Comcast’s business model is being slowly strangled.
The phenomena of cord cutting has be steadily increasing and, as younger generations come of age, only will only accelerate in the future. Additionally, the era of the “home phone” is rapidly evaporating, taking with it yet one of the “growth markets” Comcast had been counting on in their Triple Play package.
The future for cable companies is little more than a dumb pipe, and I’m ok with that. Internet the the future of communications, and the reality is it should be an unmetered utility. Users will be able to pay for speed tiers, but content and services will be provided by organizations other than the internet provider 1.
This future terrifies Comcast, as well as other large ISP’s, because there is no hope of massive revenue growth for an dumb-pipe utility. While Comcast is pursuing mergers to stave off this future, they are also looking for ways to better monetize their internet business as their other services begin an inevitable decline. One the ideas they have been knocking around for several years is the implementation of data caps. Every user on their network is allotted an arbitrary and finite amount of this “limited” resource, and those who dare to go over 2 will be charged extra. This cap is being put into place even though Comcast’s own experts admit there is no technical reason for caps to exist. In fact, Comcast itself says it’s a “business decision.” They hope people will allow themselves to be duped to be believe broadband data is like cellular minutes or the ancient world of long-distance telephony.
Knowing people will not sit well with data caps, Comcast is playing a new hand. In regions where a 300GB cap has been implemented people may pay an extra $30 a month to be excused from the cap. What a deal!
This is nothing more than Comcast playing the game they both invented and mastered. They want to see how much more people will be willing to pay a month to avoid arbitrarily assigned limits on their service before they complain. The problem is, the very existence of this option proves the above point – there is no technical reason for bandwidth limits to exist. The $30 a month extra charge is little more than a ransom which must be paid to unlock the full potential of the communication tool upon which the entire communications revolution is based.
It is a short term solution to keep revenue streams up, right at the moment Comcast’s prospects for future revenue are beginning to show weakness. It will pull the wool over the eyes of stock holders as they look at earnings reports, but accomplish nothing to stop Comcast’s fall from the throne of the communications tyrant.
Their end can’t come soon enough.
- This is why the NBC/Comcast merger should have never been allowed to go through, and why it was a minor victory when the Comcast/Time Warner merger collapsed. These mergers do little more than hold back the dumb-pipe future, and it’s bad for everyone. ↩
- That is, “Anyone daring to get their entertainment media from a source other than Comcast.” ↩