offer good options, so customers don't choose good options, therefore customers don't want good options, thus there's no need for us to offer good options. That's an awesome flow chart you got there, TWC.

  • by Anonymous Coward on Thursday February 28, 2013 @10:09AM (#43033697)

    Right - if your gigabit connection is capped at something like 30GB, then you could only back up a quarter of your TB HD every month, and provided your remote backup site has the bandwidth so that TWC's connection is the limiter, it should take you far less than an hour to do it. Why would you pay $100+ a month when you could get greater capacity AND higher average throughput from mailing TB HDDs through the USPS?

    Hah, captcha was "clipped"!

  • by MachineShedFred (621896) on Thursday February 28, 2013 @10:13AM (#43033751) Journal

    Time Warner is doing a variation on it though. What the guy really said was:

    "We offer high-bandwidth service in some markets, but people don't subscribe to it"

    What he's not expanding on, is the reason why they don't subscribe. Is it because people don't want it, or is it because they've made is so damn expensive that people don't see value in it compared to the lower-bandwidth service?

  • by Anonymous Coward on Thursday February 28, 2013 @10:24AM (#43033865)

    Remember that the 5Mbps I pay you $40/mo for is "up to" 5Mbps. And my neighborhood is so congested I'm usually lucky to get 200Kbps. I can't remember *ever* hitting my 5Mbps limit. Maybe once, on a Tuesday at 10:30AM.

    If I pay you $200/mo for "up to" 50Mbps, why should I expect to get more than 200Kbps anyway? That's still "up to" 50Mbps. It's not like you're going to tear up the streets and upgrade your infrastructure here just to deliver more bandwidth to my house.

    Of course I haven't upgraded -- the risk/reward ratio isn't there.

  • by Beardo the Bearded (321478) on Thursday February 28, 2013 @10:28AM (#43033915)

    It's not that.

    It's that if they offered gigabit Internet, then they'd have to upgrade all that other stuff to handle the bandwidth. That's why they put caps on, that's why they overcharge. It's because they can make tons of money now for the shareholders.

    They're a US utility. They don't upgrade. They wait until it falls apart and then they replace as little as possible.

  • Filed next to... (Score:5, Insightful)

    by MasterOfGoingFaster (922862) on Thursday February 28, 2013 @10:39AM (#43034043) Homepage

    I've filed this next to -

    "I think there is a world market for about five computers. ... No one else, he said, would ever need machines of their own, or would be able to afford to buy them" - Thomas Watson - IBM

    "There is no reason for any individual to have a computer in his home." - Ken Olsen - Digital Equipment Corp

    "640K ought to be enough for anybody" - Some guy...

  • by kenh (9056) on Thursday February 28, 2013 @10:49AM (#43034155) Homepage Journal

    Precisely. If I recall correctly, Comcasst offers 100 MB connectivity in my area for around $300 per month.

    Because they didn't build out thier physical plant for every household to subscribe to that level of service - they scaled their network for lower bandwidth.

    Google's 1 GB fiber connectivity is somewhere between $70 and $80 per month.

    And is being offered below the cost of providing the service (subsidised) - that is not a sustainable business model for a for-profit company.

    Do I want 100 MB, or even 1 GB? Oh, hell yeah. But can I pay more than around $100 per month for an überfast connection? Unfortunately, no. It's not lack of desire.

    Offering a service people want is a no-brainer, offering a service people want but are unwilling to pay for is a non-starter. Motorola learned this with their "Iridium" Satellite phone service...

  • by hedwards (940851) on Thursday February 28, 2013 @10:53AM (#43034223)

    I'd settle for 600mbit that's about what I'm paying for 5mbps right now. Depending upon the specific taxes involved.

    I do sort of agree with TWC that there isn't much demand. But, that's right now, the thing about increased bandwidth is that new uses come into being as people figure out how to use it. But, the real problem is the lack of upstream bandwidth. I've got 5mbps down, but only 896kbps upstream.

  • by hedwards (940851) on Thursday February 28, 2013 @10:56AM (#43034251)

    Yes, but that's likely to always be true and meanwhile it's 10 years and you haven't done any meaningful upgrades. I'm not sure if it's still true, but as of when Qwest was bought by CenturyLink, there were parts of Seattle with 1.5mbps as the maximum connection speed and no plans to do anything about it. Even in my neighborhood the speeds had increased from 4mbps to a whopping 7mbps as the fastest option in a decade.

    If you keep putting these things off, it just stifles innovation.

  • by dkleinsc (563838) on Thursday February 28, 2013 @10:58AM (#43034269) Homepage

    Alternate translation: "We don't care. We don't have to. We're the Cable Company."

  • by NatasRevol (731260) on Thursday February 28, 2013 @10:58AM (#43034275) Journal

    I think it's more a matter of price:

    TWC top tier cost - 50 Mbps @ $80/mo (introductory price!)
    Google Fiber - 1 Gbps @ $70/mo

    Now, which one would any reasonable person want?

  • by who_stole_my_kidneys (1956012) on Thursday February 28, 2013 @11:00AM (#43034309)
    by Irene Esteves logic, no one wants a Bugatti either, if they did they would just go out and buy one.
  • by Nikker (749551) on Thursday February 28, 2013 @11:05AM (#43034371)
    Maybe if the prices were lower people would start streaming HD more from Netflix and Hulu instead of buying expensive cable packages!
  • by DCFusor (1763438) on Thursday February 28, 2013 @11:07AM (#43034395) Homepage
    Mod parents up. Gee, no one wants a ride in space either, if it costs the GDP of a small country.
  • by DJRumpy (1345787) on Thursday February 28, 2013 @11:08AM (#43034409)

    I don't think it's the capping that is the only issue, but rather the pricing. It's hard to justify 100+ bucks for top tier service. We used to pay 20-30 bucks for 5, 7, or 10 Mb. In my area, bumping the 'stock' 10Mbps to 18 is $60. Going higher than that gets exorbitant.

    If there was competition, this would no doubt change, but they have a virtual monopoly around here.

  • by v1 (525388) on Thursday February 28, 2013 @11:12AM (#43034465) Homepage Journal

    Google? they only have it in a few neighborhoods in one of the smallest cities in america

    I wasn't aware that Kansas City was considered "one of the smallest cities in america"?

  • by hairyfeet (841228) <bassbeast1968@@@gmail...com> on Thursday February 28, 2013 @11:14AM (#43034491) Journal

    Bullshit its because we have ZERO competition in a good chunk of the USA. If we had actual free markets, not this backdoor bribery, cherry picking duopoly horseshit we have now I have NO doubt that we'd have faster speeds and at competitive prices, but because they know they have most customers by the short hairs the money that would be spent on infrastructure goes to bonuses. After all what are you gonna do, go dialup? Go DSL which at least here in the south is several times WORSE (average 3-4Mbps in my area with lows as bad as 700Kbps) than the 8Mbps-20Mbps the average cableco offers?

    My city has grown by over a third in the last decade and its a college town to boot...know how many new lines have been laid? ZERO. They know AT&T ain't gonna lay shit for new DSL around here so they just gouge their existing customers and keep the money. it really distorts the whole area because you can have two apt buildings side by side and one will be three times as much and have a waiting list while the other is never more than half full, why? Because you can get high speed at the first one, all you get across the street is the shitty local WISP.

    The worst part is if a city gets tired of the bullshit and decides to lay their own lines they can look forward to spending the next decade in court, can't be having competition now can we? I've never been one of those "the free market can fix anything" types but what we have now is so far from a free market it ain't even funny so frankly anything that opened up the country to competition would be good in my book.

  • by Blaisun (2763413) on Thursday February 28, 2013 @11:17AM (#43034533)
    agree, i want gigabit, but i am not willing to sell my kidneys for it. make it reasonable like google is, and i would snap it up....
  • by postbigbang (761081) on Thursday February 28, 2013 @11:17AM (#43034541)

    You're wrong in all directions you go.

    The demand for fast service is huge, and the US is a third world country because the telco model is to depreciate their asset investment as long as is possible, so as to maximize profits.

    The US used to be a leader, and now, it's fallen mightily because it's all about shareholder return and buying off government regulation whilst monopolizing as much as possible.

    Your "timing" BS is crack. 10G hardware is not the problem. Capital investment in a bought-off monopolistic era is the problem. The cure is to harrass the monopolists into acting like real capitalists.

  • by Anonymous Coward on Thursday February 28, 2013 @11:24AM (#43034613)

    I don't think it's the capping that is the only issue, but rather the pricing.

    I don't think there is any real question here, it most definitely is the pricing. If you tacked a zero on the end of everyone's current speed and charged the same price, I strongly doubt most users would be bumping themselves down to a slower data plan.

  • by Anonymous Coward on Thursday February 28, 2013 @11:29AM (#43034691)

    Why doesn't this surprise me, coming from someone named PRMan. Is this a schtick?

  • by rnturn (11092) on Thursday February 28, 2013 @11:53AM (#43035031)

    ``if your gigabit connection is capped at something like 30GB, then you could only back up a quarter of your TB HD every month''

    Seagate and Western Digital will just love internet providers like this. Think of all the external disk drives they're going to sell to handle backups. I doubt you'd need to spend more than $100 for an external USB dock and a 1TB or 2TB disk. Simple and it doesn't eat up your bandwidth limit.

    The fact that nobody's buying TWC's highest priced access plans is obvious: their customers know they're a ripoff.

  • by postbigbang (761081) on Thursday February 28, 2013 @12:14PM (#43035313)

    Taxes aren't evil, they're civilization. Generousity is also a virtue, and often civilized, too. When generous people aren't available, taxes are necessary to keep civilization. Soon, you'll see the feedback loop.

  • by jedidiah (1196) on Thursday February 28, 2013 @12:16PM (#43035333) Homepage

    People see the name Kansas and they imagine some farm village with two traffic lights.

    It's just their total ignorance and complete unwillingness to remedy that ignorance.

  • by akboss (823334) <akboss@suddenlin[ ]et ['k.n' in gap]> on Thursday February 28, 2013 @12:20PM (#43035417)

    The fact that nobody's buying TWC's highest priced access plans is obvious: their customers know they're a ripoff.

    Mod this guy up.

  • by Yobgod Ababua (68687) on Thursday February 28, 2013 @12:26PM (#43035519)

    "but they have a virtual monopoly around here."
    I envy you... where I live, in Los Angeles, they have an *actual* monopoly on high speed service.

    Can I get Verizon here? No. (Not in a Verizon area.)
    Can I get AT&T U-Verse service here? No. (Not available in my area.)
    Can I get any other cable company service? No. (Local monopoly.)

    It's TWC or nothing.

    For the record I'm not "demanding" their top tiers because their pricing is ridiculous, not because I don't want it.

  • by Mousit (646085) on Thursday February 28, 2013 @12:43PM (#43035763)
    What's even more frustrating about it is that we have plenty of examples of what sort of good actual competition produces with U.S. telco services, but they're unfortunately usually in small markets or regional areas so they don't get the national coverage they deserve. The Google Fiber project is a rarity in that regard, for having so much attention on it, including stories about Time Warner's response to it in the areas being served (lowering prices and upping service speeds to compete).

    I can relate with you, having seen my city (also a college and university city) triple in size in the last decade. Time Warner has done virtually nothing in that time, at least not on a large scale, and certainly nothing on their infrastructure. However, there's been an upstart, regional competitor that's been moving in, slowly slowly slowly. It's been slow because Time Warner's been fighting them tooth and nail, with legal tactics and otherwise. That company's been building up a modern infrastructure, almost all fiber, with current-gen equipment. They've been spending a lot of money to do it, it's true, but despite that they've been consistently profitable year after year, because customers WANT their service.

    Just two years ago, that company finally won the right-of-way access to lay down new lines in my neighborhood. As soon as service was available, I switched. I went from 15Mbps/512Kbps(!) on Time Warner to 65M/5M with the new guys. I also pay less for it, and that's not even their top tier; it's one of their mid-range offerings. Plus, I almost always GET the advertised speed too, thanks to the modern back-end. I'm also still a television watcher (I know, I know..) and I'm getting more channels I actually want, including some that were "premium" with Time Warner, included in my package, while also paying less for the television service. I even get TiVo units direct from the cable provider, instead of Time Warner's horrifically shitty lowest-bidder cable boxes and half-broken cablecards.

    The reason I bring all this up (yeah yeah, I know I'm getting off-topic a bit) is to point out Time Warner's response to all of this. In the areas that the new provider manages to get in (and ONLY in those areas!), Time Warner almost immediately moves to upgrade its equipment, lower the prices, and up the broadband speeds and television offerings, trying to hold on to customers they never had to give a shit about before. This has actually gotten them in a bit of trouble, because they're literally charging different prices for the same service, depending on which part of the city you live in (whether your neighborhood has competition or not).

    Right after I left, I started getting notices and mailings from Time Warner offering to "win me back" and telling me how they'd "improved their services" in my area, having admittedly spent a bundle to upgrade their lines and equipment, and offer higher broadband speeds and more television channels (ironically, their improved services are still not as good as the new guys and aren't cheaper either). This is the kind of thing that happens over and over and over, again and again, anywhere where even a duopoly springs up, let alone even greater competition. But since it's only some small area in Texas in my case, it doesn't get the coverage it deserves. These kind of things should be brought up on a national platform to point out the kind of lies TW's PR is spewing as in the original article up there. I mean mainstream media; it's already well-known on places like Slashdot but you've got to admit it's not an "everyman" news site.

    As an aside, wandering even more off-topic, I know what you mean about AT&T not laying shit for DSL and gouging customers. My neighborhood had DSL when I first moved in (expensive $40/mo for 5Mbps/128Kbps). Less than a year later, AT&T actually went in and pulled all the DSL equipment, dumping the customers that were using the service (this was when Time Warner was the only other competitor in the area, too). Their
  • by Grishnakh (216268) on Thursday February 28, 2013 @12:49PM (#43035821)

    You have other choices about other things in life too. You don't HAVE TO have a house or apartment; you can just live under a bridge.

    Having internet access is essential to participating in today's economy. Many jobs require it now. You can't apply for any decent job now without an internet connection and email account and a computer to maintain your resume on. You can't search for jobs without access to monster.com, dice.com, etc. And if you have a telecommuting job, high-speed internet access is essential, just like having your own car is essential to most other jobs (in the US).

  • by GameboyRMH (1153867) <gameboyrmhNO@SPAMgmail.com> on Thursday February 28, 2013 @02:02PM (#43036825) Journal

    Came here to say this. Am I interested in gigabit Internet at $2k/mo or whatever the looney price is? No. Would I be interested in it at a reasonable price? Hell yes.

    But because I don't currently buy it apparently I'm not interested. In other news gearheads are apparently not interested in owning supercars, and very few men are interested in dating supermodels.

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