Time Warner Cable: No Consumer Demand For Gigabit Internet 573
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.'"
I can think of a few rea$on$ (Score:5, Insightful)
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.
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
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.
Stating the obvious (Score:5, Insightful)
"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.
Not at the prices they're charging (Score:4, Insightful)
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-$70 for Time Warner's top tiers, as the extra speed doesn't justify the cost over the lower tiers. On the surface, this would seem to back up Time Warner's assertion that customers don't want faster speeds for the most part. The analysis is missing one important factor, however: Time Warner has no real competition in most markets. As a result, they get to set the prices to dictate customer demand, not the other way around. To maximize their profit, Time Warner has chosen a price point at which most people will want to purchase the tier they're willing to provide minimizing the amount of investment in their infrastructure they would have to provide to support more people at higher tiers.
In a more competitive environment, other ISPs would compete by offering lower prices and faster tiers. Then we would see whether customers chose to pay less for the same speeds or get a faster internet for the same price.
Re:I can think of a few rea$on$ (Score:5, Insightful)
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.
Same reasoning will be used for ala carte TV (Score:5, Insightful)
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)
Re:I can think of a few rea$on$ (Score:5, Insightful)
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.
Is TWC still capping bandwidth? (Score:5, Insightful)
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"!
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
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?
Maybe because you won't deliver it anyway (Score:2, Insightful)
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.
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
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)
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...
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
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.
And is being offered below the cost of providing the service (subsidised) - that is not a sustainable business model for a for-profit company.
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...
Re:How about the price? (Score:4, Insightful)
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.
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
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.
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
Alternate translation: "We don't care. We don't have to. We're the Cable Company."
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
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?
No Consumer Demand For Bugatti Veyron's either (Score:4, Insightful)
Re:they have a point of sorts (Score:5, Insightful)
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
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.
Re:Translation: We Don't Have Gigabit Fiber (Score:4, Insightful)
I wasn't aware that Kansas City was considered "one of the smallest cities in america"?
Comment removed (Score:5, Insightful)
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
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.
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
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.
Re:Translation: We Don't Have Gigabit Fiber (Score:3, Insightful)
Why doesn't this surprise me, coming from someone named PRMan. Is this a schtick?
Re:Is TWC still capping bandwidth? (Score:5, Insightful)
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.
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
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.
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
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.
Re:Is TWC still capping bandwidth? (Score:5, Insightful)
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.
Re:Translation: We Don't Have Gigabit Fiber (Score:5, Insightful)
"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.
Re:Translation: We Don't Have Gigabit Fiber (Score:4, Insightful)
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
Re:Translation: We Don't Have Gigabit Fiber (Score:4, Insightful)
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).
Re:Translation: We Don't Have Gigabit Fiber (Score:4, Insightful)
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.