Marketing Research Tells Us That You Want to Pay More for Less
March 2nd, 2013
Many companies use focus groups, and give you what you say you want. Apple forgoes focus groups, and gives you what you want but didn't know you wanted. Time-Warner Cable makes up their own facts, and tells you what you don't want, even if you are sure you want it. And what it says you don't want is good service. It should come as no surprise that TWC ignores popular demand and instead insists that no one wants Gigabit Internet:
Speaking at the Morgan Stanley Technology Conference, Time Warner Cable's Chief Financial Officer Irene Esteves seemed dismissive of the impact Google Fiber is having on consumers. “We're in the business of delivering what consumers want, and to stay a little ahead of what we think they will want,” she said when asked about the breakneck internet speeds delivered by Google's young Kansas City network. “We just don't see the need of delivering that to consumers.” Esteves seems to think business customers are more likely to need that level of throughput, and notes that Time Warner Cable is already competitive .In case you didn't notice the stench, that's all a pile of something well-digested and fetid. Wired nails it on the head:
Experts believe that this reluctance has less to do with a lack of customer demand and more to do with protecting high margin broadband businesses. Companies like Time Warner Cable make around a 97 percent profit on existing services, Bernstein Research analyst Craig Moffet told the MIT Technology Review this month. But Verizon is more interested in wireless broadband, on which it can make an “absolute killing,” by charging per gigabyte for usage, broadband industry watcher and DSL Reports editor Karl Bode told Wired earlier this year.In other words, rather than spending money on high-speed networks due to customer demand, telecoms are instead cashing in on the least they can offer while charging ahead on technologies which offer the highest profit margins—and since they move in lockstep with little or no real competition, customers get no say in the matter. Telecoms are like any other corporation: get as much money by any means necessary. In the early 1990's, a variety of telecoms successfully lobbied states to get them to drop regulation limiting their profits on services that were, effectively, monopolies. In exchange, the telecoms promised delivery of near-universal 45 Mbps fiber-optic broadband throughout these states by deadlines ranging from the 90's to 2015. Most states agreed, leading to hundreds of billions in extra profits for the telecoms—who soon after this killed most of their fiber-optic programs. The extra profits the telecoms have made over the past 20 years from the rate hikes they were allowed could have paid for nationwide broadband. Do we have that? Not even close. And now these same companies are saying it won't come because we don't want it. Specifically, “We just don't see the need of delivering that to consumers.” Of course not. If they can charge $100 a month for 15 or even 5 Mbps in so many locations, who would want to spend all that gravy on new networks instead of simply running off with the cash? These same profit-rich corporations are instead whining about how they don't get to invalidate Net Neutrality and charge even more, once again claiming that they need to charge more so they'll be able to invest in broadband—the exact same shell game they played on us before. Meanwhile, they reveal that they have no intention of truly improving their networks to the extent people want and need. No, consumers don't want Steam to be able to deliver HD games quickly. They don't want high quality video conferencing. But most importantly, consumers do not want, under any circumstances, Apple or Hulu or Netflix or Amazon to deliver 1080p video over Internet. Because that would threaten the cable contracts many of the ISPs enjoy with millions of American households, leading to a la carte video services that could be cheaper and more convenient than the crap delivered now. No, consumers don't want that. Comcast in California does offer 105 Mbps speeds in major cities… for $110 a month, if you commit to long-term service ($200 a month if not). If you don't live in a major city in most states, you could pay that much for 30 Mbps. Here in Tokyo, KDDI offers Gigabit Internet for $60 a month. I know it's not as expensive to wire up Japan as it is America, but you would think that at least in major Californian cities it would not be double the price for 1/10th the speed… essentially 20 times more expensive for equivalent services... after 20 years of overcharging for enough to pay for it all and then some.