Comcast's marginal rate
Aug. 30th, 2008 06:31 amWhat upsets me is that Comcast's marginal rate is so clearly bogus.
They advertise cable modem Internet service for $33/month if you buy a combo deal from them, and $50/month by itself. Let's say that $33 represents the exact marginal cost to Comcast; that has no profit margin associated with it (bogus) and is 100% of the cost of delivering a 10Mb/s line, equipment, plus 250GB of transfer (bogus).
So, 770Kb/s costs $33/month; a 1Mb/s cap ought to cost $44/month. That gives 82GB on top of the 250 -- 332GB/month.
Each additional 10GB in a month ought to cost $1.38.
What is Comcast actually going to charge? Well, they were going to charge $15 per 10GB, a markup of a mere thousand percent or so. (The current FAQ indicates that they're going to 'counsel' their customers, then boot them off.)
How does this compare to a free market? In the most directly comparable situation I can think of, Cogent will sell a 100Mb/s connection to an office in an already-connected building for less than $1000/month. They have no caps on usage at all (nobody would stand for it!) and so you can see that they charge 75 cents for what Comcast charges $33.
And if Comcast implements the $15/10GB charge, their price goes up to $120.
They advertise cable modem Internet service for $33/month if you buy a combo deal from them, and $50/month by itself. Let's say that $33 represents the exact marginal cost to Comcast; that has no profit margin associated with it (bogus) and is 100% of the cost of delivering a 10Mb/s line, equipment, plus 250GB of transfer (bogus).
So, 770Kb/s costs $33/month; a 1Mb/s cap ought to cost $44/month. That gives 82GB on top of the 250 -- 332GB/month.
Each additional 10GB in a month ought to cost $1.38.
What is Comcast actually going to charge? Well, they were going to charge $15 per 10GB, a markup of a mere thousand percent or so. (The current FAQ indicates that they're going to 'counsel' their customers, then boot them off.)
How does this compare to a free market? In the most directly comparable situation I can think of, Cogent will sell a 100Mb/s connection to an office in an already-connected building for less than $1000/month. They have no caps on usage at all (nobody would stand for it!) and so you can see that they charge 75 cents for what Comcast charges $33.
And if Comcast implements the $15/10GB charge, their price goes up to $120.