I’ve been a Comcast cable television and Internet customer for almost two years now. And to be quite honest, during those two years, I’ve had relatively few complaints. Sure, I’m not crazy about my upstream BitTorrent traffic getting throttled. But that aside, I feel as if I’ve always enjoyed a fairly high level of service. I’m more or less pleased with the speeds that I get with my Internet connection, the picture and sound quality of my cable television service is high enough to pass muster and I can’t remember ever experiencing any downtime (which initially came as a shock, after having been a DSL customer for a number of years). And all those horror stories about Comcast technicians? Mine arrived right on time for my installation appointment and was both courteous and helpful–even if he did try to sell me a cable descrambler box. In fact, during the last few years, I’ve only had one complaint regarding Comcast’s Internet service: the price tag that comes attached to it has always seemed a bit high. As of yesterday, however, that’s no longer an issue for me.
Over the years, I’ve paid a range of different prices for a range of different Internet services. As I’ve mentioned previously, I paid around $30 USD per month for a 100 Mbps fiber-optic connection via Yahoo! BB when I lived in rural Japan. In Chicago, I paid about the same for DSL “service” with SBC (trust me, the outages were frequent enough to warrant those quotation marks), now part of AT&T. And currently, I pay AT&T $30 a month on top of my voice plan for theoretically unlimited 3G/EDGE mobile broadband. Where does Comcast cable Internet fit into this spectrum? Far and away, Comcast charges more than any other ISP I’ve dealt with in the past–of my total $131.22 monthly bill (an obscene $78.75 of which goes to cable television service), $45.95 goes to cable Internet service and modem rental.
Now I realize that it’s not fair to compare all of these services as if this were an even playing field. Cable, DSL, Fiber-to-the-Home and 3G are all very different services and rightfully have different costs associated with them. Additionally, service prices tend to vary from region to region and in Japan, the national government has created economic incentives for broadband deployment (more on that here). However, all of these factors aside, even Comcast initially sold me service at that seemingly magic price point of $30/month.
When I first signed up with Comcast, I was paying in the neighborhood of $70 total every month, of which $29.99 + modem rental went toward Internet service. You can see how I would be far more comfortable with that figure–it fits in quite nicely with the rest of my broadband biography, as listed above. But as is often the case with cable providers, my price was a limited-time offer–six months to be exact–and after those six months, I entered the realm of “non-promotional pricing”. In practical terms, that meant that my monthly bill nearly doubled. Enter competition.
As I’ve mentioned in a previous post, I’m one of the lucky few who lives in an area where Verizon is rolling out its FiOS fiber-to-the-home service. No, FiOS is not quite the blazingly fast 100 Mbps Japanese fiber that I’m used to (It’s worth nothing here that 100 Mbps is no longer considered that fast in Japan, as 1 Gbps is now the new cutting edge) but it does represent another choice. Like many city-dwelling Americans, I live in an apartment complex and my management company negotiates deals with telephone and broadband providers that determine which services are available to the building’s tenants. Previously, we had only two choices: either cable (Comcast) or DSL (Verizon). Given my previous experience with DSL as well as the fact that I didn’t want or need a home phone line (a common requirement for a DSL line), cable seemed like the logical choice at the time.
FiOS, however, presented an entirely new option. For around the same price that I paid Comcast for an 8 Mbps/768 kbs connection I could have 10 Mbps/2 Mbps service with FiOS. This seemed like a pretty solid value proposition to me. However, I couldn’t help but recall a post that ZDnet‘s Larry Dignan made all the way back in January 2007, where he found himself in much the same situation as I when Verizon started laying fiber in his neighborhood. When he called up Comcast and informed them of his intentions to leave (even though FiOS wasn’t yet technically available in his area), they cut his monthly bill in half. Might I be able to pull off the same feat, I wondered?
After months of procrastination, I finally decided to give Comcast a call yesterday afternoon. No need to beat around the bush, I figured–might as well go straight for the jugular. “Hi, I’m thinking of switching to Verizon FiOS,” I told the customer service rep, “and I was wondering if you had any current promotions that might entice me to stay with Comcast.” After taking a minute to look up the available promotions in my area, the customer service rep offered me essentially the same deal as Dignan–I got to keep all of my current services, she cut my bill down to $69.99 a month (before tax and franchise fees) and she threw in 12 free months of HBO and Starz to boot. She even made it a point to tell me the exact date when this promotion would end–essentially letting me know when I would need to call in again and threaten to switch in order to avoid getting stuck with a higher bill.
The moral of the story, in case you hadn’t already figured it out, is that competition is a good thing. I went from two choices to a whopping three and it had a huge impact on the price that I pay for broadband. Now imagine what it would be like if we had real competition in the broadband marketplace–not just a handful of companies, each offering a different type of broadband service but multiple providers competing to offer the same services (i.e. multiple cable providers, multiple fiber providers, etc.). In such a market, the price of broadband service would be drastically lowered, subsequently lowering the barrier of entry for the millions of Americans who don’t have high-speed Internet access. Many Americans currently live in areas where there’s only one game in town and even those who don’t are sometimes faced with limited choices based on the building or complex that they live in. If you ask me, this seems to signal a clear lack of competition in the national broadband market.
Take my case as an example. Obviously, Comcast can afford to profitably sell cable Internet service for $30 a month but in the absence of competition–not to mention well-informed customers–they’re more than happy to increase that price by 50%. Sure, I was able to wiggle my way out of this price hike but I’m willing to bet that there are plenty of people who still pay $45/month in my building. And that’s not to mention all the other folks out there who pay the same for Comcast service in areas where there is even less competition than there is in my neck of the woods. As many have suggested before, a national broadband strategy would go a long way to solve these kinds of problems, offering incentives for ISPs to build out in areas where there were previously few, if any options. Until the US federal government gets its act together on the broadband front, however, you’re going to have to hope that a new ISP moseys into your town and lights a match under the incumbent, whoever that might be.