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It’s An Oligopoly, Stupid: What’s Wrong with Comcast Business Class Internet?

Let’s begin with what sounds like a fairy tale but turns out to be a nightmare. After watching your country invest hundreds of millions of dollars in taxpayer-subsidized infrastructure, you’ve finally decided it’s time to buy your own car. You visit the only car dealer in town and are told that all vehicles are leased, not sold, for a period of three years. Cars come in three models. Would you like a 200, 300, or 400 horsepower engine? You opt for the 400 horsepower model and, just as your new car sputters off the lot, you discover a 14-page list of Terms and Conditions in your glove box. The document reveals that the manufacturer doesn’t make any guarantees regarding the performance or reliability of your new vehicle. And, if you attempt to return the car in a couple months because of the vehicle’s unreliability or lousy performance, you agree to forfeit 75% of the entire cost of the 3-year lease. And, no, you cannot sublease or even give your crappy purple Scion1 to somebody else. Aside from the fact that Scion actually makes great automobiles with excellent warranties, the only real difference in this scenario and The World According to Comcast is the fact that, with a car, the item being leased becomes less valuable every day. With Comcast, prices continue to go up, and up, and up…

So perhaps you think the cellphone oligopoly is similar. The Bell Sisters could only wish. With a cellphone plan, the carriers actually subsidize the cost of your discounted cellphone by spreading the cost over a period of two years. Thus, their early termination fees which typically run $200 to $300 are closely tied to recovery of the subsidized cost of your discounted phone. With Comcast, the company is not providing any hardware that you don’t actually pay for either up front or on a pay-as-you-go basis. Build out costs are payable in advance. Cable modems are leased by the month. When you discontinue service, the cable modem is returned and handed out to the next poor sucker customer waiting in line.

[gview file="http://business.comcast.com/docs/smb-pdfs/cbc_terms_020309.pdf"]

Early Termination Fees. So let’s calculate the fee that Comcast could impose if you decide after a couple months that your business can no longer survive on their "Business Class" level of service and performance. On the Business Internet D50 plan (note that there’s no mention in the contract that this has been touted by the sales rep as a 50Mbit down, 10Mbit up Internet service), the "discounted" cost with one static IP address is $125 per month for 36 months = $4,500. You used the service for two months which reduces the lease balance to $4,250. The 75% Early Termination Fee for the service you never used and for which Comcast made no representation as to performance or reliability works out to a whopping $3,187.50. Makes your $125 monthly cellphone bill sound like a bargain, doesn’t it?

According to Craig Moffet, an analyst at the Wall Street firm Bernstein Research, Comcast and Time Warner are making a 97 percent margin on their “almost comically profitable” Internet services. So this is clearly not a case of recovering infrastructure costs. After all, most of those were either paid or subsidized by federal, state, and local governments. This is simply an oligopolist doing what they do best in unregulated local markets with almost zero competition by regulatory design. It’s good old-fashioned price gouging! What a coincidence that Comcast also happens to be one of the "top ten" political contributors in the United States.

Internet Performance. The other glaring problem lies with Comcast selling tiers of service at different price points while providing no assurance that the performance levels will ever be met. We all appreciate that Internet performance can vary; however, the Comcast terms go far beyond that. If Comcast provided a 2400 baud modem level of performance for three years, our reading of the contract terms suggests that Comcast is fully within its rights even though the service was sold as offering 50 megabit download speeds. Comcast’s terms and conditions specifically disclaim any responsibility for achieving any performance measurement ever. In short, the speed designations allow Comcast to charge higher rates without offering anything of contractual value to the customer in return.

How’s the Service? Let us briefly replay the last 8 days of dealing with Comcast Business Class in our office. This all transpired while a Comcast sales rep was pitching a new 3-year contract as the only way for us to decouple our existing Business Class Internet "service" from our residential cable TV bill. This would allow us to once again get business class support without a 30-minute residential support run-around on every Business Class Internet support call, a highly touted (and necessary!) feature that actually worked during the first two years of our first contract.

Sunday, Oct. 6, 6 a.m. – Preparing to leave town for AstriCon 10. Internet dead.
Sunday, Oct. 6, 7 a.m. – Reset cable modem, Comcast tests modem. All fine. Internet still dead.
Monday, Oct. 7, all day – Repeat of Sunday. Internet still dead.
Tuesday, Oct. 8, all day – Same story.
Wednesday, Oct. 9, all day – Same story.
Thursday, Oct. 10, 4 p.m. – Another hour with Comcast support. Will try to schedule visit for Friday.
Friday, Oct. 11, 10 a.m. – Tech arrives. Takes one look at modem and declares the unit defective.
Friday, Oct. 11, rest of day – Internet works.
Saturday, Oct. 12, 6 a.m. – Internet dead. Comcast reports A-OK. Is the modem in bridge mode? Yes.
Sunday, Oct. 13, 3 p.m. – Comcast support: In bridge mode? Ooops. No. Internet finally works.
Monday, Oct. 14, 4 p.m. – Internet dead. Looks like a fiber cut. Offers 1 month Internet credit.
Monday, Oct. 14, 9 p.m. – Internet works.

What Can You Do About It? For openers, raise hell with your favorite Congressman. Assuming he or she didn’t receive a "political contribution," it might actually help. Then write or visit your state and local elected representatives and hand them a copy of this article if you’re too shy to tell your own story. Nearly everybody has a ‘Comcast Story’ to tell. Encourage all of these folks either to open up the marketplace for real competition or to establish local initiatives to bring affordable Internet service to local businesses and communities. Last, but not least, write your local newspaper and encourage them to shine a spotlight on business practices such as these. You might be surprised by the results. If there’s an organization that deserves a lower job approval rating than Congress, we have a tip for you.

What’s Next? We’ve reached out to @ComcastCares for comment. We’ll let you know if there’s a meaningful response.

Originally published: Tuesday, October 15, 2013

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  1. With apologies to Scion that actually makes perfectly functional and dependable automobiles! Listen to the song for details. []


  1. Have you tried reaching out to the local authority that taxes them and supposedly "regulates" them? There is a local authority here that I think was set up specifically to tax them when they came to town.

  2. I have had good luck with local providers of "wireless internet." It’s usually provided by microwave. They are generally small mom & pop companies. They care, and I’ve been able to talk directly with the technicians when I had a problem. I also had good luck with a real business internet provider that used dedicated telco lines to provide me with service. Both options cost more, but the customer service is much better.

  3. Wow, sounds like quite the headache.
    My own personal experience with Comcast business support has been quite the opposite. I have a 50/10 with 5 statics now.

    I’ve only had 2 outages in 9 years, first was due to hurricane Katrina, the second one due to a burned out modem about 6 months ago. They replaced my modem in less than 24 hrs. So no complaints on my end about support.

    My only issue is that my account is listed as both residential and business in their system for some reason, so when I input my account, the IVR tells me that it’s a residential account but allows me to connect with a business rep just fine. I do hear that business support varies quite a bit from others though.

    The termination fees are truly ridiculous, not to even mention the fact that your contract auto renews every year for a year when it ends and you are then subjected to the ridiculous fine again. To cancel your contract you need to call ahead one month in advanced.
    Being on contract does not even mean they can’t raise the rates and boy do they love to raise the modem rental rates.
    Comcast sucks, but in my area they are the better providers 🙁

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