Time Warner: Lies, Lies, Lies?

I know it’s a little late, but Ars Technica posted this great article on Wednesday about how Time Warner just might be stretching the truth about their bandwidth costs. Apparently, all of TWC’s whining about “increased costs” just doesn’t bear out analysis… of the company’s own shareholder reports. In fact, external bandwidth is the least of all of TWC’s contractual obligations, except for existing debt obligations.

How’s this for a figure: Time Warner pays around $40 million per year for their external bandwidth. Compare that to how much the company pays for carriage contracts – the contracts between cable networks and cable providers ($3 billion), digital phone bandwidth ($453 million), and purchases of set-top cable boxes ($175 million) and you can see that TWC really is raking it in on its Internet service.

And not only that, the cost of backbone bandwidth is dropping by around 50 percent every year. So whatever Time Warner pays for bandwith this year, expect the price per megabyte to actually fall next year… and the year after that, and the year after that.

You should really read the linked article. It will open your eyes.

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