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Time Warner Cable's 97 Percent Profit Margin on High-Speed Internet Service Exposed

So they're delivering complete shit for internet, when they CLEARLY have the money to dump into beefing shit up? Unbelieveable.

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Get your facts straight guys. Go read the Huffington post again. Cost of revenue for highspeed data is $175m for 2013, and the author is claiming that the corresponding cost per subscriber is only $1.32? That's assuming there are 132.6m TWC highspeed internet subscribers ($175M/$1.32) in the US, that's 40% of the US population. Absurd.
 
Go to TWC's 2013 annual report on http://ir.timewarnercable.com/investor-relations/financial-reports-and-filings/annual-reports/default.aspx

Go to top of page 3 (pdf pg 11) and you'll see "As of December 31, 2013, TWC served approximately 11.1 million residential high-speed data subscribers"

 

Now take that $175m cost of revenue and divide by 11.1m subscribers, you get a cost of $15.77 per subscriber instead of $1.32, which gives you a contribution/gross margin, not profit margin, of ($43.92-$15.77)/$43.92 = 64%, which is before accounting for fixed costs such as depreciation and SG&A. 

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Get your facts straight guys. Go read the Huffington post again. Cost of revenue for highspeed data is $175m for 2013, and the author is claiming that the corresponding cost per subscriber is only $1.32? That's assuming there are 132.6m TWC highspeed internet subscribers ($175M/$1.32) in the US, that's 40% of the US population. Absurd.

 

Go to TWC's 2013 annual report on http://ir.timewarnercable.com/investor-relations/financial-reports-and-filings/annual-reports/default.aspx

Go to top of page 3 (pdf pg 11) and you'll see "As of December 31, 2013, TWC served approximately 11.1 million residential high-speed data subscribers"

 

Now take that $175m cost of revenue and divide by 11.1m subscribers, you get a cost of $15.77 per subscriber instead of $1.32, which gives you a contribution/gross margin, not profit margin, of ($43.92-$15.77)/$43.92 = 64%, which is before accounting for fixed costs such as depreciation and SG&A. 

 

Alz you need to correct a few things.

 

Your math is entirely wrong because you took the entire cost of revenue per year without dividing it per month. There are actually 11,089,000 subscribers. 

  • $175m per year / 11.089m subscribers = $15.78 per year
  • $15.78 per year / 12 months = $1.315 per subscriber per month

 

Use the actual SEC source linked in the Huffington Post article since their numbers are more precise: http://www.sec.gov/Archives/edgar/data/1377013/000119312514056642/d640670d10k.htm

 

TWC 2013 High Speed Data:

  • Residential subscribers (page 38): 11,089,000
  • Residential revenue per month average (page 40): $43.92
  • Residential revenue per year (page 39): $5,822,000,000
  • Business subscribers (page 38): 517,000
  • Business revenue per year (page 41): $1,099,000,000
  • Cost of revenue per year (page 42): $175,000,000

 

Total high speed data revenue:

  • $5,822,000,000 + $1,099,000,000 = $6,921,000,000

Gross high speed data profit: 

  • $6.921 billion - $0.175 billion = $6,746,000,000
  • 6.746 / 6.921 = 97.47% total gross profit on high speed data

Cost per month:

  • $175,000,000 cost of revenue per year / 12 months = $14,583,333.33 cost per month
  • The Huffington Post is only including residential cost:
    • They only included the residential subscribers while calculating the cost per month.
    • $14,583,333.33  / 11,089,000 residential subscribers = $1.32 (1.315) per residential subscriber per month (excluding business)
  • Per Subscriber cost per month (including both residential and business):
    • $14,583,333.33  / 11,606,000 total subscribers = $1.26 per subscriber per month (including residential and business)
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Alz you need to correct a few things.

 

Your math is entirely wrong because you took the entire cost of revenue per year without dividing it per month. There are actually 11,089,000 subscribers. 

  • $175m per year / 11.089m subscribers = $15.78 per year
  • $15.78 per year / 12 months = $1.315 per subscriber per month

 

Use the actual SEC source linked in the Huffington Post article since their numbers are more precise: http://www.sec.gov/Archives/edgar/data/1377013/000119312514056642/d640670d10k.htm

 

TWC 2013 High Speed Data:

  • Residential subscribers (page 38): 11,089,000
  • Residential revenue per month average (page 40): $43.92
  • Residential revenue per year (page 39): $5,822,000,000
  • Business subscribers (page 38): 517,000
  • Business revenue per year (page 41): $1,099,000,000
  • Cost of revenue per year (page 42): $175,000,000

 

Total high speed data revenue:

  • $5,822,000,000 + $1,099,000,000 = $6,921,000,000

Gross high speed data profit: 

  • $6.921 billion - $0.175 billion = $6,746,000,000
  • 6.746 / 6.921 = 97.47% total gross profit on high speed data

Cost per month:

  • $175,000,000 cost of revenue per year / 12 months = $14,583,333.33 cost per month
  • The Huffington Post is only including residential cost:
    • They only included the residential subscribers while calculating the cost per month.
    • $14,583,333.33  / 11,089,000 residential subscribers = $1.32 (1.315) per residential subscriber per month (excluding business)
  • Per Subscriber cost per month (including both residential and business):
    • $14,583,333.33  / 11,606,000 total subscribers = $1.26 per subscriber per month (including residential and business)

 

 

You're right, that makes sense. I forgot to into account the $43.92 per user was on a monthly basis. Thank's for clarifying. 

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Alz you need to correct a few things.

 

Your math is entirely wrong because you took the entire cost of revenue per year without dividing it per month. There are actually 11,089,000 subscribers. 

  • $175m per year / 11.089m subscribers = $15.78 per year
  • $15.78 per year / 12 months = $1.315 per subscriber per month

 

Use the actual SEC source linked in the Huffington Post article since their numbers are more precise: http://www.sec.gov/Archives/edgar/data/1377013/000119312514056642/d640670d10k.htm

 

TWC 2013 High Speed Data:

  • Residential subscribers (page 38): 11,089,000
  • Residential revenue per month average (page 40): $43.92
  • Residential revenue per year (page 39): $5,822,000,000
  • Business subscribers (page 38): 517,000
  • Business revenue per year (page 41): $1,099,000,000
  • Cost of revenue per year (page 42): $175,000,000

 

Total high speed data revenue:

  • $5,822,000,000 + $1,099,000,000 = $6,921,000,000

Gross high speed data profit: 

  • $6.921 billion - $0.175 billion = $6,746,000,000
  • 6.746 / 6.921 = 97.47% total gross profit on high speed data

Cost per month:

  • $175,000,000 cost of revenue per year / 12 months = $14,583,333.33 cost per month
  • The Huffington Post is only including residential cost:
    • They only included the residential subscribers while calculating the cost per month.
    • $14,583,333.33  / 11,089,000 residential subscribers = $1.32 (1.315) per residential subscriber per month (excluding business)
  • Per Subscriber cost per month (including both residential and business):
    • $14,583,333.33  / 11,606,000 total subscribers = $1.26 per subscriber per month (including residential and business)

 

I'm going to start up my own cable company,  I'll call it "moose's, go fuck yourself but leave me the money internet services"  

 

This is indecent for a company that complains so loudly about competition being dangerous to it's bottom line.

Grammar and spelling is not indicative of intelligence/knowledge.  Not having the same opinion does not always mean lack of understanding.  

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The cost per customer at 3% seems unrealistic. Does that really encompass thousands of salaries for call center job positions? No matter how horrid your provider's service might be, they are essential to sales, repair service, and encompass more than just call agents. There's management teams, directors, operators and an endless number of departments. Field technicians and contractors doing repairs, installs, climbing poles, or splicing in manholes, working the central hub offices. All of this really only costs 3% of the total revenue?

I don't think the questioning of profits is without merit, in fact, we all know they're making too much money, but way more money is being made on mobile subscribers than any landline services, we're all getting screwed both ways, but i think mobile network costs are even more outrageous.

 

 

- It's common knowledge that established incumbent (ILEC) networks have large profit margins. Once they had all the copper laid and connection centrals setup, yearly investments for upkeep are minimal. 

- Many of these giant providers could do a lot better if they spent more of their earnings towards infrastructure, but they have board of directors that focus on company stock value.

 

- Providing consumers with 1Gbit connections at low cost does not equal better quarterly results when those people have little choice but to go with one of two or three providers in the first place, monopoly blahblah.

 

Right now copper is being phased out in favor of much cheaper fiber, and services are going more and more into the cloud era and VoIP, but I don't see these giant providers making a 180 on all of their practices and slow infrastructure upgrades. I personally think the answer is in municipal community built fiber networks. We're seeing more and more of them, besides google fiber, providing gigabit lines for cheap to the whole community, with no dependency on local providers.


 

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The cost per customer at 3% seems unrealistic. Does that really encompass thousands of salaries for call center job positions? No matter how horrid your provider's service might be, they are essential to sales, repair service, and encompass more than just call agents.

 

 

 

It wouldn't surprise me if they had 1 person for every 2-3000 customers,  How often does anyone contact customer service for anything, once at the start, maybe a few issues in the middle and then moving out or disconnect. Probably once or twice a year on average.   

Grammar and spelling is not indicative of intelligence/knowledge.  Not having the same opinion does not always mean lack of understanding.  

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The cost per customer at 3% seems unrealistic.

 

 

The cost per revenue for highspeed data isn't the only cost incurred by TWC to provide that service, it excludes indirect expenses such as depreciation and SG&A. The depreciation expense for 2013 is $3.16 billion, and I wouldn't be surprised if a significant portion of that is related to highspeed data due to the infrastructure required to provide that service. The 97% margin here is not profit margin, but rather gross margin or contribution margin.

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