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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, Funny) by darkfeline on Monday February 09 2015, @03:17PM
Should it even be legal for a company to make more than, say 50% net profit margin? If you're making that much money, at least pay your employees an extra French fry or something.
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(Score: 5, Interesting) by Thexalon on Monday February 09 2015, @03:36PM
More to the point, why can't the public utilities commissions or FCC step in to demand lower prices? And before some libertarian says that's unfair, I'll point out that they voluntarily sought out local monopolies in exchange for utility regulation (this isn't uncommon for phone or electric or water service either), which includes government controls on pricing.
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(Score: 0) by Anonymous Coward on Monday February 09 2015, @05:18PM
says it all
(Score: 4, Interesting) by frojack on Monday February 09 2015, @10:37PM
More to the point, why can't the public utilities commissions or FCC step in to demand lower prices?
Its already in the works, The FCC is pushing for Title II common carrier status for ISPs.
Why? Net Neutrality, bundled with the fact that in most places these big ISPs have a defacto monopoly.
In my town I have a choice of Comcast (wired all over town) or horribly slow ADSL in limited areas.
We don't generally limit profits unless there is some sort of unfair market advantage that works to prevents competition.
Its finally dawned on people that the vast majority of people in the US DON'T have a choice of internet providers.
There are at least three different TV providers.
No, you are mistaken. I've always had this sig.
(Score: 1, Interesting) by Anonymous Coward on Monday February 09 2015, @03:41PM
These are gross margin numbers. I'm no fan of cable companies or monopolies, but Huff-Po's understanding of how to read a financial statement is seriously lacking.
(Score: 5, Insightful) by iwoloschin on Monday February 09 2015, @03:46PM
Sure, it should be legal for a company to charge whatever they think the market will bear for their product. For most companies this is totally fine, if you've got a shortage of product, or just a product that is *that* amazing, then sure, charge for it! I know of many companies with obscene profit margins, but they're usually just the best in their game, and can very much justify the crazy profit margins.
This falls apart with monopolies though, particularly legal monopolies such as public utility companies. If you're the only one who can provide a service to an area, your charter should limit your profit margin to some reasonable level. Charge a lot of money for service if you want, but anything over the set profit margin must be reinvested in plant or reimbursed.