Data caps and metered billing have generated significant consumer resistance not because the idea of metered billing is always bad, but because the new packages on offer feel like highway robbery. Proponents of such caps, like Time Warner Cable, often claim that people need to "pay their fair share" in order to fund future upgrades, so we rounded the quarterly earnings statements out last week from the major US ISPs in an attempt to gauge how accurate that argument might be.
It turns out that just about everyone is making huge margins in Internet access, revenue is surging even as costs drop, and companies like Time Warner Cable have actually reduced (significantly) their capital outlays on infrastructure.
Even those cable companies that are in the midst of their DOCSIS 3.0 upgrades are posting significant profits. Here are the highlights.
Comcast. Revenues for Internet access from Comcast are up, jumping from $1.57 billion in the first quarter of 2007 to $1.75 billion in the first quarter of 2008 to $1.91 billion in the first quarter of 2009.
Even as Comcast has grown both its subscriber base and its revenues, though, its expenses for "High-speed Internet" have consistently fallen since 2007. It cost $142 million to deliver Internet access in the first quarter of 2007, $138 million in the first quarter of 2008, and $120 million in the first quarter of 2009. Over that period, not only has Comcast handled an increasing number of Internet subscribers, but each one of those subscribers has presumably been transferring more data on average.
As with all of these systems, of course, the costs of delivering Internet access don't give a complete picture, since the same expenses can sometimes affect multiple systems. If a cable company upgrades its hybrid-fiber coax plant, for instance, was that a TV, voice, or Internet upgrade? In Comcast's case, the numbers also don't include "technical labor."
But the numbers do show that the actual cost of running high-speed Internet connections is dropping even as revenues (and subscribers) grow. This is a key metric because other costs, such as tech support and truck rolls, are not costs that vary with an individual's monthly data usage. As for the argument that cable companies need even more money from users to pay for upcoming, expensive Internet upgrades, the numbers suggest that cable firms are doing pretty well.
Comcast, for instance, has an operating cash flow margin of 39 percent in the first quarter of 2009, up from 37.8 percent a year earlier and 37.4 percent in the first quarter of 2007—and it has been rolling out the (relatively cheap) DOCSIS 3.0 upgrades for some time already.
Time Warner Cable. Time Warner Cable, which kicked off the most recent debate over metered billing and Internet data caps, likewise posted some excellent first quarter numbers. The company's overall revenues were up five percent from a year before, but when broken down by category, Internet access did much better—11 percent higher. In its 2008 annual report, TWC also indicates that its Internet expenses had dropped by about 12 percent, even as the revenues increased.
Back when it was still issuing statements trying to justify its unpopular data caps, the company stressed that the business was a good one now, but that it needed plenty of future cash to pay for all the upgrades that higher Internet use was forcing on the company. But in the first quarter of 2009, the company substantially cut its capital expenditures, from $846 million a year ago to $769 million for this last three months. The slide highlighting the drop is titled "disciplined capital deployment."
Cablevision. Cablevision has already spent most of the money for its DOCSIS 3.0 upgrades, which it plans to roll out across New York in less than two weeks. "Up to" 101Mbps access will be available for $100 a month, with no apparent data caps. Given that this was precisely the setup that Time Warner Cable said might ruin it without switching to a capped data model, how is Cablevision's revenue situation?
The company has yet to release its first quarter numbers, but we can get a clear sense of the trends from its 2008 annual report. Internet revenues are up, voice revenues are up, and cable TV revenues are up. The company doesn't break out its Internet expenses, but it does note that its overall "cable television" operating income (which includes data, voice, and TV packages) was 25.9 percent higher in 2008 than it was in 2007. Its business Internet service, Optimum Lightpath, fared even better, with a 129.8 percent improvement in its operating income.
Essentially, the story is the same wherever we look: healthy operating margins in all telecommunications services, even as companies roll out faster Internet services, add more users, and as Internet use per person increases dramatically.
more here
everyone that comes to this forum needs to watch this, it could be something bad for us one day soon.
It turns out that just about everyone is making huge margins in Internet access, revenue is surging even as costs drop, and companies like Time Warner Cable have actually reduced (significantly) their capital outlays on infrastructure.
Even those cable companies that are in the midst of their DOCSIS 3.0 upgrades are posting significant profits. Here are the highlights.
Comcast. Revenues for Internet access from Comcast are up, jumping from $1.57 billion in the first quarter of 2007 to $1.75 billion in the first quarter of 2008 to $1.91 billion in the first quarter of 2009.
Even as Comcast has grown both its subscriber base and its revenues, though, its expenses for "High-speed Internet" have consistently fallen since 2007. It cost $142 million to deliver Internet access in the first quarter of 2007, $138 million in the first quarter of 2008, and $120 million in the first quarter of 2009. Over that period, not only has Comcast handled an increasing number of Internet subscribers, but each one of those subscribers has presumably been transferring more data on average.
As with all of these systems, of course, the costs of delivering Internet access don't give a complete picture, since the same expenses can sometimes affect multiple systems. If a cable company upgrades its hybrid-fiber coax plant, for instance, was that a TV, voice, or Internet upgrade? In Comcast's case, the numbers also don't include "technical labor."
But the numbers do show that the actual cost of running high-speed Internet connections is dropping even as revenues (and subscribers) grow. This is a key metric because other costs, such as tech support and truck rolls, are not costs that vary with an individual's monthly data usage. As for the argument that cable companies need even more money from users to pay for upcoming, expensive Internet upgrades, the numbers suggest that cable firms are doing pretty well.
Comcast, for instance, has an operating cash flow margin of 39 percent in the first quarter of 2009, up from 37.8 percent a year earlier and 37.4 percent in the first quarter of 2007—and it has been rolling out the (relatively cheap) DOCSIS 3.0 upgrades for some time already.
Time Warner Cable. Time Warner Cable, which kicked off the most recent debate over metered billing and Internet data caps, likewise posted some excellent first quarter numbers. The company's overall revenues were up five percent from a year before, but when broken down by category, Internet access did much better—11 percent higher. In its 2008 annual report, TWC also indicates that its Internet expenses had dropped by about 12 percent, even as the revenues increased.
Back when it was still issuing statements trying to justify its unpopular data caps, the company stressed that the business was a good one now, but that it needed plenty of future cash to pay for all the upgrades that higher Internet use was forcing on the company. But in the first quarter of 2009, the company substantially cut its capital expenditures, from $846 million a year ago to $769 million for this last three months. The slide highlighting the drop is titled "disciplined capital deployment."
Cablevision. Cablevision has already spent most of the money for its DOCSIS 3.0 upgrades, which it plans to roll out across New York in less than two weeks. "Up to" 101Mbps access will be available for $100 a month, with no apparent data caps. Given that this was precisely the setup that Time Warner Cable said might ruin it without switching to a capped data model, how is Cablevision's revenue situation?
The company has yet to release its first quarter numbers, but we can get a clear sense of the trends from its 2008 annual report. Internet revenues are up, voice revenues are up, and cable TV revenues are up. The company doesn't break out its Internet expenses, but it does note that its overall "cable television" operating income (which includes data, voice, and TV packages) was 25.9 percent higher in 2008 than it was in 2007. Its business Internet service, Optimum Lightpath, fared even better, with a 129.8 percent improvement in its operating income.
Essentially, the story is the same wherever we look: healthy operating margins in all telecommunications services, even as companies roll out faster Internet services, add more users, and as Internet use per person increases dramatically.
more here
everyone that comes to this forum needs to watch this, it could be something bad for us one day soon.
