AT&T to cap broadband usage. Streamers beware

It's purely a profit maximization calculation - there's no moral "right" or "wrong", and certainly no "should" or "shouldn't".

Presumably, someone will offer unlimited bandwidth at some price - and ATT will either make a competing offer or they won't. That decision will turn on their view of the risk of losing customers, their cost structure and their requisite margins, not on some notion of apportioning their costs "fairly" to "bandwidth hogs". Evidently, ATT has concluded that, right now, they can pull their existing unlimited bandwidth offer and charge more to heavy users without the risk of losing too many of them.

I can assure you that ATT does NOT want to lose high bandwidth customers.

I'd also note that there are several reasons to believe that the actual cost of incremental fiber capacity will see significant downward pressure in the coming years. However, that doesn't mean ATT will pass the cost savings on. In order to realize that benefit as a consumer, you might have to deal with someone other than your current bandwidth provider. It remains to be seen who will emerge to fill that "unlimited bandwidth demand" space (ATT might well jump back in) and it should be interesting to see how this plays out.

Marty

Trebejo,

I'll disagree - pretty strenuously, actually. These assets (telecom for regulatory purposes) have historically been in the hands of publicly owned or regulated utilities. As a result, they were horribly mismanaged and the public paid the price.

Once the sector was privatized and opened to competition, prices dropped like a rock. There should be no doubt about this - it was specifically as a result of private sector competition. In fact, prices dropped so quickly and steeply that a few of the highly levered companies which laid the fiber went bankrupt.

If these assets were in the public sector, you can bet anything that high speed service would be sparse, hard to find and very expensive.

We've been there, no one should want to go back.

Marty

Incidentally,

I should add that one of the examples you cite (South Korea) is illuminating. South Korea has effectively fostered competition in the deployment of high speed connectivity by aggressively forcing the last mile monopoly (Korea Telecom) to open its local access ("unbundle the last mile") to bandwidth providers like Hanaro. To my knowledge, South Korea has by far the least regulated Telcom sector in Asia. Additionally, a fair chunk of South Korea's subsea fiber was developed (and to a lesser extent provided) by private entities like the Asia Global Crossing/Dacom JV.

Honestly, I am much less familiar with the situation through most of Europe, and I definitely can't comment on Finland. However, there are so many factors - ranging from the aforementioned last mile legacy, to geography, population density, etc. - that such comparisons are very difficult in any circumstance.

Marty

Sam,

Not remotely.

I have no particular philosophy regarding public ownership/regulated business versus unregulated capitalism. There are benefits to each. Stability vs. efficiency. People want the upside without the downside. Sadly, that's not how the world works. Free markets bring upside, but volatility. Regulated markets are more stable, but kill the upside.

My guess is that most people are happiest somewhere in the middle. Fine by me, either way.

However, I have personally financed (to the best of my knowledge) more fiber than any other individual on the planet. I know the history of these assets better than I want to.

My comments reflect the history of ths business as I understand it - but they certainly shouldn't be taken as an endorsement of free markets at all costs. Rather, I'm just pointing out that the development of low cost digital distribution is a direct result of privatization. Having lived thru the transition from public to private, I don't think that this fact - FACT -should be subject to debate.

Marty

Sam,

I see that I sort of skipped answering your question re: TARP directly and went straight to the logical follow-up, re: government intervention.

As to the former. I'm not an economist, but I do have the gut feeling that letting the big banks fail might have been truly disastrous. Therefore, I think TARP probably saved Main Street as much as Wall Street and, therfore, constituted good policy. (Only, however, on the basis of TARP's effect on Main Street.) Just an opinion, and not a terrible informed one, at that.

As a side note, you might be interested to know that, of the many dozens (maybe hundreds) of Wall Street bankers and lawyers that I know, NOT ONE fully embraced TARP. From that, I hope you deduce that I don't hobnob with the Lloyd Blankenships of the world.

Bankers tend to be free market guys who want to see badly run businesses fail - even if they work for those businesses. Most (at least the good ones) are sufficiently confident (arrogant, if you prefer) as to believe that they could find another job and make the same (or more) money. These guys were as angry as anyone at their own executive management - except maybe for the asset backed origination guys who were the bulk of the root cause and, honestly, I just don't know anyone at that end of the business.

The only fact tempering their resistance to TARP was the their own position in their employer's stock (a portion of those huge bonuses you hear about is always in stock/options that vest over time). Bottom line: most bankers grudgingly approved of TARP because it protected their wealth, even tho they hated the idea.

OTOH, those guys who saw it coming and shorted the bank sector (I know several who did so) were just furious. One neighbor even trotted out the Boone Pickens line that, after TARP, political risk to investment was greater in the US than it is in China. For what that's worth....

Hope that is more responsive to your question.

Marty

Sam,

Sorry, I don't follow the "intimate and casual associations" reference. I'm particularly curious about the "intimate" part.

Marty