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The Huffington Post reports
In our Petition for Investigation of Time Warner Cable (TWC) and Comcast, we point out that TWC's High-Speed Internet service has a 97 percent profit margin and a number of people asked how that statistic was derived. Simple. Time Warner Cable provides the information, (with some caveats).
Below is the actual financial information excerpted from the Time Warner Cable, 2013 SEC-filed annual report. (Please note that this same mathematics is also used by Comcast and probably Verizon and AT&T, though they do not explicitly detail their financials in this way.)
Moreover, we need to put this financial information in context to what customers are paying, and more specifically with the Time Warner Cable Triple Play bill that's been featured in previous articles.
[...]
Net Neutrality, Competition, and Fees to Competitors
In the current FCC proceeding about Open Internet, commonly known as "Net Neutrality", one of the issues surrounds what the competitors and content providers, such as Netflix, are paying to connect to the cable networks. On the other side, the 'slow-lane-fast-lane' discussion is all about charging end-user customers more or getting your service slowed down in some way.
To put it bluntly, with a 97 percent profit margin for High-Speed Internet, TWC has given its own services 'priority' favoritism, a sweet-heart deal,--call it what you want--but any other company would never, ever [be allowed to pay just] $1.32 a month to use the TWC networks to offer competitive High-Speed Internet, but this is what it costs Time Warner Cable's ISP, the part of the company offering the Internet and broadband service, to offer end users High-Speed Internet service. Competitors would most likely have to pay about 50 percent or more of the 'retail' average price of $43.92 to offer their service as a competitor.
If customers have been 'defacto' investors, paying an extra $5.00 a month since 2001 under the "Social Contract" to fund upgrades of the cable networks for High-Speed Internet, why shouldn't these networks be open so we can choose who offers us Internet or cable service over these wires?"
(Score: 5, Informative) by Covalent on Monday February 09 2015, @02:40PM
http://www.businessinsider.com/sector-profit-margins-sp-500-2012-8 [businessinsider.com]
Data is from '12, but presumably today's numbers aren't far off. You can see that the average profit margins are typically 30%, so 97% is off the charts.
Seems to me like cutting prices by 75% would lower their profit margins to the 20 - 25% range...which would put them in line with industry standards, and would also put their price in line with sanity. But that is probably not going to happen.
You can't rationally argue somebody out of a position they didn't rationally get into.
(Score: 3, Interesting) by frojack on Monday February 09 2015, @10:22PM
Yeah, but....
The consolidated figured in Business Insider are hardly typical of, and probably drawn up differently than the cable internet segment.
I suspect this isn't out of line for other big cable tv companies.
They already have the cable plant for the TV segment and they have had that for years and years.
They went all digital on that cable plant freeing up boat loads of bandwidth.
Bolting on IP traffic to an existing cable plant involves a change out of gear (bidirectional amps etc) that was accomplished decades ago.
So the only thing to pay for is the installation, (installation charges cover that) and the upstream bandwidth to their inter-ties.
And since they already have nationwide TV backbones, they can do their upstream inter-ties where ever it is most cost effective.
Finally, we don't know the details of the calculation. Is cable plant extension included in cable internet costs? Or is that all in the capital budget?
Short answer is I suspect cable internet is a cash cow for ALL the Cable TV providers. Not JUST those that own a movies and media components.
Could they reduce their prices? Probably, but until they start losing customers they will charge what the market will bear, because for most
people, in most places, they are the only game in town.
Title II [ting.com] is about more than just net neutrality.
No, you are mistaken. I've always had this sig.