Cable companies make 97% margin on internet services and have no incentive to offer gigabit internet (xpost from r/technology)
nextbigfuture.com/2013/02/cable-companies-mak...
nextbigfuture.comPosted Feb 6, 2013, 12:03 AM UTC
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nextbigfuture.comLooks like Tom was right. Making the router lights blink, apparently doesn't cost much.
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The source article for this story (MIT Technology Review) is actually better, so I found after clicking through a bit: http://www.technologyreview.com/news/510176/when-will-the-rest-of-us-get-google-fiber/?utm_campaign=newsletters&utm_source=newsletter-daily-all&utm_medium=email&utm_content=20130205
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I mean does this really surprise anyone? Private companies will continue to bend consumers over until the end of time. They don't care about advancement. They care about profits only.
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Then you guys should buy Comcast stock (cmcsa) and you can all be billionaires too.
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97% really seems like an exaggeration to me.
I dug through the telephone-game chain of links to find a source, and I found it. Apparently it's 97% because 'Craig Moffet' said it is. Whoever that is. There is no explanation for how that number was calculated.
Meanwhile, there are some HUGE questions about how a number like this is calculated. Comcast has a shared infrastructure between internet and cable TV. I'm going to guess that those shared costs are probably HUGE part of the total. Stringing many thousands of miles of cable around is not cheap. How is he attributing those costs?
I'm going to guess that he attributed ALL of these shared costs to the cable TV business, as a sunk cost, when this is not really truly a sunk cost.
Because it is. Hell, Technology Review gets their source's name wrong, and erroneously state he's still at a firm he left last month. This is sensationalism, and a guy trying to stay in the limelight plus a blogger trying to get pageviews. Self-interest baby.
For the record, wireline margins are somewhere in the range of 25-33%, but that's just one part of the picture. I mean as a whole, companies like VZ get like 10% gross margin at the end of the year. As other commenters pointed out, the only way this stat could make any sense is if it was purely about line delivery, and excluded SG&A and depreciation/amortization.
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