Last week, the MIT Technology Review’s David Talbot claimed that “cable distribution giants like Time Warner Cable and Comcast are already making a 97 percent margin on their ‘almost comically profitable’ Internet services.” TechFreedom’s Matt Starr and Will Rinehart respond to these claims in an op-ed in The Daily Caller, pointing out that the number is patently false,
The “97 percent margin” assumes cable infrastructure materializes out of thin air, ready for broadband use and requiring no upgrades. It’s another misleading statistic all too easily accepted by those who insist that cable is a rapacious monopoly requiring public utility regulation.
Talbot cited the highly respected telecom analyst Craig Moffett as his source. But Moffett was referencing “gross profit margin” (GPM), a statistic that doesn’t take into account the infrastructure-heavy models of broadband providers. Talbot conveniently left out Moffett’s next sentence: in which he said that “this is not as crazy as it first appears,” and explained GPM’s pitfalls.
Read the entire op-ed at The Daily Caller.