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Your Right to Pay Less for Cable

By 16 October 2010 2 Comments

Advertising Age tells us that Vermont Telephone “has begun building out an aggressive and forward-thinking gigabit fiber network that will reach across its Vermont footprint, along with a state wide 4G/LTE network that promises 100 megabits throughout the crenellated peaks and valleys of the Green Mountains.”

A recent letter to customers says they “should have the legal right to pay less” for service, and, further, the right to a la carte rather than bundled cable TV service.

Three points come quickly to mind:

First, VTEL is doing this with $93 million of federal money, so the claim seems to resolve down to the idea that Vermonters have a right to be subsidized. Well, I too live in a state the begins with a V — Virginia — so surely I too have a right to be subsidized. So I will send my money to D.C. which will send it to Vermont and Vermonters can send theirs to D.C. which will send it to Virginia, and then we will all have our rights to blacken the sky with criss-crossing dollars.

Second, VTEL is a private “family-owned” company, so somewhere in the mix is the idea that some of the federal money will go to the coffers of the family of — in AA’s term — the “quixotic Dr. J. Michele Guite.” Ah, those colorful old New England curmudgeons!

Third, a la carte is not going to work like people think. Cable TV is a business that is heavy on investment costs and low on variable costs, so the actual cost of delivering one channel is not one percent of delivering 100 channels; I suspect the cost of delivering one is about 99% of the cost of delivering 100. George?

And let’s add a fourth point — Advertising Age seems unaware of all of these facts, which is certainly not a service to any readers who might think they have become better informed by reading it. No wonder conventional media is dying.

2 Comments »

  • Garrett said:

    James,

    Have you considered the huge market that would be created by separating the infrastructure from the content? Imagine a market where individual TV channels are able to bring products to market to individual viewers!

    I could see it being similar to how the internet runs today where a number of online retailers all ride the same infrastructure and deliver content to consumers.

    In this age it still confounds me to understand why you would ever want anything but an open and competitive infrastructure… Today our power infrastructure is open (we can choose what power we want by which producers) our telephone lines are open (we can choose from a number of providers) and our internet is open (we don’t get only certain online retailers according to who our ISP is). WHY should our cable infrastructure be closed?

    If the infrastructure is REALLY what is expensive than what we should do is eliminate the regulation that the infrastructure companies put on their networks. As you have explained MANY times, regulation is the killer of markets. WHY are we allowing infrastructure companies to regulate competition out? DEREGULATE IT, get infrastructure out of the business of content!

  • George Ou said:

    Note that it’s 100 Mbps per node (120 degrees coverage and three of these per tower). So basically, it’s 100 Mbps shared between users at short range. But at the longer ranges, the shared speed probably drops down to 10 Mbps and that affects the close range users as well since the weak signal users use up more air time for their slow transmissions.