Time Warner Cable (TWC) has been testing a new billing concept based on bandwidth use for their Road Runner (RR) internet service in the city of Beaumont, Texas. In the last couple of days Time Warner Cable said they’ve completed their testing and are ready to move forward with a pay-for-bandwidth concept. They’ll have several plans, the biggest one (more expensive than current unlimited use) will allow you to use 40 gigs of bandwidth — after which you would pay $1 per gigabyte in overage charges. A Time Warner customer service rep today told me they are doing it to save people money – and I think that’s the most absurd lie I’ve ever heard.
Why Are They Doing This?
There are different ideas, but these are the two most popular (and likely).
1) They’re doing it for the money. We’re in a world of broadband and they are quite aware that the last couple of generations (and likely all to come after) will be nearly literally connected to their computing devices at all times. If they begin implementation now, it gives them a chance to get younger generations used to the idea of pay-for-use so that by the time the next generation is growing up, it seems quite normal.
We use the internet to play games (World of Warcraft bandwidth anyone?), blog, twitter, instant message, email … everything. Think about YouTube and other video broadcasting we watch? Hulu anyone? Ah, but that gets us into #2.
2) They’re doing it to reduce the competition of the internet. Oh sure, Time Warner separated it’s internet service by creating a spinoff branch called Time Warner Cable Inc., but do you really think there’s still no connected interest between TWC Inc. and Time Warner Inc.?
Time Warner Inc. owns 2 of the major avenues hit hardest by the internet: Print and Television media. In print, they run magazines like Time, Life, Money, and Essence. For television they’re not only the ones behind shows like ‘The Closer,’ they also own HBO and Warner Brothers.
Of course they’ve got their foray into Internet, America Online (AOL), which was such a headache back in the day and now has become only relevant because of their instant messaging service: AIM. Overall, Time Warner is like many large corporations these days — struggling with too many old concepts to successfully market itself in the current era of internet-by-preference.
So, what’s possibility #2 people are accusing Time Warner Inc. of? That Time Warner wants to make using and accessing the Internet more expensive so that people during economic downtime will choose a less expensive path of watching their TV and reading their magazines. This will target their online video competition because online video uses so much bandwidth.
How Much Is This Going To Cost?
To give you an idea of how much bandwidth online video uses, I’m going to pull a quote from the Business Week article on Time Warner’s new tiered pricing:
Time Warner Cable offers four cap levels of 5, 10, 20, and 40 GB. A download of a high-definition movie typically eats up about 8 GB. A recent report from Sanford C. Bernstein suggests that a family on the 40 GB plan that streams 7.25 hours of online video a week (a fraction of the 60 hours Americans spend watching TV in a week) could end up spending $200 per month on broadband usage fees. And that’s just for video viewing, before factoring in such Internet activities as music downloads and photo sharing.
Can’t I Just Switch Providers?
So, a lot of the people who commented on the above article from Business Week said they’ll just drop Time Warner’s service and switch to AT&T. People, don’t forget that AT&T has been trying to get permission to restrict and own internet access control on their networks so that they can have the right to block access to any site they want that goes through their network (for instance, say.. their competitors). So should it be any surprise that AT&T is ALSO testing their own similar concept in Beaumont.
Which really leads me to wonder about that city and why it’s drawing all this testing. I was on the phone with a friend ranting about this earlier, and wondering why these big companies are both choosing to do testing in that city. Wouldn’t that, by the mere nature of scientific research, skew the results? Eh, in the long run, do I really think either company cares so long as they have justification for what they’ve already decided to do? Not so much. I was telling my friend that doing something like this in a smaller city like Beaumont isn’t really a good indicator (yes, I consider 100,000 people a small city – I live in one of the top 10 cities in the country – plus I also live in Texas and am allowed to pick on other Texas cities because of it.). This all led to an interesting conversation.
What About Free WiFi?
I said something to the effect of “A test here would’ve been more interesting. We have WiFi all over the place, businesses completely networked as complexes, and more coming online all the time.”
At which point, he brought up a really good question.
“What, I wonder, will happen to all the places that offer WiFi to their customers. You know, restaurants, coffee shops, book stores, hotels and such. I have a hard time seeing any business just willing to shell out tens of thousands of dollars in overage just to keep offering free WiFi.”
A really good point.
I think the obvious answer is: They won’t. Why would any business decide to just drop that kind of money to keep free WiFi for their customers? It would be a ridiculous choice to make.
Could This Happen To Mobile?
Of course, he was on his iPhone during this conversation (obviously with service through AT&T, and on an unlimited plan) and that lead into the discussion of how far this would go. Time Warner plans to go to pay-for-use. AT&T is doing the same testing, but as soon as Time Warner starts rolling in the money the overages bring them, you know the other providers are going to jump on board with this new ‘pricing model’ and leave us with no options. I have a hard time seeing that, with the booming growth of mobile, that companies would not do the same exact things for their mobile users. In fact, they may even have an easier road with mobile people who have been used to the concept of overages and additional use fees for a long time.
What About This Rumor of TW’s Bad Hardware?
There’s been some ideas passed around that Time Warner is doing this based on some infrastructure problems and not being able to handle bandwidth. Well, first off – if that were the case, then they simply need to improve. Do what local governments do when they need to rebuild roads or schools – a short term tax. How bout.. a few extra bucks on the bill each month for one year. They’ve got around 15 million customers, that should add up pretty fast. Aside from that, if their hardware is bad, how were they able to just recently roll out the new and fastest high speed internet available? But, in the long run, it’s just nonsensical for them to say on one hand that only a small portion of their users consume the most bandwidth, and then say this is somehow a more balanced way of handling their load. Really? I mean, I’m a programmer, but let’s pretend I don’t know a thing about math beyond the basics.
Here’s an example:
So let’s take their study that said 17% of users in Beaumont had overage charges. Why not (it’s a huge percent already) just round it up to 20% to make it simple. Now let’s say 1 out of every 5 people uses 250 gigs of bandwidth per month (just a random number that’s not possibly related to the fact that it’s the current bandwidth cap for Comcast customers). Let’s say the other 4 each use 20 gigs a month. Between them all, that’s 330 gigs per month of use. Each pays $44.95 a month for a total of $224.75 among the 5 of them (before a ton of fees, but who’s counting?). So, the new plan for 20 gigs is supposed to be in the same price range, so let’s just pretend for now that it’s the same. So in our scenario, all these customers have the 20 gig plan except.. let’s say the one who uses 250 gigs gets the 40 gig plan instead to try and save money (cost at $54.90). The Time Warner ‘infrastructure’ is still transmitting 330 gigs among all 5 customers, but now.. they’re making: 179.80 off 4 customers, and $264.90 off one customer for a total of $444.70.
Gee. So the same exact amount of data is getting processed on their ‘infrastructure’ and yet they are now making $444.70 instead of $224.75. Go figure. Apparently it’s good for business to have crappy hardware.
The Big Issues
To summarize my dislike of the topic, I’ll say the following:
1. It is unethical to limit access to information on the Internet based on an ability to pay. We can pay for access, but don’t limit how much information we can learn.
2. Limiting access to competitors only shows a fear of what people will find when they see them. Improve and evolve your own service instead.
3. It will cause a waterfall effect throughout the industry and limit or eliminate alternative options.
4. It will stifle those who use the most bandwidth – those who develop and work in technology oriented fields creating all the new and amazing things out there these companies are so afraid of.
5. It will hinder free web applications and services that provide something just for the sake of giving something free to the Internet (Twitter is, for example, still not monetized).
6. It will cause an eventual hike in hosting bandwidth costs for websites in general.
7. It will reduce the ability for people in the US to learn, use, and create on the web. Do we really need to be -less- competition to other countries than we are already?
What Now?
So.. Mr. President, are you ready to go to bat for all the Internet users that raised you up on their shoulders? Get us some rulings on Net Neutrality to ensure that we do not become corporate victims and keep us able to explore the unlimited information available to us online.
Readers: If you found this as upsetting as I do, check out sites like Stop The Cap, learn about Net Neutrality, as well as read and comment on articles and news sites online. Be active. Let them know you don’t want it. Write to people who can make changes.
~Nicole
Most Americans have lived with the kind of privilege that many people around the world can only dream of. Any time that people perceive that privilege to be questioned or infringed upon, they become upset to an inordinate degree, not realizing that what they have is still far in excess of the bulk of the world’s population.
I live in Australia, and we have always had bandwidth capping. Originally, with dial-up, we were limited by time (similar to buying ‘minutes’ on your cell-phone plan). Now with broadband, we simply pay for the amount of data we use; exactly the model that Time-Warner is proposing. There are a few ‘unlimited’ plans with some ISPs, but they are prohibitively expensive for much of the population.
I don’t disagree that Time-Warner are in this for the money, but we are at the start of a global recession, which could very well continue into a depression; companies need to either raise prices or cut costs to stay afloat, even when they are the size of Time-Warner.
In response to your 7 ‘Big Issues’, you haven’t actually attempted to justify or explain several of them.
1. It is unethical to limit access to information on the Internet based on an ability to pay.
I don’t think this is true. For instance, I do not believe it ‘unethical’ for an ISP to terminate a non-paying customer’s account; this is essentially the issue. Customer cannot/does not pay = company is not obliged to provide them with service.
If you are viewing this from a ‘quantity’ perspective, the principal is still the same. Consider that all utilities – gas, water, electricity – charge per unit used; the fact that America to this point hasn’t had this same model for the internet does not make it fundamentally wrong.
2. Limiting access to competitors only shows a fear of what people will find when they see them
It is misleading to include net neutrality in in an article on bandwidth capping as a core issue. That is to say, Net Neutrality is about information being treated equally, with no domains or data types being given bandwidth preference (they have ‘equal weight’ in the network). Bandwidth capping still treats all data as equal; the only limit here is on exactly how much of this equal-weight data a user is alloted in a given time period.
In fact, the only link drawn in the article is that Time Warner has a public stance on both; hardly grounds for the emphasis placed on it.
3. It will cause a waterfall effect throughout the industry and limit or eliminate alternative options.
Maybe, maybe not. Even if it does, the free market should prevail. There are ISPs in Australia that have 40gb as their highest-usage plan, but there are many more who offer much more usage than that, up to several hundred gigabytes per month. Surely there will be ISPs in America who will want to lure these ‘high-use’ customers by offering them plans with more allocated data.
4. It will stifle those who use the most bandwidth – those who develop and work in technology oriented fields creating all the new and amazing things out there these companies are so afraid of.
Actually, this is pretty much the same as point 5; hindering people who are trying to provide tech services and content.
I’m not sure how to tackle this one; I think its pretty straight forward to say that those who work in Tech-oriented fields are going to use the most bandwidth, but in order to ‘create’ on the web, you don’t actually need a whole heap of downstream bandwidth; you need upstream bandwidth to provide these things to consumers. For those who are doing this on a professional level, most of them will already be using a hosting service anyway. And surely this goes to a fundament of capitalism; if they are making their money via the web, why not make them pay more than the average user for it?
Anyway, I’m bored with trying to tell you that maybe Time-Warner isn’t the only party involved being greedy. Wake up and smell the fact that Americans are still among the most privileged and wealthiest people in the world, but that as the global community grows and the recession really sets in, some of that wealth is going to have to be redistributed, and not all of your privileges will be sustained.
It’s kinda funny to see a post like this seeing as that’s EXACTLY how all broadband connectivity, mobile or otherwise, is charged here in South Africa.
About the best deal I have found is for 10gig which is R500 per month. That is roughly $50. Now it gets ever better because this cost excludes the actual line rental which is about R700 or $70 per month.
So for a 4 meg adsl(the fastest broadband available to us) works out to be $120 for 10 gig. And it’s all due to our wonderful telecoms monopoly.
@Bananafische
1. I never said it was unethical to terminate a non-paying customers account. I said outright that we had no problem paying for access, but that limiting how much access you can have was unethical. For instance, I see it as saying, ‘Well, you can pay a monthly fee for a library card, but if you want to spend more than an hour in here reading your book we’re going to charge you. Or we’ll let you in, but if you want to go to this particular section of really popular books there’s going to be an additional surcharge.’
2. It’s not at all misleading to mention net neutrality. Net Neutrality specifically advocates against caps and restrictions on internet use.
3. For residential customers, there are only 3 large providers in the entire US. Most people in large cities only have access to 2 of the 3 providers. Smaller cities often only have access to 1. 2 of the 3 large providers are planning to institute caps – the 3rd already has.
4.
You assume a technology provider is monetizing and not doing it for free as a service. There are so many sites for information, online web apps, etc.. that are offered for free, that it would be ridiculous to consider them lumped into the same group as a company that monetizes their information.
@Bananafische AND @Kenneth
I’m quite aware that many other places already have metered bandwidth and caps instituted. But I firmly believe that it’s allowed due to conditioning.
People in other countries have been conditioned to think it’s normal to live with caps on their access to information, so they don’t see how we could get upset about this. We have not been conditioned to live with caps on our access, and cannot understand how people would NOT get upset about it.
Businesses and capitalism will only function in the manner that people allow them to get away with things.
Americans were highly upset about the idea of caps, and if you didn’t follow the story further, the level of outrage actually got an immediate response out of Time Warner — they’re backing away from instituting caps, for now at least.
Of course, they’ll try again, it’s too much of a potential money maker to let go entirely. But now that they’ve given in once, people will be ready to rise up again the next time.