Comcast recently announced unilateral broadband speed increases for some customers. Customers with current 60 Mbps service today are being increased to 150 Mbps, those with 150 Mbps are moving up to 250 Mbps, and those with 250 Mbps are being bumped up to 400 Mbps or 1 Gbps depending upon their cable package.
The Houston Chronicle reported that the speed upgrades are only available to customers who have a cable package and an X1 settop box. This article has spawned a number of outraged reactions from customers and industry journalists.
This is not news, and in my experience has been a long-term practice of the company. When there is an event like this speed increase the Comcast practice percolates up to the surface again. The company has been reserving their fastest broadband speeds for customers who buy cable TV for years. When I moved to Florida five years ago Comcast would not sell me standalone broadband any faster than 20 Mbps unless I purchased a cable package.
That speed was not adequate for my family and home office and so I was corralled into buying their basic TV package in order to get 100 Mbps broadband. They wouldn’t let me buy the faster standalone broadband at any price. The cable settop box went immediately into my closet and was never plugged in. The $20 basic TV package ended up costing me over $40 per month after layering on the settop box and local programming fees. I felt like I was being extorted every time I paid my Comcast bill. I called periodically to try to drop the cable package but was always told that would mean reducing my broadband speed.
The articles I’ve read assume that this pricing structure is intended to hurt cord cutters. But when this happened to me five years ago there were very few cord cutters. I’ve always assumed that Comcast wanted to maintain cable customer counts to please Wall Street and were willing to strongarm customers to do so. I was a cable customer in terms of counting, but I never watched any of the TV I was forced to buy. I always wondered how many other people were in the same position. For the last few years Comcast has lost fewer cable customers than the other big cable companies and perhaps this one policy is a big part of the reason for that.
Today it’s easier to make the argument that this is to punish cord cutters. This policy clearly harms those who refuse to buy the company’s cable products by forcing them into the company’s smallest bandwidth data products. Last year Comcast declared that they are now a broadband company and not just a traditional cable company – but this policy challenges that assertion.
Comcast is further punishing card cutters by enforcing their data caps. Due to public outcry a few years ago they raised the monthly data limit to one terabyte. While that sounds generous, it’s a number that is not that hard to hit for a house full of cord cutters. Over time more households will hit that limit and have to pay even more money for their broadband.
This policy is a clear example of monopolist behavior. I’m positive that this policy is not invoked in those markets where Comcast is competing with a fiber overbuilder. There is no better way to identify the monopolist policies than by seeing what gets waived in competitive markets.
Unfortunately for the public there is no recourse to monopolistic behavior. The FCC has largely washed their hands of broadband regulations and is going to turn a deaf ear to issues like this. Comcast and the other big ISPs are now emboldened to implement any policies that will maximize their revenues at the expense of customers.
It’s not hard to understand some of the ramifications of this policy. My 100 Mbps connection from Comcast was costing me over $100 per month and this is both a ridiculous price and unaffordable to many homes. The scariest thing about these kinds of policies is that the cable company monopoly is strengthening as they chase out the last remnants of DSL. There will be huge numbers of markets where Comcast and the other large cable companies will be the only realistic broadband option.
I’ve noted in a few blogs that there seem to be consensus on Wall Street that the big ISPs are going to significantly increase broadband prices over the next few years. They continue to also bill outrageous rates for a cable modem and slap on hidden fees to further jack up prices. When you layer in policies like this one and data caps it’s clear that Comcast cares about profits a whole lot more than they care if households can afford broadband. I know that’s inevitable monopoly behavior, and in the ideal world the federal government would step in to stop the worst monopoly abuses.