The FCC says that cable company Comcast (NASDAQ: CMCSA) is slowing service to some of its customers, especially those who use a great deal of bandwidth on video downloads and peer-to-peer software applications. Comcast says it is simply managing its network so that it does not get overloaded and hurt service to all customers.

The debate came to a head yesterday. According to The Wall Street Journal (subscription required), "Federal Communications Commission Chairman Kevin Martin warned cable giant Comcast that the government is `ready, willing and able' to stop companies from improperly hobbling Internet traffic."

The FCC position is a little out of touch with reality. Telecom companies and cable firms do not have an unlimited amount of bandwidth to offer each and every home. At some point, the pipes do become overloaded. The cynical view is that these large companies want to charge heavy users more money for taking up more bandwidth. What is probably more accurate is that, unless there is some governor of internet use, the system will slow for everyone.

A cup can only hold so much water.

Douglas A. McIntyre is an editor at 247wallst.com.

FCC warns Comcast (CMCSA) on internet speeds originally appeared on BloggingStocks on Tue, 26 Feb 2008 10:10:00 EST. Please see our terms for use of feeds.