Letter to Time Warner Cable regarding conflicting statements on costs
Preface: This is a copy of the letter I just sent to realideas@twcable.com requesting comment on the contradictory statements being made, telling consumers that costs are increasing, and telling shareholders that they are decreasing.
To whom it may concern:
Several reports have recently come to light that your SEC filings show
costs are decreasing and your profits and subscriber base are rising.
http://www.dslreports.com/forum/r22213854-
http://blog.wired.com/business/2009/04/time-warner-cab.html
In the face of this evidence, which you yourself have provided, how can Mr.
Hobbs continue to put forth the argument that your costs are increasing? In
his most recent statement, Mr. Hobbs asserts:
“With the ever-increasing flood of content on the Internet, bandwidth
consumption is growing exponentially. That’s a good thing; however, there
are costs associated with this increased Internet usage. Here at Time
Warner Cable, consumption among our high-speed Internet subscribers is
increasing by about 40% a year. As a facilities based provider, we’ve
built a network that must be maintained and upgraded. We have increasing
variable costs and we have to continue to invest in the network itself.”
Mr. Hobbs strongly implies that your “increasing variable costs” amount to
40% a year, correlating with consumption. Let’s set aside the fact that you
have told your shareholders that costs are DECREASING; we’ll come back to
that later.
Not only do several independent sources cited in the above articles debunk
the idea that cost correlates with consumption in any meaningful way. Most
all costs are overhead, and extra transfer is minuscule in cost. This DOES
support your idea that heavier users should bear the brunt of
infrastructure and equipment to handle the load they require, but it also
indicates that modeling pricing based on amount consumed is not logical.
What is wrong with the existing model of charging based on the user’s
desired theoretical maximum throughput? It seems to be making you plenty of
money right now, and those profits are growing.
You’ll probably key on the fact that I said “right now” and reemphasize
that you predict that at the rate we’re going, we’ll have “brown outs” or
something in 2012. Well, any study done by real scientists
(http://www.dslreports.com/shownews/99302) rather than “corporate-funded
think tanks, the investment community, incumbent policy groups, lobbyists
and executives”
(http://www.dslreports.com/shownews/Time-Warner-Cable-Offers-Weak-Concessions-101838)
exposes this to be nothing more than a myth, perpetrated by your industry,
to justify increasing our bills. The study linked by Jeff Simmermon on
Twitter following the first statement from Mr. Hobbs
(http://www.dslreports.com/shownews/Time-Warner-Cable-Offers-Weak-Concessions-101838)
was shown to be funded by AT&T, and industry player who is also trying to
advance the cause of consumption-based billing.
So, in short, we don’t buy it.
I have a lot more issues with the proposed consumption-based billing (see
how I’m not calling it “caps”?), but I’d like to see if I can first get a
response to this simple question:
Why do you continue to put forth the idea that your costs are rising, when
your statements to your shareholders not only directly contradict that,
they show that your profits are rising, as is your subscriber base?
You don’t have to answer my question, and you can “decline comment” for
written news articles, but myself and many others are disseminating the
facts on this issue, and mark my words, you will get asked this on tape by
a reporter, and for your sake, I hope you come up with a good answer that
won’t add to the embarrassment your company is already suffering.
Regards,
Scott Cranfill
TWC Rochester Account # [redacted]
