GM GA! About time here: Google's (GOOG) new bandwidth plan threatens Comcast (CMCSA)
Posted Jan 29th 2009 4:00AM by Douglas McIntyre
Filed under: Google (GOOG), Comcast Cl'A' (CMCSA)
Google (NASDAQ:GOOG) is setting up a new tool to allow people online to measure whether their broadband provider is cutting down the speed of their access to the internet.
According to Reuters, "Google is looking to encourage network neutrality and prevent Internet service providers from blocking bandwidth-heavy sites." That is probably good news for consumers, but it is bad news for broadband providers like Comcast (NASDAQ:CMCSA) who have limited capacity in their network infrastructures.
The FCC has encouraged all broadband providers to offer unlimited access to the internet no matter how much data their subscribers want to download. Some users do so much file-sharing that the entire system is taxed. Cable companies like Comcast may be shutting down access to the most prolific users of their infrastructures so that other customers do not have their service speed undermined.
But, Comcast has a more sinister reason for throttling speed. As its subscribers use more and more of the company's bandwidth capacity, the need for Comcast to spend money to upgrade its system grows. The cost of retooling the system to provide higher Internet speeds could run into the hundreds of millions of dollars.
Google is pushing a product that may eventually push broadband companies to sharply increase their capital expenditures to serve their subscriber bases. The may well hurt Comcast's balance sheet and its shareholders.
Bow no head, Bend no knee. Better to rule than serve!
