TWC Has 97% Profit Margin On High-Speed Internet Service

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Could you imagine running a company that has a 97% profit margin? Apparently Time Warner Cable can. :eek:

In our Petition for Investigation of Time Warner Cable (TWC) and Comcast, we point out that TWC's High-Speed Internet service has a 97 percent profit margin and a number of people asked how that statistic was derived. Simple. Time Warner Cable provides the information, (with some caveats).
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97% profit before political contributions, significantly lower afterwards. Its expensive to legally buy politicians.
 
How much do they spend on infrastructure improvements? I'm all for a good profit margin, but if they keep saying things like they need caps, infrastructure improvements cost too much, etc., then they are fuckers. If they spend a lot on the backend and get rid of caps, then it's fine with me. Make some money. I'd do it if I could. I'd rather put a lot of that to make my customers happy, though. And I'm not talking about shareholders. If they were able to get 100Mb+ speeds to every place they serve at a low price and good customer service and no caps, customers would flock to them. They might not have the same profit margin, but they'd gain a lot of customers to bring it up a bit from how much they spent. And, they'd have a much better reputation.
 
I'm not an accounting stud, and I'm not saying TWC isn't raping customers - but that article is crap. There's no business that is that profitable. That number is cost of sales, which iirc doesn't include salaries of employees or depreciation or other liabilities. Any accounting peeps here that can refresh my memory on a subject that is 15+ years old in my brain?

I'm thinking the real costs are more and this is just an author confused on what he's looking at on the balance sheet. I'm sure they are still raking in the dough - but I doubt at 97% profit.
 
If high speed fiber offerings were really that profitable I doubt that Verizon would be getting out of the Fios business ... TWC gross profit for the entire company was 45.5% ... their net profit was only 12.4% ... those were all based on 2013 (the same as the article) ... those are the SEC numbers they have to report annually and which carry significant penalties for lying or error ... if the entire company's profit was 12.4% then it doesn't matter if high speed internet was 100% (and probably points to errors in the calculation that gave that number) ;)
 
Ur_Mom said:
How much do they spend on infrastructure improvements? I'm all for a good profit margin, but if they keep saying things like they need caps, infrastructure improvements cost too much, etc., then they are fuckers.
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They ARE fuckers, this shouldn't be a revelation, lol!

Capitalism can only work when you have a free market that is free from political corruption with a lot of open competition between businesses. We have the exact opposite of this as is, so really any change to the status quo is bound to be an improvement.
 
They aren't really "competing" for rollout. If they were, we see lower costs of deployment to new areas and brutal catfights for broadband costs all over the USA.

When was the last time you saw a price war for internet/phone/TV service in any market?

So let us not blame capitalism when we have never actually even had any when it comes to these data networks.

The current problem IS cronyism and corruption. NOT capitalism or competition.
 
EODetroit said:
97% profit before political contributions, significantly lower afterwards. Its expensive to legally lobby politicians.
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Because bribing is illegal :D.

But it doesn't come as a surprise cable and internet distribution have always been the highest performers in the entertainment sector.
 
It's not surprising that internet is cheap... hell my local ISP has said it many times when talking about the cost of fiber service, $40 for 100Mbps line, +$30 for 1Gbps, bandwidth is cheap, it costs almost the same amount regardless of what you want.

That said, while I think they make gobs of profit on high speed internet, I think their numbers of flawed, when showing the cost of service per customer, looks like they completely ignore the cost of employee services, or they conveniently lump that all in with video since that makes the most, but the reality is the same employees working video are also working internet when it comes to infrastructure.
 
It's from the Stuffington Post...of course it's crap. These kinds of articles are written for the weak-minded among us who have been convinced (by politicians pandering for votes) that the very companies who provide us with the goods and services we like the most are in fact the very companies we should "hate." The only person for whom that proposition makes any sense at all is a Washington politician or else some other equally challenged group. Largely inclusive of the national Democrat party, these groups would lie, cheat, and/or steal to control the Internet so that they could eventually and ultimately "regulate" what people may see and what they may not see in the way of "news and opinion."

If you don't think that's at the bottom of many politicians' Internet agendas and policies, you haven't been paying attention. The national Democrat party, especially the Obama administration, salivates profusely at the mere suggestion of an Internet turned into a propaganda organ for an elitist government--a government wherein things like "free speech" and "the Constitution" are mere inconveniences--bumps in the road that must be overcome on the way to the promised land: a government-run utopia and nirvana in which "the truth" is whatever the government decides it is at the moment. (My own thought is that if you want that sort of government then perhaps you need to secure an ISIS job application and apply to a jihad post haste...:))
 
Kongar said:
I'm not an accounting stud, and I'm not saying TWC isn't raping customers - but that article is crap. There's no business that is that profitable. That number is cost of sales, which iirc doesn't include salaries of employees or depreciation or other liabilities. Any accounting peeps here that can refresh my memory on a subject that is 15+ years old in my brain?

I'm thinking the real costs are more and this is just an author confused on what he's looking at on the balance sheet. I'm sure they are still raking in the dough - but I doubt at 97% profit.
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Yeah, you are right. I mentioned this in another thread when they said it was Comcast who had a 97% profit. It's gross profit margin. which is revenue minus cost of goods sold. When you are selling something that isn't a physical thing, and assume that things like infrastructure and manpower is free well, yeah you are basically printing money. Google would probably be 100% profit if you looked at it that way.
 
I tried reading the article but had to stop at "While I have no idea what 'customer relationships' are". Its good to understand your topic when analyzing numbers.
 
WaltC said:
It's from the Stuffington Post...of course it's crap. These kinds of articles are written for the weak-minded among us who have been convinced (by politicians pandering for votes) that the very companies who provide us with the goods and services we like the most are in fact the very companies we should "hate." The only person for whom that proposition makes any sense at all is a Washington politician or else some other equally challenged group. Largely inclusive of the national Democrat party, these groups would lie, cheat, and/or steal to control the Internet so that they could eventually and ultimately "regulate" what people may see and what they may not see in the way of "news and opinion."

If you don't think that's at the bottom of many politicians' Internet agendas and policies, you haven't been paying attention. The national Democrat party, especially the Obama administration, salivates profusely at the mere suggestion of an Internet turned into a propaganda organ for an elitist government--a government wherein things like "free speech" and "the Constitution" are mere inconveniences--bumps in the road that must be overcome on the way to the promised land: a government-run utopia and nirvana in which "the truth" is whatever the government decides it is at the moment. (My own thought is that if you want that sort of government then perhaps you need to secure an ISIS job application and apply to a jihad post haste...:))
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pot calling the kettle black... Your whole rants reads like you have been sucking on some propaganda as well.
 
sfsuphysics said:
That said, while I think they make gobs of profit on high speed internet, I think their numbers of flawed, when showing the cost of service per customer, looks like they completely ignore the cost of employee services, or they conveniently lump that all in with video since that makes the most, but the reality is the same employees working video are also working internet when it comes to infrastructure.
Click to expand...

I can't say how it works for major cable companies, but I know that for 1Gb that we're rolling out, the video is not as profitable as the 1Gb fiber. I think people forget that once the fiber is in (and obviously the back haul), the internet is relatively cheap to provide. For TV, we still have to get a cable (might as well be fiber) to your house and we have to pay for the content.

Bigger providers get better video deals, so they may do better on video, but I suspect that video is less profitable than $60-$100/month internet.
 
nilepez said:
I can't say how it works for major cable companies, but I know that for 1Gb that we're rolling out, the video is not as profitable as the 1Gb fiber. I think people forget that once the fiber is in (and obviously the back haul), the internet is relatively cheap to provide. For TV, we still have to get a cable (might as well be fiber) to your house and we have to pay for the content.
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Oh absolutely, however I was specifically focusing on the employee side of things. You still need people to maintain lines, repair lines, run new lines for new customers. The only way that really changes for video is that you are more likely to have more people just have TV and not TV/internet. Then if later they get internet, they don't have an employee charge because they already paid that employee for the services rendered to pull the cable for TV the first time.
 
sfsuphysics said:
Oh absolutely, however I was specifically focusing on the employee side of things. You still need people to maintain lines, repair lines, run new lines for new customers. The only way that really changes for video is that you are more likely to have more people just have TV and not TV/internet. Then if later they get internet, they don't have an employee charge because they already paid that employee for the services rendered to pull the cable for TV the first time.
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Yeah. It really depends whether they have to lay down something to get high speed into the home or not. I have relatives in with municipal fiber, and they got it up about a year after the final court battle ended. In their case they had some of the infrastructure already in place, but that should be true for virtually all the cable companies too.

So once you put in the wire, it's pretty much gravy on the internet side. This is really a fight against competition. Almost none of these companies compete against each other. The exception is when a town with one cable/isp is incorporated into a different town/county that uses a competitor. Occasionally you get AT&T and Comcast, but its' rare. I've never had high speed data where there was a competitor. First it was DSL or nothing and then I moved to a place where it was cable at 5-6 Mb/s or DSL, which made 1.5 Mb seem slow and then I moved and my choice was even faster internet or about the same DSL.

If you have a municipal electric company and you like them, they'll probably do a decent job as an ISP. If not, then you probably won't vote to fund the build out.
 
WaltC said:
It's from the Stuffington Post...of course it's crap. These kinds of articles are written for the weak-minded among us who have been convinced (by politicians pandering for votes) that the very companies who provide us with the goods and services we like the most are in fact the very companies we should "hate." The only person for whom that proposition makes any sense at all is a Washington politician or else some other equally challenged group. Largely inclusive of the national Democrat party, these groups would lie, cheat, and/or steal to control the Internet so that they could eventually and ultimately "regulate" what people may see and what they may not see in the way of "news and opinion."

If you don't think that's at the bottom of many politicians' Internet agendas and policies, you haven't been paying attention. The national Democrat party, especially the Obama administration, salivates profusely at the mere suggestion of an Internet turned into a propaganda organ for an elitist government--a government wherein things like "free speech" and "the Constitution" are mere inconveniences--bumps in the road that must be overcome on the way to the promised land: a government-run utopia and nirvana in which "the truth" is whatever the government decides it is at the moment. (My own thought is that if you want that sort of government then perhaps you need to secure an ISIS job application and apply to a jihad post haste...:))
Click to expand...

That sounds like two paragraphs of conspiracy theories and paranoia.
 
Kongar said:
I'm not an accounting stud, and I'm not saying TWC isn't raping customers - but that article is crap. There's no business that is that profitable. That number is cost of sales, which iirc doesn't include salaries of employees or depreciation or other liabilities. Any accounting peeps here that can refresh my memory on a subject that is 15+ years old in my brain?

I'm thinking the real costs are more and this is just an author confused on what he's looking at on the balance sheet. I'm sure they are still raking in the dough - but I doubt at 97% profit.
Click to expand...

Ahh, I see we have difficulties reading.

The article just compares price charged to customers and what TWC pays. This is rather explicit throughout. I am sorry that it was difficult reading for you, Afterall, it was the huffingtonpost.
 
5icko said:
Best way to reduce your bill right now is to get rid of the $8/mo plus tax modem rental fee
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One of my better life decisions was doing this back in 2013.. got a SB6141 which I paid $80 at the time on Amazon (currently $90 but prices on this fluctuate). Not sure if the SB6183 is worth getting for $40 more if you don't currently have or think you will have any time soon speeds over 300 Mbps down and 100 Mbps up which the SB6141 can handle.
 
this doesn't add up to me,
Simply put: For Phone Service (Voice)

TWC charges the customer, on average, for Voice (phone) service --$34.40
Minus
It costs TWC to offer the Service --$8.94
Equals-- The company makes $24.46 in profit per customer per month -- 74 percent.

Not bad, huh?
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wouldn't that be 300% profit?
 
Insula Gilliganis said:
One of my better life decisions was doing this back in 2013.. got a SB6141 which I paid $80 at the time on Amazon (currently $90 but prices on this fluctuate). Not sure if the SB6183 is worth getting for $40 more if you don't currently have or think you will have any time soon speeds over 300 Mbps down and 100 Mbps up which the SB6141 can handle.
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got rid of my cable modem rental many years ago, when the price dropped under $80. I'm on my 3rd or 4th one by now, as the old ones got to slow or wheren't supported any more. Never spent more than $90 which is less than a years rent. Currently running a used cisco that has 8 download channels. should be fast enough for the next few years.
 
Content licensing fees (for TV) have long been a cable company's largest expense. Since they don't have to pay content licensing fees and still charge similar amounts for high-speed internet as they do for TV why is it any surprise high-speed internet service is almost entirely profit?
 
kbrickley said:
If high speed fiber offerings were really that profitable I doubt that Verizon would be getting out of the Fios business ... TWC gross profit for the entire company was 45.5% ... their net profit was only 12.4% ... those were all based on 2013 (the same as the article) ... those are the SEC numbers they have to report annually and which carry significant penalties for lying or error ... if the entire company's profit was 12.4% then it doesn't matter if high speed internet was 100% (and probably points to errors in the calculation that gave that number) ;)
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Verizon is NOT getting out of the FiOS business, they just aren't wiring anymore FiOS to any new areas. The problem is internet is very highly profitable, but the wiring of fiber is ridiculously expensive. It takes a large expenditure in order to wire an area with fiber to the home, but the bandwidth is highly profitable. If you want bandwidth profitability to exceed 100% you need to have caps and overages, that's why they want to have them. TWC net profit is low because they are a cable company and licensing of Cable content costs a LOT.
 
I wonder how they keep getting tax breaks for build out of new broadband infrastructure and upgrades for old ones and not do it yet still get to keep tax breaks without penalty. Its like we pay them to lay the lines down with tax money and they rob us every month to use what we just paid for.
 
Tip of the day, tweet to @twc_help to get your bill lowered.

I'm paying $45 for 100/10 which is the going rate for new customers. When the 12 months is up, retweet. Your region may be cheaper.
 
LurkerLito said:
Verizon is NOT getting out of the FiOS business, they just aren't wiring anymore FiOS to any new areas. The problem is internet is very highly profitable, but the wiring of fiber is ridiculously expensive. It takes a large expenditure in order to wire an area with fiber to the home, but the bandwidth is highly profitable. If you want bandwidth profitability to exceed 100% you need to have caps and overages, that's why they want to have them. TWC net profit is low because they are a cable company and licensing of Cable content costs a LOT.
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My point is that regardless of the perceived profitability of the broadband business, the overall profit of the company is much lower ... if we were to mandate lower profits (which is usually where these sorts of arguments lead) then you would force the company viability to suffer or force them to eliminate all the businesses that are lower profit and focus only on the highest profit ones (which is perhaps also what some people want)

The bad part of the internet costs isn't profit but the lack of competition ... people throw around profit numbers like there is an acceptable level of profit that all businesses should have (and no more) ... bottom line is that in capitalism you will have some businesses (even without oligopolies and monopolies) with extraordinary profits ... perhaps they have a patent for a unique material or compound (like a drug or metal) or perhaps they are the first to a new business area that no one else has entered or tried ... profit is not evil and there is no acceptable or unacceptable level of profit ;)
 
kbrickley said:
My point is that regardless of the perceived profitability of the broadband business, the overall profit of the company is much lower ... if we were to mandate lower profits (which is usually where these sorts of arguments lead) then you would force the company viability to suffer or force them to eliminate all the businesses that are lower profit and focus only on the highest profit ones (which is perhaps also what some people want)

The bad part of the internet costs isn't profit but the lack of competition ... people throw around profit numbers like there is an acceptable level of profit that all businesses should have (and no more) ... bottom line is that in capitalism you will have some businesses (even without oligopolies and monopolies) with extraordinary profits ... perhaps they have a patent for a unique material or compound (like a drug or metal) or perhaps they are the first to a new business area that no one else has entered or tried ... profit is not evil and there is no acceptable or unacceptable level of profit ;)
Click to expand...

Or perhaps the business world should consider that not all industries are able to have record profits every year, forever. "Profit" may not be evil, but the methods and excuses made to gain it most definitely are. Virtually any business that has gone from private to public is evidence of such.
 
///AMG said:
I wonder how they keep getting tax breaks for build out of new broadband infrastructure and upgrades for old ones and not do it yet still get to keep tax breaks without penalty. Its like we pay them to lay the lines down with tax money and they rob us every month to use what we just paid for.
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Comcast and TWC have a great cash machine going on. They rake in our money, give it to select politicians as campaign contributions and in turn, they get tax breaks. Everybody gets rich (i.e. executives, shareholders, lobbyists, and politicians). Wash, rinse, repeat, year after year. As a bonus, the NSA gets a pipeline into our data for data mining purposes. They can get internet usage stats, phone data, and the new craze called in-home security with video cameras INSIDE the home. Oh what one can do with that data. ;)
 
article author also doesn't understand that cable cos pay content providers for the channels.
They have to pay for this chunk of channels.

Customer only wants one of those channels? Cable co still has to pay content provider for the whole chunk that includes that single channel.
How can they charge customer $5/mo for a single channel, when they still have to pay the content provider, say, $30/mo for a whole chunk of channels.
That's a $25/mo loss per customer.
(numbers are not accurate, just used for representation)
That wouldn't exactly be a good business model...

That blame needs to lie on content providers, not cable providers.
 
Dreaz said:
Ahh, I see we have difficulties reading.

The article just compares price charged to customers and what TWC pays. This is rather explicit throughout. I am sorry that it was difficult reading for you, Afterall, it was the huffingtonpost.
Click to expand...

Who pissed in your cornflakes? :p

"pays" to whom? And what's included? It says it's their "cost of revenue" What's included in that cost? The article answers none of these things. My point is that companies pay for a lot of things, but the way you account costs is complicated. I'd be very surprised if that number includes everything and is properly allocated (probably an impossible task to do accurately for a company the size of TWC - thus accounting)
 
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