Biting and Eating Hands That Feed You

Phil Harris
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Posted: Jun 09, 2008 12:26 PM
Biting and Eating Hands That Feed You

This country is going to hell in a hand basket. That is a recently expressed perspective from an elder gentleman I respect. He was talking about the price of gasoline at the time, but I am inclined to add further evidence to the charge.

America transformed rapidly over the past few decades, into a society that runs on two essential ingredients: gasoline and communications. Our population has moved from rural communities to the cities and from city centers to a sprawling network of annexed suburbs, often to the chagrin of the small town’s people, powerless to stop it from happening.

I just watched a recorded interview in which they were discussing plans of major Internet Service Providers such as Time-Warner and AT&T to begin charging subscribers for actual Internet usage. Not such an unreasonable concept, one might be inclined to agree unless we look at the facts of the matter. Giant telecom crocodile tears may tear at the heart-strings of conservative sympathizers; however, I am getting a bit sensitive to the notion that corporate America has less than admirable intentions.

I am a subscriber to Time-Warner’s Road-Runner service. It is expensive at $44.95 per month, but it has been reasonably reliable and provides adequate speed for my Internet needs. Certainly, I would not argue that it is costly to create and maintain the infrastructure to deliver services such as Internet connectivity, but just how costly is it?

My home has been connected to the Time-Warner system for more than six years. The same line is used to deliver cable television and Internet service, and it has been in place, unchanged for each of those years. My combined Time-Warner bill (cable and Internet) has never been less than $135 per month, which means that I have paid at least $1,620 per year for a total of nearly $10,000 during this time. Yes, I do know that a portion of that was for taxes and regulatory fees, but the lions share has gone to Time-Warner.

Perhaps, it would behoove me to ask the question. Did I adequately compensate Time-Warner for the $3.75 worth of coaxial cable that links my home to the box on the corner of my lot? Did this subdivision I live in, with three hundred homes adequately cover the cost of this leg of Time-Warner’s distribution system?

Two-hundred homes (considering that not all of the three hundred subscribe to their Internet service, but most do subscribe to cable) at $10,000 per pop… is at least two-million dollars ($2,000,000.00).

Take a high estimate of $16,000 per mile for laying fiber optic cable in rural areas, which is essentially what you have when developing these out-lying subdivisions. Then consider that the reach to my subdivision from existing infrastructure would have been roughly one-fourth of a mile, at a cost of about $4,000.

So to date, I believe it is safe to say that Time-Warner has adequately recouped its costs for connecting my home. In fact, I believe it is safe to say that Time-Warner has recouped its costs for connecting all of the homes in the neighborhood. Further, it is equally safe to assume that this paid-for infrastructure will continue to generate revenue for Time-Warner for the next twenty or thirty years and there will be virtually no additional costs over the foreseeable future to maintain this infrastructure. In these modern times of buried fiber optic cable, trees and ice no longer tear down wires, so barring any sudden upswing in earthquake or volcanic activity in Nebraska, the investment is pretty safe.

So then, is there justification is for Time-Warner and other service providers to cry about heavy Internet use by their subscribers? Of all fiber optic cable that is already in place, upwards of 70% of that existing capacity remains dark (unused). Some subscribers are making heavy demands on bandwidth, but it is not irrelevant to account for money paid by the content providers, because that bandwidth has been sold and paid for at the other end of the pipe.

Cell phone service (another communications segment) is also a sore spot for me. I struggled for years to keep my family in touch by using Sprint’s services. The family plan seemed to be quite a deal, at $75 for two phones plus $10 each for three additional phones. We paid for five cell phones ($105 per month) plus extra fees for unlimited nights & weekends and insurance. Once in awhile, an extra $5 per 100 additional minutes over the allotted prime-time minutes was added.

I finally gave up the battle, and now we have no cell phones at all. Even after one of my sons took over his own service, leaving us with just four phones on the plan, our Sprint bill was still climbing, often reaching at or above $300 per month. No matter how you look at it, that monthly outgo far exceeds the notion of “Family-Plan” savings.

We did not use the cell phone Internet capabilities, and despite two years of questioning Sprint and receiving half-baked justifications, it came time to drop out. I spent my first thirty years or so without a ringing telephone in my pants pocket, so it is not inconceivable that life can exist otherwise.

The average for gasoline is now above four dollars per gallon, while oil company executives boast to shareholders about record-breaking profits. Communications companies are crying foul because customers are finally beginning to use services for which they have been over-paying for years. To top it all off, our taxes are higher than ever and are forever on the rise.

Perhaps, as the elder gentleman suggested, we are indeed in a hand-basket. Maybe the basket is being carried by short-sighted, greedy, money-grubbing corporate genius types who haven’t the common sense to look up and see where they are carrying us.

I wonder if they will seem so brilliant after they step off the brink and we all plummet into the flaming abyss. There is that old bit of wisdom, about not biting the hand that feeds you. Surely it is worse still, to not just bite the hand, but to devour it as well.