Comments on: Thinking about Caps http://bennett.com/blog/2009/04/thinking-about-caps/ A personal blog Sun, 11 Sep 2011 14:57:16 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Brett Glass http://bennett.com/blog/2009/04/thinking-about-caps/#comment-6033 Brett Glass Thu, 16 Apr 2009 20:30:18 +0000 http://bennett.com/blog/2009/04/thinking-about-caps/#comment-6033 Richard, one thing that should be emphasized is that consumers are being even more greedy than they accuse the cable providers of being. Many of them are trying to engage in price arbitrage by canceling their video service and stream TV programs via the Net 24x7. Trouble is, the bandwidth to deliver those individual streams costs many times more than either broadcasting (terrestrial or satellite) or sending the channels down a cable, because streaming is not a broadcast medium. Each new stream uses up more capacity and represents an incremental expense to the provider. Paradoxically, under today's "flat rate" Internet pricing, this costs the consumer less and the provider more. In fact, the provider loses money -- a situation that's not sustainable. That's why pricing models need to change. The consumer does deserve (and should shop for!) the most for his money, but the provider also deserves a fair return -- and certainly should not be expected to lose money. Richard, one thing that should be emphasized is that consumers are being even more greedy than they accuse the cable providers of being. Many of them are trying to engage in price arbitrage by canceling their video service and stream TV programs via the Net 24×7. Trouble is, the bandwidth to deliver those individual streams costs many times more than either broadcasting (terrestrial or satellite) or sending the channels down a cable, because streaming is not a broadcast medium. Each new stream uses up more capacity and represents an incremental expense to the provider.

Paradoxically, under today’s “flat rate” Internet pricing, this costs the consumer less and the provider more. In fact, the provider loses money — a situation that’s not sustainable. That’s why pricing models need to change. The consumer does deserve (and should shop for!) the most for his money, but the provider also deserves a fair return — and certainly should not be expected to lose money.

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