Subscribe
Flagler Beach, Florida
Another public-private Wi-Fi initiative has been launched, this one in Flagler Beach, Florida, between the city government and Bright House Networks, the area’s dominant cable operator.
The Wi-Fi network will provide consistent wireless access to the Internet in the downtown business and beach areas, running approximately from Highway 100 (Moody Blvd.) south to 2nd Street and from Highway A1A (Oceanshore Blvd.) west to Flagler Avenue.
City and local tourism officials celebrated the launch of the Metro Wireless Network in Flagler Beach by suggesting it will be a convenience for tourists looking for broadband access.
“It’s also a boost for tourism because promotions that are targeted to bring visitors to the area can tell them that they can connect during their stay in town and don’t have to fish around for access,” said Doug Baxter, president of the Flagler County Chamber of Commerce & Affiliates. “Everybody is stuck to a computer these days. (The free wireless service) is a lure.”
The service is creating some mild controversy in Flagler Beach, where residents have learned “free access” is provided on an unlimited basis only to existing customers of Bright House Networks’ Road Runner broadband service.
Non-subscribers will be granted two hours access per day, but that access is contiguous, not cumulative, meaning the moment one logs into the system, the two hour allowance starts running. Checking your e-mail first thing in the morning assures when you log on later in the day, your free time will have expired and you will be told to purchase additional time.
The price?
1 hour – $1.95
1 day – $4.95
1 week – $14.95
All pay services are also sold in contiguous blocks of time. For example, the one hour access fee expires one hour after paying for the service, even if you did not use the service for an entire hour.
JJ32, commenting on The Daytona Beach News-Journal website:
How exactly is this a boon for the tourism industry when tourists can only use it for two hours, or have to pay for the service? This also isn’t unique. Other money-hungry cable companies (looking at you AT&T) have this in other cities, and it looks like Bright House Networks has now joined this notorious lot. I agree that wireless access in public areas is important, but I am tired of pro-cable company press releases saying how much they’re doing for the community, when in reality they’ve just discovered a new way to rake in revenues.
Some area businesses are also unimpressed.
Carol Fisher, owner of the BeachHouse Beanery, said she isn’t likely to promote the city’s service. That because the coffeehouse’s customers can access the wireless network she’s provided for some time, Fisher said, and there are no hoops and hurdles or fees.
City officials are widely distributing a flier explaining the service in greater detail to residents and visitors.
Other stories of interest:
- Binghamton To Expand Free Wi-Fi in Downtown Region – Encourages Residents To Share Their Connection
- TV Everywhere Not Even Free to Cable Subscribers?
- Time Warner/Others Open Pandora’s Box – New Legislative Action Forthcoming
- Texas Customer Goes to War With Time Warner Cable & AT&T Over Internet Overcharging After Getting Huge Bill
- Letting Big Telecom Foxes Map Out the Broadband Hen House on Your Dime
Defeatisms
Quietly sitting back and just reading the comments this week I do see a lot of this…almost an acceptance of a different future with little fighting back. People looking so happy they can get 1 gig a month and learn to love it without overcharges something they will soon learn to hate. This is of course is mainly based on the providers knowledge that people are unwilling to go without cable TV or internet until such a time the providers throw in the towel. No subscribers make for a very bad bottom line and stockholder payouts. I almost choked when Mr. Smith said that new wireless router was nice at $199 and has a meter that most know a firmware change is all that it needed a router with a built in meter… what comes next? An acceptance of caps and finally the caps implemented. That is what IM seeing here now. Examples from excerpts of the current topics.
1 – Bright house $14.95 a week Rounded $60 a month for wifi Reminds me of all the pretty people playing with their pretty new laptops trying to look pretty for everyone else and not really doing anything at star bucks Reminds me of meat markets except long ago a computer connection was the last thing on our minds.
2 – Suddenlink Meters next caps. They won’t last long but the article did point out Frontier and TWC can not decide on how much data a normal user uses in a month.
3 – Philly a bright spot with 3 battling it out. Only good can come from this.
4 – FCC well government takes a long time and is well funded by lobby money.
5 – Binghamton was a very up lifting topic along with can antennas. For the common good repeaters a nice idea. You do know weather proof high gain antennas can be bought. Throw one up on the roof.
5 – Cableone: Any fool willing to sight up to a provider that charges $10 for every overage gig requires brain surgery.
6 – Where is the fight and where is it going?
Actually I see the introduction of bandwidth “meters” as a stated feature of routers to be an tool in your arsenal to fight against unfair metering and capping such as Time Warner Cable intends.
If your router can tell you (accurately) your usage and that is lower than what TWC reports from their central office, then it’s evidence in the case against metering (in general) and specifically metering from the CO.
Without meters at your location you have no tool to show your actual usage for any reason and are at the mercy of the ISP to tell you what they believe you transfered. It puts some of the power back in your hands for a premium it seems (at least for now). I expect SNMP will become a standard feature in even the simplest and cheapest router / gateway and in a few years’ time every one sold will the the ability to show your monthly data transfer in and out of the router.
Metered able routers are really no big deal what is a big deal is why?
Do the manufactures know something we do not that the world is going to
be capped no matter what. Is this the future? You do not need a meter of
any kind if there are no caps. So the providers have already
decided that caps are coming and hardware makers are going along.
Then the matter of who the provider is going to listen to your meter or
theirs. I bet you loose that one or at least spend a good portion of you time
and money in court pleading your case. Everybody seems to loose sight of
the fact that TW can cap tomorrow and they do not need a meter to do it
and I do not think there is anything in the rule book that says they can not.
Where are you going to turn to then Rochester? Ain’t no fiber around here.
I can only speak of the US. If one big provider throws the switch all the
others will follow including frontier that still has the 5 gig limit in their TOS
but have not used it yet. They will.
I think it’s more of consumer demand. Features like SNMP have traditionally be the purview of commercial network hardware and not consumer-level hardware.
However as technology rolls on home networks are getting more and more complex and consumer-grade hardware is getting more commercial-grade features. Free firmware like Tomato and DD-WRT provide these commercial-grade features for free and they are popular.
In order to capture more enthusiast market share manufacturers like Linksys and Netgear and D-Link are providing these features standard to differentiate themselves from one another and to segment the market into low-end consumer and enthusiast (more $$$). PC builders and component makers have been doing this for the past 10 or 15 years as well.
As this site proves (as does Rochester’s previous reactions to caps from Frontier and TWC) – companies do not have a free pass with their consumers. I don’t think there’s a solid basis for the rather pessimistic view that all this capping business is inevitable. Moreover I see evidence to the contrary in history – cell phone plans when from capped to unlimited (voice and data — sort of); traditional telephone service went from local rate to unlimited (and in some cases unlimited long distance as well); Internet access went from time-based to speed-based and I don’t see data-based being the next step forward (indeed it’s two steps backwards).
Easy… just change the MAC address on your wireless card before re-associating. Boom. Two more free hours!
But do you really want to mess around every two hours for something that should be 24/7?
It’d be annoying, but for those who know how to change a device’s MAC address and really want free Internet (:D) then I suppose the annoyance is very minor.
Some interesting comments here. I am wondering what logic is producing a comment that this wireless service, or any wireless service should be free 24/7. What business model supports free service 24/7??
I see a very typical pattern of uneducated and uninitiated commentary on this site, by people that have taken little time to understand the business logistics involved.
And by the way, two free hours of internet access is still two free hours of access…whether or not you like the terms.
I think the Binghamton model proves a successful, community-supported WiFi service can be sustainable and easily constructed at very low cost, with basic captive ads during login. Even if you had trouble finding less than $4,000 a month from local advertisers, if you threw it open to also taking contributions from a happy general public, I’d find it hard to believe they couldn’t keep the service breaking even, if not turning a “profit” month after month.
Pitching two free hours of contiguous access makes it fine for the locals, but if I was a tourist that wanted to check in several times a day with my laptop, I’d have to cough up money. I think that discourages use. Bright House Networks could have made this into a PR coup with:
a) Wide open free access, but limited to two hours cumulative (meaning you have up to two hours divided up anyway you like) access during a day. You can throw the gates open to the Road Runner customer base 24/7 as a “thank you” but also allow your company to obtain the goodwill from a happy public. You might even subject non-customers to additional advertiser messages.
b) Run promotions on the service for Bright House Networks and their services, and make the public aware they are receiving this service out of a sense of community spirit by BHN, and they could “return the favor” by becoming a loyal customer. Assuming the costs to administer this project are somewhere close to Binghamton, it’s cheaper than one of the cable postcard campaigns most cable operators pitch for their digital phone and broadband products blast-mailed to every non-customer in the area every week or so.
c) Obtain advertising rights during captive logins which BHN could market as part of a “total advertising solution” along with their existing local cable ad inserts, etc. It gets advertisers used to the concept of advertising on the Wi-Fi network, especially for local restaurants and other venues. It helps defray their own expenses.
As this project stands right now, I am not sure why the city officials are involving themselves with it. If the network is designed really to tease users with access and get them to purchase access time, that’s something I think local governments should not involve themselves with — that’s a private business affair.
Frontier locally throws in a few freebie nodes in a small handful of places for their Wi-Fi network here in Rochester, includes five free minutes (I don’t remember if it’s for a day or week), and has free access for their bundled DSL/voice customers. The county got involved only because they have the handful of free 24/7 access nodes to promote. I doubt they would have without those.
My personal view is that I don’t object to the project or its outcome, but I think the existing limits benefit Bright House much more than the local government, and if I were a local official, I’d wish BH good luck with their project, but I wouldn’t associate myself with it to the extent Flagler Beach has.
Hey I appreciate free service as much as anyone, but reality needs to get checked here.
Ad revenue driven Wi-Fi models would be great, except that they have generally failed, for both large and small scale deployments. Remember Earthlink’s multi-market fiasco? Remember also that the folks that used Juno and NetZero free dial-up service years ago spent precious little money with the companies that advertised on those platforms. There is curently little reason to believe that ad supported Wi-Fi models will fare any different. Take a close look at NZ and Juno today, and you will see how those companies have survived…and that’s a direction that would indeed be a wrong step for public access Wi-Fi systems. Besides, Bright House has all the right to push ads or whatever content they wish on the system in Flagler Beach…but they don’t have to do it at the expense of sacrificing their current subs.
Regarding the City’s role in the Flagler Beach Bright House Networks deployment, the only “involvement” that the City had is that it has published information about the service to let people know that it is there. Zero dollars paid by taxpayers…unless they opt to pay to use the service. The City probably wants some positive press, and to offer something to residents and visitors, which the BHN system provides. Compared to the Rochester example, the Flagler Beach deployment offers almost three orders of magnitude more access time, even if the comparison is on a daily basis and not monthly…thats something to talk about.
I have personally used the system in Flagler Beach and at several other locations where BHN offers public Wi-Fi service (Winter Park is another), and performance is excellent compared to other systems I have used, as is the bandwidth delivery…tested @7Mbps down by 1.5Mbps up, yeehaw! I’m a subscriber, so the service is free…but even if it weren’t, I would not be complaining about only getting two free hours per day, that’s dumb.
While some of your points make sense from an end user perspective relative to what anyone would wish for from a free service, I think you are off the mark regarding the core issue that all public use Wi-Fi networks must face…sustainability. Realistic business models equal long term success, and subscriber revenue pays for service. And before anyone rebukes the ISP for creating yet another way to bilk the public for revenue, look into how much money pay-for-service public access Wi-Fi deployments make. Then you might agree that this type of offer looks more like charity than opportunism.
I am very interested and will watch and see if the Binghamton model proves successful and extends past the current contract deadline of 2/10. The very small coverage area and limited initial capital investment paired with slow, measured growth may indeed allow the Binghamton model to continue on in the future…but it offers little opportunity for all but a few users to eliminate their pay-for service, because the signal footprint is so small.
One last thing and I will get off my soapbox. Before people are so quick to denounce the cable companies as the evil internet overlords, take a look at the business of running an ISP…dont just be a complainer. Tiered pay-for-byte may indeed suck, but look at the cost of providing bandwidth as video and multimedia explode across the local pipes and IC trunks, not to mention P2P. Heck, look at some of the domestic and global bandwidth prediction charts for the next five years. Do you want your monthly service cost to increase at the rate of bandwidth demand?? Do the fuel companies pay for the additional gas your full size SUV uses compared to your friend’s 4-banger compact? Why not? Tiered service is a way for the ISPs to allow you to still pay an affordable monthly rate, as their cost to provide service skyrockets.
I suggest you read some of the articles on this site to find out just how much their costs “skyrocket” from year to year.
The fact is, their bandwidth costs are getting less and less each year, even with the increase traffic.
They cannot keep saying that their networks are expensive to run, and then spend less and less each year to maintain them, while also saying that their is no real need to upgrade their networks.
Sorry, but your statements here are materially incorrect. The fact is that as demand increases (and service requirements), costs increase. The cost per byte on the transport side may decrease, but that is different than saying that the overall costs are declining…they simply are not.
We have gone over this alot.
The amount of money that TWC is spending to maintain their network is decreasing year after year. RR Turbo customers are offsetting the lower revenue of RR Basic (or whatever they call that now). TWC has made more money, not less money as internet usage has increased.
BTW, this is only about Internet. I know the cable side is declining. That is an entirely different subject.
http://www.wired.com/epicenter/2009/04/time-warner-cab/
You beat me to it Ron lol. Anyways, hard to argue with facts. I think Research Rules needs to do more research especially into fiber optic bandwidth.
http://www.necus.com/companies/30/AT&T%20NEC%20Corning%20Reseachers.pdf
32 Terabits is a lot in one second, 4TB/second. I don’t think we have to worry about our bandwidth running out anytime soon with fiber optic.
You’re not including the effects of technological improvements and commoditization of computing technology. By your logic every doubling of computing power should incur a doubling of price. This doesn’t happen. Why? Because we’re able to make processors and related computer components faster AND cheaper. Network technology is not immune to this effect. Routers and transport equipment gets cheaper as it gets faster and easier to administer. The only thing that remains fairly consistent over the years is the cost to roll a truck or lay cable/fiber. With both cable and fiber we’ve developed techniques (DOCSIS 3, multi-mode) that allow us to send more data over the same infrastructure. Since no truck rolls are required, and all that’s needed is to replace a piece of head-end equipment with a faster, cheaper, and easier to manage one and mail your customer a new cheaper, faster, easier to manage modem, your average cost per Mbps begins to actually decrease.
Earthlink was, is, and likely will always be a fiasco, regardless of whether they are involved in Wi-Fi or any other business of theirs. It was remarkable in April to have members of the media, the public, and even elected officials calling their corporate offices during the Time Warner Cable Overcharging fiasco to clarify what Earthlink was going to do (they ride along on the TWC broadband backbone to end subscribers), and the only people ever there were two or three secretaries that took messages, and nobody, and I mean nobody, ever bothered to call anyone back.
You’d think when a congressman or senator calls corporate headquarters, at least one corporate official would have been there to take, or at least return the call, but no.
Earthlink is a ship without a captain, potentially running on autopilot with outsourced Asian technical support.
I am not at all surprised that ANY project they involve themselves with becomes a fiasco.
But Earthlink only sets the gold standard for incompetence, not for Wi-Fi projects that work.
Binghamton is just one of several communities that have pulled this off successfully and at minimal cost.
Community Wi-Fi advertising, particularly in business districts, have had decent success with entertainment and dining-related advertising. Would a used car dealer attract a lot of attention? Not so sure. A national advertiser pitching home refinancing? Probably not. But pushing a menu special or upcoming entertainment event, particularly in a tourist area? You bet, especially if the costs are low.
NZ and Juno are living in the past and have been living in the past for almost a decade now. NZ running ads about returning to dial-up during difficult economic times to save money is laughable and runs contrary to every piece of evidence we have about broadband adoption. It would be like prying a semi-automatic from the hands of a lifetime NRA member.
Nobody here is bashing BHN for having the service. But I am unconvinced that sustainability is the driving reason for limiting access.
Most of these “community Wi-Fi” projects akin to this turn up when a community starts making noise about a municipally owned and run system, which then upsets the telco and cable company in town, generates the ridiculous “that’s socialism” rhetoric, and then one of the providers overwhelms the municipal proposal with a private system proposal. It almost always throws a token bone to the general public, like the “two free hours” or, in Monroe County, the three free nodes, but let’s be honest here — it’s more about protecting turf than offering a real public service.
And just as TV Everywhere has illustrated, the exemption for “authenticated” current subscribers goes a long way towards proving that.
Most of these deals also are for limited times, so they can pull the plug on the public benefits down the road.
I also am not convinced that members of the public are looking for a Wi-Fi network to replace their broadband service they have now. Most Wi-Fi networks simply are not as capable as wired broadband, and I’d bet the only people trying to make do with Wi-Fi as their only option cannot afford existing broadband service or for whatever reason cannot easily access it.
Indeed, most people looking for access are folks on the go who don’t want to be raped by pricing from some of the private providers out there charging outrageous amounts for access.
Your arguments for broadband costs and growth have been debunked here over the past year. It is incomplete to simply argue that growing demand for bandwidth equals higher costs without also considering the growing revenue, declining cost to serve those subscribers, and the very telling dramatic DECLINE in operator investments in their own networks.
The “exaflood” era is a doomsday scenario promulgated by those with an agenda — to sell equipment to cope with it (Cisco, et al.), to generate a groundswell for federal tax dollar infusions into private enterprise to expand the network (AT&T and other telephone companies), as an excuse to throttle or limit certain applications like peer to peer (cable and telephone ISPs), or use as an excuse to overcharge people for broadband service with caps, limits, and consumption-based pricing (cable companies, particularly this year, and AT&T).
If you review our articles about astroturfing, in particular, you’ll find Washington think tanks funded by telecom interests producing junk studies that “prove” the “exaflood” theory and then sell those results as “independent analysis” for use by those same companies for lobbying in Washington.
Independent research shows growth, but at manageable levels. It also understands that coping with an issue 5-10 years out will not be done with the equipment that exists today, despite most of the exaflood theories that assume providers will still be using legacy hardware.
If you want to overpay for your broadband service, that’s your business and providers will love you for it. But anyone who spends the time to go beyond the propaganda these companies are producing to justify some of these schemes will find they are making piles of profits at today’s pricing and only seek to earn more to supplement the harder times they are facing with traditional cable television and telephone service revenues.
They can lie to you and I. They have a lot tougher time lying to shareholders.
Anybody here think regulation is not necessary in this run away money grab?
Car analogies are great, let’s continue with yours…
Gas stations (specifically) generally speaking set their prices based on two primary factors: 1) what other stations in the area are setting their prices to and 2) how much next week’s gas will cost them based on how much they sold last week.
When speculation on oil prices rise, gas stations have a tendency to raise their prices for everyone (not in a tiered fashion) because whether you’re using 50 gallons or 5 in your vehicle, it’s likely to cost the gas station more money next week week for that same amount of fuel as it did the week before. If they waited until the oil prices actually rose then they’d be behind the increase and lose money on the fuel they already have (in an accounting sense) because it’s just become more valuable but the next delivery will cost that much more as well. To offset those larger fluctuations in cost, they raise the price now to ensure they have enough to pay the (potentially higher) price next week while still maintaining the same comfortable profit margin.
ISPs also price based on what other providers in their area offer as well as changes in the market for wholesale broadband access. ISPs also are driven by maintaining or increasing profit margins despite increased growth and demand. The difference (as has been stated elsewhere before) is Internet access is not a consumable resource.
When you go online you do not destroy the 10 Mbps bandwidth you have as you use it. When you disconnect your bandwidth is freed for others to use. Bandwidth is closer to trying to fit as many people through the doorway at once as possible and less like using water, gas, or electricity.
Interestingly your analogy also demonstrates that people did reach a point with gas prices – it was about $4.50/gallon – at which point they decided they could do without driving and chose alternative methods of transportation: carpooling, public transportation, walking, bicycling. The sales of bikes went through the roof! There is a point at which people will say “enough is enough” and simply cancel their expensive subscriptions and find an alternate means of entertainment. Movie theaters know this all too well also.
There are many ways for ISPs to afford their upgrades that don’t involve draconian caps on data or overly simplistic time-based models such as BHN. Even AOL and Compuserv back in the day did not charge time against your allotment when you were not connected.
To be certain beggars cannot be choosers. If BHN offers free wi-fi it will be on their terms and they have a right to do so. However, I don’t see it as much of a benefit to anyone except those who are already customers since two free hours a day that start the instant you connect and are contiguous makes it fairly useless as a free service for tourists. If I’m touring I’m not here to sit down for two hours and play online – I want to check my email and what-not on an as-needed basis throughout the day so this offers me nothing more than a one-time access for free per day. Not to mention a growing number of people have “unlimited” data plans on their phones that suffice the Internet needs of a traveler. Then again there are libraries that often provide free unlimited (or time limited per session not per day) Internet access making the wi-fi also irrelevant.
Lastly, unless you carry a laptop with you when traveling or you have a netbook, free wi-fi doesn’t offer much to tourists that they can’t get elsewhere for free or at least for more value (i.e. I can go to Starbucks or Panera and enjoy a coffee or a sandwich while I use their free wi-fi. Yes I’m paying for it, but I’m also getting the coffee or food with the wi-fi…I’m not just paying for access and there is a better value proposition there.)
What you have described here are free market economics at work…very typical in function and predictability. Same for the concept of network oversubscription, practiced by every ISP and service provider in business. I’m not sure how this is a counter-argument to my assertion that if an ISP or a service provider builds out any type of network infrastructure their focus must be on revenue opportunity, and thus sustainability.
I wont address the free service issue any more, as IMO free is free, regardless of what makes the “free” part useful. When you consider the business drivers behind this type of deployment, what BHN has done makes perfect sense to me. Defensive posturing and border patrol? Of course. But its no revelation to point that behavior out.
I do want to address the concept that costs are decreasing, not increasing. This idea seems to be the central argument supporting the theme of this forum, but I believe that it is incorrect, at least in the case of my example below.
TWC has been referenced in support of the overcharge theory…what factual evidence regarding TWCs expenditures (or lack thereof) support this statement? I think you guys are off your rocker here…seriously! Lets just look at a single technology, DOCSIS. TWC is actively testing and developing for a DOCSIS 3.0 deployment, which requires significant upgrades to CMTS hardware and the related capacity upgrades for core transport, as well as upgrades and maintenance to the HFC infrastructure to deliver the higer spec signaling that DOCSIS 3.0 requires…in fact, just about every MSO has or is in the process of doing so. Lets see…Network upgrades…check. Cost to deliver additional bandwidth…check. Investment in network…check. This is just one example, but it directly countradicts the idea that our service providers are resting on their haunches and raking in piles of cash.
Will Time Warner make money by depoying DOCSIS 3? Sure, but the price per byte will go down and if you pay for only what you use, your bandwidth costs may as well. Unless of course you are a P2P downloader…then you potentially pay more. The idea that everyone should have unlimited access to bandwidth also unfortunately means that the small minority of users that drive 80% of bandwidth utilization will drive up costs for all. Not clear? See
http://www.sandvine.com/general/documents/Traffic_Demographics_NA_Broadband_Networks.pdf
and
http://www.sandvine.com/general/documents/2008%20Global%20Broadband%20Phenomena%20-%20Executive%20Summary.pdf
for more information.
Maybe I am being trolled here, but this is a fairly simple issue.
Sandvine? Canada’s biggest bandwidth management firm that lives or dies based on the sales of “bandwidth management solutions?”
Sandvine is hardly an impartial observer of the bandwidth management question. Their marketing material hypes the problem in order to drive sales of their solution, which includes selling the tools to overcharge consumers for their service with meters and measurement tools and, more importantly for Canadians, throttles which artificially slow down certain traffic for “fair utilization.”
I will be back with you about TWC and their costs. Their latest financial report was issued today and once again, their broadband profits are up… way up, and their costs have dropped yet again. I have to prepare an extensive article on it, but will be back with you about the entire costs argument. The answers you want have already been addressed here. Select Time Warner from the Provider menu along the top and skim back and look for the TWC financial report articles that highlight their own data proving our contention that their costs are declining, not increasing.
DOCSIS deployment is not nearly as expensive as you suggest, either. I’ll address these in greater detail as time permits.
I’m waiting to see what that article will look like. Time Warner’s been busy upgrading my area (splitting nodes at least, still on DOCSIS 1.1) to help battle FiOS which is making a steady pace towards my home, which I’ll be getting in exchange for one of my DSL lines.
Time Warner’s SEC filings for 2007 and 2008. I’ve previously written a personal blog posting on this a while ago which calls out specific sections of the filing as well as provides links to the original documents for your enjoyment: http://brions.blogspot.com/2009/04/reality-check-do-time-warners-new-plans.html
I know Phillip has also covered it in posts long ago (around April 2009) on this site. A little digging should give you what you desire.
The long and short of it is, in releases to the SEC and their shareholders TWC claims their costs are dropping and profits remain high with revenues increasing. The filing itself shows the company with a loss for the 2008 year but that’s primarily due to a one-time mark down of Adelphia asset acquisitions it received in an agreement with Comcast. Unless they have another large acquisition I expect the 2009 Annual Report to reflect more clearly the true reductions in infrastructure and operational costs and the continued increase in revenue.
Additionally, you’ll see their biggest area of decline and cost is in the video market while the high speed data (HSD) is doing exceeding well.
Since when has it become commonplace for businesses to place the entire burden of capital improvements on the customer. Investors are by their nature _investing_ money into the company to help it improve with an expectation of a return on that investment. What is TWC (or any corporation) doing with its investors’ money if not putting it into capital improvements to make the business more efficient, more robust, or broader in scope?
Money from customers is primarily (in my experience) used to cover operational costs and provide part of the profit. A portion of the profit, in turn, is frequently used to improve the core business infrastructure or expand the business through acquisition. Business that just sit on their profits and line the pockets of the officers and shareholders fall behind and lose to competitors willing to re-invest that money into improving the product.
Cable and telcos (and other businesses with large market control) are somewhat exempt from innovation because there is no pressure to improve – only to extract more money for the shareholders. Claiming DOCSIS 3.0 can’t be rolled out because it’s too expensive while boasting record levels if revenue and huge profit margins is not merely disingenuous but outright insulting.
TWC (and others) should deploy DOCSIS 3.0 strategically and incrementally for their own sake in order to reduce the number of node splits and ease congestion on their most heavily used network segments. There’s no way a customer will know DOCSIS 3.0 is installed in any part of the network unless they are told it has been installed. This excuse is a straw-man argument and doesn’t stand up under scrutiny.
You need a new script. These talking points are worn out. If you’ve used computers for more than a couple years you should know that it’s not the light users that drive technology – it’s the heavy users. If you’re discouraging heavy users then you’re indirectly discouraging innovation and technical advancement (because there will be no demand).
Wasnt going to “go there” and dig into the financials, but I will later today…and then address some of your statements which made me “lol”.
That seems unlike you. Your other posts give the impression that you do as your name implies – research – and you weren’t going to dig into the financials? Interesting.
Anyway, I’m not a CPA nor do I work in finance, but I am a stockholder (not in TWC) and I can read and what Landel Hobbs says in his http://a.longreply.com posts and what the company’s SEC filings say to the shareholders. They are two completely different things.
Specifically, to the general public TWC can’t roll out DOCSIS 3.0 because it’s too poor without consumption based billing (CBB) so the “heavy users” can hump the bill and it’s unfair to your vegetarian friend who buys a salad if you buy an overpriced steak and split the bill in half — I paraphrased that analogy only slightly. On the other hand to the shareholders there’s plenty of network capacity to last 10 more years without upgrade and HSD revenues are increasing at a healthy rate with a sizable increase in bundled services (all-in-one Internet/TV/Digital Phone).
I await your analysis of the financials with bated breath. I would appreciate section or page references if you’re going to cite specifics as counter-arguments to my own analysis. It’s only fair we are on the same literal page and can debate the actual statements in the filing.
Cheers!
Brion
“…which requires significant upgrades to CMTS hardware and the related capacity upgrades for core transport, as well as upgrades and maintenance to the HFC infrastructure to deliver the higer spec signaling that DOCSIS 3.0 requires…”
I will agree with you that CMTS hardware needs to be replaced. Parts also age and need to be replaced anyway, but I have a feeling the new CMTS hardware that supports DOCSIS 3.0 is cheaper than the old 2.0 (or even 1.1) hardware.
Oh and the rest of the quote is just pure BS. You need to do some research on the technology you’re talking about.
http://www.cablemodem.com/specifications/specifications30.html
DOCSIS 3.0 allows for channel bonding of up to ten 6 MHz NTSC channels to give a theoretical maximum of 304/108 Mbps with future improvements getting closer to 1 Gbps, All of this is done utilizing the SAME spectrum and physical infrastructure we have TODAY. The fact is that DOCSIS 3.0 is a gold mine for MSOs. They can use the same business model they have now (no caps) and just add another (more expensive) tier to their offerings, and watch the cash roll in. And for the most part, consumers would be fine with that…..slightly annoyed at the cost, but willing to pay it for the speed.
Your “feeling” about CMTS cost is wrong, as are your statements that D3 can use existing infrastructure and spectrum. But I will help you understand what you dont.
D3 CMTS hardware is significantly higher in cost compared to the systems that it replaces, both from a first box perspective, and also with regards to network capacity and spectrum utilization. Don’t spout specs to me, I am very well versed in this area. If you know anything about networks, then you know that adding enpoint capacity means nothing unless you can move that traffic at line rate across your entire infrastructure…and that means upgrades in capacity. So higher CMTS cost is only the beginning.
That great channel bonding feature that gives D3 its capacity, also requires resources. Your local cable company has utilized every nook and cranny of its available spectrum to push its existing services, from video to voice to data, and even has even deployed services into the rolloff area of the spectrum. So, there are no channels available TO bond without either A) reorganizing/eliminating existing services to free up spectrum, or B) plant upgrade to add spectrum capacity. The latter option costing millions BTW.
Do a little research on either topic and you will understand.
Thank you for trying to help me understand. I admit that I’m not an expert in the details of enterprise networking. I thought I would just browse around Cisco’s website and check out their CMTS hardware and become a little more familiar with it all. What I found is that their older 7206 VXR router (supporting DOCSIS 1.1 and up to 1.8 Gbps backplane capacity) had an MSRP of around $22,000. The latest 7606 router (supporting DOCSIS 3.0 and up to 480 Gbps backplane capacity) has an MSRP of $49,500, and the fastest 7609 router (up to 720 Gbps backplane capacity) has an MSRP of $72,381. This gives a price per Gbps of $12,222, $103, and $100 respectively.
So you are correct in that the cost of some hardware is significantly more than its predecessor, but you neglect to account for the increased capacity and throughput of the new hardware. In browsing Cisco’s marketing literature I kept coming across phrases like this:
“The recommended upgrade path for the Cisco NPE-200 is to the NPE-225. This network processing engine has a higher sustained throughput rate, offering higher performance at a lower price”
As far as cable companies utilizing every nook and cranny of its spectrum, what about the nook and crannies freed up by eliminating analog channels and moving all video to compressed digital?
References:
http://www.cisco.com/en/US/products/hw/routers/ps341/prod_models_comparison.html
http://www.cisco.com/en/US/products/hw/routers/ps368/prod_models_comparison.html
http://www.costcentral.com/proddetail/Cisco_7206_VXR_Router/7206VXRNPEG1/682175/extended/
http://www.costcentral.com/proddetail/Cisco_7606_Router/7606RSP720CXLP/10775760/extended/
http://www.costcentral.com/proddetail/Cisco_7609_S_Router/7609SSUP720BXLRRF/10881270/extended/
Clearly there are costs involved with DOCSIS 3 deployment, both in hardware in-house and out in the field. But let’s not make it out to be insurmountable or represents a negative for the cable operator. Even bankrupt Charter had an aggressive DOCSIS 3 rollout schedule, and most of the other major operators are well on their way. TWC has not been among them, because the CEO doesn’t see much benefit to it, at least outside of very aggressively competitive markets. That statement, by the way, came AFTER Landel Hobbs was telling customers that if only they adopted their Internet Overcharging scheme, DOCSIS 3 would be among the improvements they would get. By the end of April, we heard an entirely different tune.
TWC just spent more, to the tune of perhaps $100 million dollars to deploy Switched Digital Video, which in itself is quite a challenge too. But they did it without any complaint, realizing it was a way to deal with system capacity issues in light of the 100 channel HD universe.
TWC’s capacity beyond the last mile is largely a non-issue for them. They were asked about it during the preliminary chatter about TV Everywhere, and if anything will drive capacity issues it will be TWC itself becoming what they believe will be the nation’s largest system to deliver ‘authenticated’ video content to cable modem subscribers. When you are dealing with a company that earns billions in high speed revenue every year, spending a few hundred million on an upgrade which will drive subscriber loyalty, enhance revenue from increased speed tiers, and maintain quality of service takes all of three minutes to debate before giving the green light. In the case of TWC, right now that green light has mostly been competition, because they are one of the few that have dragged their feet on the revenue potential of higher speed tiers, even though in financial report after report, their Turbo product was responsible for driving a lot of extra revenue for very little cost.
TWC, like most other cable companies, will address system bandwidth capacity in one of three ways:
1) Use SDV to offload some of the lower demand digital channels to free up capacity;
2) Move analog channels to digital, which will free up considerable capacity (precisely what Comcast and several others have done);
3) Upgrade cable plant to handle additional capacity (unlikely at the moment in this economy.)
This is not the insurmountable hurdle you make it out to be. Cable companies dealt successfully with this issue to deal with the 100 HD universe. DOCSIS 3 and channel bonding is hardly a challenge in comparison.
Considering a huge amount of their revenue comes from broadband, it’s hardly an issue that will get ignored for long. That’s why they aren’t ignoring it in NYC as Verizon FiOS makes inroads. They probably won’t ignore it in areas with U-verse either, once AT&T begins to market faster broadband service there as well.
I wouldn’t underestimate our readers here for understanding the issues here. They are reading the financial reports, they are listening to what company officials tell shareholders vs. what marketing departments tell the public at large.
I argued with one of the industry hacks over on GigaOM a few weeks ago who was telling me I was wrong because… well, I just was. Asked for evidence, and you never got any, just more outspoken opinion. I wasn’t intimidated, and I don’t think you’ll find many readers here intimidated either. Of course, he didn’t even know his employer’s own address (it was one of those hack-a-thon policy institutes paid quietly by providers to cough up ‘independent analysis’), so things fell apart for him pretty quickly after that.
Let’s debate the issues, if you’d like, but let’s do so respectfully of each others’ viewpoints.
Are you saying that other cable providers, that have said it is relatively inexpensive per account to upgrade to DOCCIS 3 are lieing and the only one that is not is TWC?
Or are you saying that for the past 10 years, TWC has let their networks lapse and other cable operators have not so therefore it is cheaper for them?
I am not sure which one is worse.
In Japan – cost for each user upgrade is in article below:
http://bits.blogs.nytimes.com/2009/04/03/the-cost-to-offer-the-worlds-fastest-broadband-20-per-home/
Cablevision cost per user in article below.
http://bits.blogs.nytimes.com/2009/04/28/cablevision-goes-for-us-broadband-speed-record/
Both of the above articles have quotes directly from the companies:
“Cablevision has said it spent $300 million for its upgrade to Docsis 3 and the deployment of Wi-Fi hot spots for use by its Internet customers around the New York area. That investment comes to about $97 for each of Cablevision’s 3.1 million customers, or $60 for each of the homes passed. Those relatively low numbers are consistent with other reports that say the overall cost to deploy Docsis 3 is quite low compared with the premium prices that cable companies are charging for 50-megabit and 100-megabit service. ”
Now add what seems to be a $40 to $50 surcharge a month for the higher speeds and you will see the recoup of their upgrades quickly. Not to mention the other benefits that DOCSIS 3 bring to the cable companies.
Internet access is becoming vital. Cities should provide it free. The consumer could buy or rent the modem and a small tax could pay for the infrastructure costs. Tell the telecos you blew it and can not be trusted, Tell em to take a hike. Without the need for large exuctive salaries and bonus as well as no need for profits to shareholders, I think it could work.
Private enterprise cannot be trusted, but government can? Heh.
It has less to do with trust, and more to do with some type of competition. Right now, most of us live in areas that have 1 cable provider and 1 DSL provider. Some other people have the choice of one of them.
Having another provider, may provide the competition that is required to make service better. Let’s face it, when there is a defacto standard for anything, that thing just sits there with no inovation or upgrades until there is a real competitor.
Time Warner in my area is a good example. Started off at 10Mb. Cut it all the way down to 3Mb when they had a people. DSL came in, then the next year or 2 they one upped each other for speed.
There are examples across every industry of this. If municple networks – wether wifi or wired offer competition to them, that is good.
I dont disagree that competition in a free market is a good thing…and I understand that many are frustrated with a lack of choice when it comes to service providers. But my statement was addressing the concept that government as a service provider was a good alternative to private industry, an idea with which I disagree.
Take a look at today’s headlines. When was the last time the government, local or otherwise, did anything fiscally responsible? There are a few rare exceptions, but our elected officials can barely manage thier toilet paper budgets on a monthly baisis…no thanks to the idea that I want to depend on them for my internet access, even if they have a third party manage the service.
Then that is your choice. Go with another provider. But the choice is there. It is a good alternative when no one wants to enter the market.
I don;t think that anyone here is advocating replacing a private monopoly or duopoly with a government one. In places where there is no competition, this gives people a choice, and another provider to have access to.
Not so much a good alternative as a good supplement to a currently broken market. We’re not advocating government step in and kick out private competition. Government is the reason we ALL have electricity at our homes and interstate highways to drive on. Read your history on FDR’s Rural Electrification Administration.
Government has it’s own share of problems for sure, but the big national infrastructure improvements we have faced in the past rarely got done without the help of government. So when you ask, “When was the last time the government, local or otherwise, did anything fiscally responsible?”, I’d say bust out a history book.
Internet access shouldn’t be free. It should be at reduced cost though. The trend in the industry is towards more expensive tiers of service even though the costs of upgrading their network was negligible. How come Japan can install 50% fiber to the the whole country and still be lower than the USA even though they offer far faster speeds? Can you say fleeced?
Well part of the reason is Japan is much smaller than the US with an incredibly high population density in metropolitan areas. People simply don’t live that far away from each other in the cities and those in the country don’t have 160Mbps Internet connections.
However, it still stands as a testament to the technology – the speed is there and it is ready for residential use but the value proposition to U.S. companies like TWC and Comcast are not really there yet for the majority of their market share mostly due to distance costs (backhaul, etc.).
I’m also not saying we should settle for less, just offering some explanation why Japan may not be the most fair comparison.
I think the comparison is valid. Yes it is a smaller country overall but like you said the high-speed service won’t be as fast out in the country. Same applies here, compare Japan’s high population density spots with US’s high population density spots and it is fair to assume we are getting fleeced. Japan is not the only country we are behind. We are like 17th overall on fiber deployment, IIRC, compared with the rest of the world and have some of the highest prices for internet access.
My point is that population density plays a huge role in cost of roll-out (like it or not). In the U.S. there is considerable long haul fiber that must be laid over large distances to serve remote metropolitan areas. In Japan there are a few long haul cables but most of them are out of the country to other countries like China.
Japan is 34th overall in the world for population density (870 people per sq. mile) while the U.S. is 177th overall in the world with a population density of a mere 80 people per sq. mile. ( http://en.wikipedia.org/wiki/List_of_countries_by_population_density )
What this means in practical terms is that for one mile of fiber backbone (not last mile) in Japan you can theoretically wire 870 people. In the U.S. that same mile of fiber backbone will only wire 80 people. Japan has only about 5% of its labor force in agriculture – the rest is urban ( http://en.wikipedia.org/wiki/Demographics_of_Japan#Urban_distribution ). The U.S. has decidedly more rural population. Japan’s entire area is 145,000 sq. miles. The U.S. area is roughly 3.7 million sq. miles.
Do you really think this is a fair comparison?
I think this is a more valid comparison than just lumping rural US areas in there.
Percent of total population in cities larger than 1,000,000
http://rankingamerica.files.wordpress.com/2009/03/chart-of-urban-populationxls.jpg
US is 44.3%
Japan is 47.8% which is not a quantum leap in difference.
I can see your point on rural areas but not in urban areas with high density populations.
Touché. However there’s still the matter of long distances of fiber to run between disparate metro areas. Los Angeles to Minneapolis to New York City are very long distances; much longer than you’d have in Japan. Those runs need to be accounted for even if you eliminate all the rural coverage completely.
Even so, that still would not make up for the relatively slow internet speeds on the coastal United States as a whole if compared.
Need I say more?
http://www.cityofflaglerbeach.com/CRA/Flagler%20Beach%20WiFi%20Coverage.jpg
These are the longest forum postings I have ever seen anywhere!
stop the cr*p!
Imagine this: I paid for an hour I would like to use an hour. 5 minutes now (noon), 10 minutes later (2pm)…
[^ this applies to all mobile networks. Twisted IP only the one who owns the phrase "roll over minutes" actually sells minutes -- in a limited sense with inane restrictions of course.]
It’s misleading to be selling time when in fact they are selling access to a window of time. Will tourists be paying for the privilege of being exposed to system rape? Or usage data mining?
Will this be device agnostic? (VERY unlike fios)
There is an obvious solution to MAC spoofing but I don’t feel much like sharing in this atmosphere of greed … unless you have a left handed smoke shifter.