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Thursday, October 02, 2008
Tim Beyers :: Townhall.com Columnist
Fool Blog: Comcast's Cop-Out
by Tim Beyers
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Does Comcast (Nasdaq: CMCSA) think we're stupid? You'd think so. Last week, executives there said that they're capping Internet usage. Cross the line, and you'll be disconnected.

What's so dangerous about this policy is that it seems reasonable. Comcast's cap is at 250 gigabytes, or 100 times what the average user consumes. Very few of us download 62,500 songs or 125 standard-definition movies each month.

Nevertheless, Comcast's cap ignores something fundamental: The Internet is growing exponentially. Look at the key players. Motley Fool Rule Breakers recommendations Akamai (Nasdaq: AKAM) and Google (Nasdaq: GOOG) have grown revenue by 37% and 46%, respectively, over the past 12 months.

For its part, Comcast says that the cap is designed to prevent bandwidth hogs from stealing time from Joe and Jane Webizen. Yeah, and when my cousin Eddie tells me he'll pay me back on Tuesday the $50 I'm loaning him today, he doesn't really mean that I'll never see that money again. Silly me.

Here's what Comcast should have said:

"See, we've got this legacy cable business. That wouldn't be so bad if innovators weren't making it easier to stream video over the Web. Microsoft 's (Nasdaq: MSFT) Silverlight helped bring you the Olympics. So did Limelight Networks (Nasdaq: LLNW), and it's also behind Netflix 's (Nasdaq: NFLX) Watch Now service. Intel (Nasdaq: INTC) is working on chips for Web TV. These technologies will improve over time and, as they do, they'll demand more bandwidth. We're not big fans. In fact, we'd prefer you ignore these innovations and watch TV and video the traditional way, over our cable network."

Most troublingly, this cap reveals Comcast to be gutless. Otherwise, management would immediately replace it with utility-style pricing, in which bandwidth burners would pay extra. Trouble is, that involves risk. A limitless pay-per-use model could boost demand and force Comcast to upgrade its infrastructure, even as top customers shop for cheaper services.

Still, blaming the bandwidth hogs is a cop-out, Comcast. You're small-f fooling no one.

More bloggy Foolishness:

recommend these stocks to our grandmas.When will Uncle Sam let something fail?Your short attention span will love these investment classics.
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About The Author

Tim Beyers is a freelance writer and PR and marketing consultant.

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(3 comments so Far)
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Reply # 1
Date: Oct 2, 2008 - 9:51 AM EST
Comcast is very bad.
Or at least my experience with Comcast has been very bad. I used to have Charter and they were great. Soon I hope to have time to look at alternatives out there and not have to deal with Comcast ever again.
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Reply # 2
Date: Oct 2, 2008 - 8:37 AM EST
Interesting topic
Let the competition begin. May Comcast fossilize and die if it fails to provide a good service at a fair price. And where is K Mart these days? Oh yes, Comcast needs some politicians in their corner and on their dole to pass protective legislation, or maybe bail them out with our taxes if they fail.
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