24 September 2009

Facts about broadband provision

Today's WSJ had an op-ed by Holman Jenkins. In it he claimed the following:

Two-thirds of Comcast's new broadband subscribers signed up in a recent quarter were defectors from DSL. "Churn" is the biggest challenge to broadband profitability, especially as competition drives down margins. According to Arbor Networks, the cost of fielding a single call to customer service can wipe out three years' profitability for a customer's broadband account.


Anonymous said...

Church is when you switch from one product or service to another similar product. Is it church if you switch from an inferior product to a superior product? Can you compare a 500 kbps or whatever DSL line to a 10 mbps cable line? Churn might be bouncing from FiOS to Cable - but is it bouncing from telegraph to broadband?

Martin Weiss said...

As far as service providers are concerned, it is "churn", though consumers may see it as an upgrade. If the market is competitive enough, then both cable and telcos will make investments such that the performance differences between their products will be indistinguishable by consumers. And this is a key point, as far as I am concerned: different consumers have different needs that might be served better by different products.