Comcast (sort of) Admits Guilt, Gets a Slap On the Wrist
FCC Chairman, Kevin Martin has granted Comcast a “reasonable timeframe” in which to discontinue its practice of prioritizing certain web-based applications based on bandwidth. This announcement came on the back of Comcast’s public agreement this week to work with Vonage to improve the VoIP company’s phone service carried over their network.
Comcast denies all wrong-doing, but the sudden helping hand offered to Vonage raises a flag. So let’s also assume for the sake of argument that Comcast is guilty. The question is why they would take such measures when there are other, more legitimate ways to compete with poor, little Vonage.
First, Comcast owns the entire cable experience. Convenience alone should account a good portion of people who are weighing the options of Comcast’s phone service versus Vonage:
Comcast: Welcome to Comcast. Would you like to sign up for our Triple Play Preferred package that includes TV, phone and internet on the same bill?
Customer: Yes.
Comcast: But it costs a lot more than if you just sign up for TV and data through us and then use Vonage for phone.
Customer: I don’t care because I’m too lazy to call Vonage. Thank you.
Second, Comcast owns the network. There is virtually nothing stopping them from simply lowering their prices to a point at which Vonage has little or no advantage. For example, Cablevision (who has not been named by the FCC) prices their basic Triple Play package at approximately $90 per month - $25 less than Comcast’s similar offering. Is this predatory? Hardly – it’s not like Cablevision is giving their phone service away for free. They are pricing competitively to the point where, even for a savvy customer, the negligible difference is made up for in service and convenience.
Finally, Comcast could innovate – the honest way. Vonage is offering visual voicemail and virtual phone numbers so that every call is a local call. All the while, instead of enhancing their products and services, Comcast is concentrating on destroying the competition – literally.
Cable companies have held local monopolies for years. But now with competition coming from all angles – Vonage, FiOS and DirecTV – that environment is quickly changing.
Unless they enjoy bad press, fines and frequent visits from the FCC, Comcast and others would be wise to play nicely.
