Comcast
enhanced the value position of its broadband subscriptions by increasing the
monthly data allowance to 1 Terrabyte (1000 Gigabytes). See http://money.cnn.com/2016/04/28/technology/comcast-data-cap/. As an independent, unsponsored researcher, I
can say “Thank You Comcast” without adverse consequences and only a bit of
irony. This company does much to
displease, but ab expanded data allowance offers a winning proposition.
Consumers
win, because Comcast has opted not to create artificial scarcity with an eye
toward running up subscribers bills. While one subscriber’s glut maybe another’s
scarcity, 1000 Gigabytes offers a generous allowance. Most subscribers will not have to ration their
usage including actively cutting off advertisements that increasingly seem to
launch despite attempts to prevent “auto play.”
Comcast
wins, because longer and stickier subscriber viewing typically generates more
revenues for the company. Comcast
operates in what economists describe as a double sided market. The company generates revenues from
downstream, broadband subscribers and it also receives payments from upstream
carriers, such as Content Distribution Networks, as well as content creators
and distributors, such as Netflix.
Additionally,
Comcast can accommodate ever increasing demand for bandwidth quickly, efficiently
and inexpensively. The company need only
reallocate a 6 MegaHertz channel from video carriage to broadband
carriage. Aljazerra America’s sign off
created a candidate channel for reassignment. See http://america.aljazeera.com/articles/2016/1/13/al-jazeera-america-to-close-down.html. Cable television networks typically now have
ample bandwidth affording latitude in assigning capacity for video, data and
other services. A technology known as
cable bonding makes it possible to add broadband capacity in 6 MHz increments.
As cable
companies expand broadband data rates, wireless carriers persist in rationing
access with monthly allocations typically in 1-10 Gigabyte range. Wireless
carriers currently do confront scarcity, particularly if many subscribers in
the same vicinity try to stream video at the same time. As well, wireless carriers do not have the
same quick, easy and cheap opportunities to expand broadband bandwidth,
although they can install more towers (“cell-splitting”), encourage subscribers
to incorporate their wired broadband subscription with cellphone service and
acquire more spectrum.
Currently,
wireless carriers appear quite adept at finding the sweet spot that balances
scarcity abatement strategies with scarcity-based pricing. These carriers have paid billions for auctioned
off spectrum, but they also want to use unlicensed, free Wi-Fi spectrum to accommodate
growing demand, most probably without a data rate increase. Additionally, they can rely on the spectrum
scarcity rationale to justify many tiers of service with pricing rising
significantly as data rates increase. Few
current subscribers have truly unlimited data plans, because the service
agreement authorizes the carriers to reduce (throttle) delivery speeds to rates
that do not support video streaming.
Wireless carriers
can exploit spectrum scarcity to support a much higher per Gigabyte cost of
service. Comcast just widened this
differential.
