I wanted to put this in my last post, but decided it merited its’ own.
A big story on the tech front this week was news that next year we will see internet prices go up because of streaming movie services like NetFlix and HuLu.
Time Warner Cable Inc. and U.S. pay- TV companies, weighing how to profit from surging Internet demand spurred by Netflix Inc. and Hulu, are on the verge of instituting new fees on Web-access customers who use the most.
At least one major cable operator will institute so-called usage-based billing next year, predicts Craig Moffett, an analyst with Sanford C. Bernstein & Co. in New York. He said Cox Communications Inc., Charter Communications Inc. or Time Warner Cable may be first to charge Web-access customers for the amount of data they consume, not just transmission speed.
“As more video shifts to the Web, the cable operators will inevitably align their pricing models,” Moffett said in an interview. “With the right usage-based pricing plan, they can embrace the transition instead of resisting it.”
Welcome to capitalism fail. Time Warner is the nation’s 4th largest cable operator. Comcast is first. When it comes to the internet Comcast falls to 2nd place and Time Warner moves up to 3rd place.
What this means is that the companies are losing money on one service and not really seeing more money come in on the other. People are dropping the high costs of cable television and moving to things like Netflix. That means less subscribers for Time Warner and Comcast. But they are lucky. They have the power to make that up by increasing the costs in another sector of their empires – the internet.
The increased demand on the internet from streaming services is not costing these operators anything. The only motivation for this is their own greed. Why not make cable prices more competitive? Isn’t that how the free markets are supposed to work?
Apparently not.
We live in a world of Gordon Geckos, where greed trumps anything. I’m old enough to remember when cable came out. We were one of the first houses in our neighborhood to get it. The salesman told my dad that the benefits was limited commercials and even though the price was high at the time, we would see it go down in the next decade as they paid off the loans for all the equipment. Instead we saw prices continue to go up and commercials become such a big part of cable that they even removed decent channels from the service to provide 24 hour commercials disguised as “24 hour shopping” networks.
The cable operators haven’t listened to the cries of their customers, so the customers have gone else where. A lot of gone to satellite, which is a lot cheaper than cable. Others have gone to streaming services. These reactions are the very foundation of the philosophy of free markets and we are seeing the serious failure in it.
There is only one real solution to this, government intervention. Of course the GOP would never let that happen because “government bad”. But what if a different approach was taken to this? What if instead of saying we are trying to “regulate the free market” we are punishing those who are trying to hurt the free market? Here we have a perfect argument for just that.
Greed is trumping actual free market principals with these cable operators. The government should tell them that they are using a tenet of the American way to increase their bottom line and that we can’t allow that. Either the cable operators learn how to become more competitive in an evolving economy or the government will force them to.
Like I said in my last post, we already have some of the costliest, lowest quality internet in the world. The internet is a vital part of our economy now and we have the big internet providers out there trying to make the situation worse. We can’t allow that, so it’s time for the government to get involved and make sure this doesn’t happen.