Cable: Not Impacted by Net Neutrality?

Posted by: Olga Kharif on September 30, 2009

Ever since the Federal Communications Commission ruled last year that Comcast had no right to slow down certain applications, such as file-sharing service BitTorrent, running over its network, the impact of the ruling has been subject of much debate. But has there been much of an impact?

Comcast’s results are still robust: The company’s second-quarter revenues rose 4.5%, and earnings per share climbed 57.1% year over year. Back in the same quarter of 2008, Comcast’s sales and earnings both increased 11%. Even more stringent regulation proposed by FCC Chairman Julius Genachowski on Sept. 21 is unlikely to have much financial impact on the cable industry, according to recent reports from Oppenheimer & Co.’s Tim Horan and Hudson Square Research’s Todd Rethemeier.

The analysts point out that most cable companies abide by the FCC’s proposed rules already. And when forced by regulators to cater to bandwidth-hogging services users, broadband providers can simply charge these heavy users higher fees. The industry has already implemented tiered pricing, in which people who want higher-speed access have to pay more for it. It’s also been experimenting with metered pricing, in which people’s monthly fees are directly tied to how much network capacity they use up. While metered pricing hasn’t found favor with consumers, cable companies could still go for it, and mitigate any negative impact from additional regulation.

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Reader Comments

Dar

September 30, 2009 03:55 PM

Once again in a single article you misrepresent two entirely different problems. In the first paragraph you have "Comcast had no right to slow down certain applications". In other words Comcast cannot slow you down based on the content of the traffic. This is critical so that the broadband providers in the future cannot artificially restrict things like video content that will compete with their TV offerings.

However, later you use the phrase "forced by regulators to cater to bandwidth-hogging services users" which is entirely incorrect. All service providers have the right to charge and then limit their customers to the bandwidth purchased. Even the net neutrality position does not suggest that the broadband providers provide unlimited bandwidth to everyone.

Alton Drew

September 30, 2009 11:54 PM

Thanks for a well-written, concise, and to-the-point analysis, Olga. In light of Comcast's financial performance, there may not be an adverse financial impact resulting from an application of a quasi net neutrality ruling. From a network management and market failure perspective, there may still be a good argument to oppose net neutrality. The scheme is too interventionist.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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