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TWC Mothballs New Metering Trials

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
4/16/2009
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Succumbing to consumer and political pressure, Time Warner Cable Inc. (NYSE: TWC) said it would sack plans to launch trials of a controversial consumption-based Internet billing system in four additional markets later this year. (See TWC Puts New Meter Trials on Hold .)

The MSO, which already has such a trial underway in Beaumont, Texas, unleashed a firestorm of criticism when it revealed plans to kick off similar trials in Rochester, N.Y.; Greensboro, N.C.; and San Antonio and Austin, Texas. Following an initial grace period, and depending on the tier, TWC planned to charge $1 to $2 for every gigabyte customers consumed above a fixed cap. Overage fees would not exceed $75 in any given month, however. (See TWC Dons Larger Consumption Caps and NCTA, Free Press Bicker Over Metering.)

Congressman Eric Massa (D-NY) has gone so far as threatening to draft legislation to stop TWC's plan. (See Congressman Mad About TWC's Internet Meter .)

Today, Sen. Charles Schumer (D-NY) was on hand in Rochester to join a protest against TWC's metering plans there.

TWC has argued that a metered model is becoming necessary to ensure that network costs don’t get out of hand as Internet usage continues to surge. Critics have maintained that operators like TWC are eager to enlist consumption-based Internet billing in order to stifle "over-the-top" Web TV services and to maintain Internet service subscription margins.

Although there were indications that TWC would stick to its guns and proceed with a new set of trials, the backlash evidently proved too much.

Time Warner Cable said it would suspend those efforts "while the customer education process continues."

"It is clear from the public response over the last two weeks that there is a great deal of misunderstanding about our plans to roll out additional tests on consumption based billing," said TWC CEO Glenn Britt, in a prepared statement. "As a result, we will not proceed with implementation of additional tests until further consultation with our customers and other interested parties, ensuring that community needs are being met."

Although TWC is putting new trials on hold, it's not scrapping the concept. Britt said the MSO continues to believe that consumption-based billing "may be the best pricing plan for consumers."

Also, the existing Internet metering test in Beaumont will continue on, a Time Warner Cable spokesman confirmed via email.

The MSO also confirmed that it's working on tools to help customers track their bandwidth consumption, and will make those available "as soon as possible."

— Jeff Baumgartner, Site Editor, Cable Digital News

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Fiber Lord
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Fiber Lord,
User Rank: Light Beer
12/5/2012 | 4:06:57 PM
re: TWC Mothballs New Metering Trials


What a joke from these guys. let's offer a la carte TV channels or meter our viewing so those who watch lots of TV pay more. Why only if you use the Internet will they go to metering. These guys are up to no good. They are trying to figure out the best way to shorn the sheep.

optodoofus
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optodoofus,
User Rank: Light Beer
12/5/2012 | 4:06:54 PM
re: TWC Mothballs New Metering Trials


Internet usage and TV watching are not the same thing.  The amount of TV you watch does not have any impact on the cable TV infrastructure.  They do not need to add more capacity to the network whether you watch a little TV or sit on the coach flipping through channels all day.  And the amount of TV you watch does not impact the amount available to your neighbors.


Now compare this to Internet use. If everyone consumes a lot, it causes congetion, which requires increassed capacity (or else it requires the subs to put up woth poor performance).  And the more traffic you consume, the less is available for your neighbors.


You don't get flat-rate electricity.  You don't get flat-rate water.  Information is a utility just like these. So why shouldn't you pay for what you use?  If we don't move to some sort of metered usage, then it is just a matter of time before prices go up.  It may take some backruptcies to thin out the competition herd, but the money coming in must eventually balance with the expenses to maintain the network.


I don't consume large amounts of Internet bandwidth, so I should I pay more to subsidize someone who does?


optodoofus

falsecut
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falsecut,
User Rank: Light Beer
12/5/2012 | 4:06:53 PM
re: TWC Mothballs New Metering Trials


Optodoofus, I have a couple of clarification questions to ask you: "It may take some backruptcies to thin out the competition herd, but the money coming in must eventually balance with the expenses to maintain the network."  What competition were you thinking of exactly?  In many (most) cases, competition is limited to very few choices, if any.  In my own, it's cable or dial up for my broadband.  Or were you thinking of something else?


"I don't consume large amounts of Internet bandwidth, so I should I pay more to subsidize someone who does?"  What's the base level, in your opinion, of the cost of providing service?  If I never use a drop of water, a watt of electricity or a therm of gas, I still pay some costs for distribution and so forth.  What do you think that base rate is for broadband?  Isn't knowing that the only way to find out how much you are subsidizing the larger consumes?

Fiber Lord
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Fiber Lord,
User Rank: Light Beer
12/5/2012 | 4:06:53 PM
re: TWC Mothballs New Metering Trials


True, TV viewing is not the same but there are some options left unmentioned by you. If they are to meter Internet usage, why not pay by the mile the data travels. Long distance and local phone service has been around for 80 years, at least. So if I download from the server farm in town, the cost should be a lot less according to your analogy, than if I download from New Zealand, where I would be clogging up undersea cables.


Why not a la carte channels choices? If I do not want to watch a channel why is it included in the package that I must subscribe to just to get the channels I want. Similarly, if I only wish to visit web sites in my town, why can I not get a break? Also, if I only want to use some applications on my broadband link, such as e-mail, why can I not get a break. In fact, why do they have a minimum monthly broadband service charge. If metering is such a great idea, and if the Internet is so clogged, why not let light users of the service pay very little in monthly charges and stick it to the heavy users? We know that TWC realizes that the vast majority of users would see a decrease in their Cable TV bills or their Internet broadband bills if they truly allowed a la carte, or true usage billing. That is why they want neither.


Another philosophical problem for me of metering is the lack of quality of service. I know quality of service is often confused with class of service, so to avoid confusion I mean quality of service as a measure of the satisfaction that a user has with the service, not some flags set in the data packets.


The lack of quality of service means that "all you can eat" billing is the most acceptable. If I were billed by the minute I were online, then the service provider's congestion would require me to be online longer. In that case it would be in the interest of the service provider to not improve the network and reduce the congestion. If I were billed by the minute, then every time there is congestion, TCP crankback kicks in and discards my data so that I again would pay for the service provider not maintaining the network.


Until quality of service, like that we are used to from our public telephone network, (although it has gotten much worse with cell phones), is the norm on our public computer network, metering is unacceptable.

dhancock
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dhancock,
User Rank: Light Beer
12/5/2012 | 4:06:52 PM
re: TWC Mothballs New Metering Trials


optodoofus, you said:


"The amount of TV you watch does not have any impact on the cable TV infrastructure.  They do not need to add more capacity to the network whether you watch a little TV or sit on the coach flipping through channels all day.  And the amount of TV you watch does not impact the amount available to your neighbors." 


That's not so true these days:  Many cable systems (TW was a leader here) use Switched Digital Video to distribute video (particularly HD video).  The more different programs are watched, the greater the strain on a system.  Ultimately the cable company has to split the nodes to keep up with demand - that means capital expansion, the very same argument that TW has used to justify Consumption Based billing.


optodoofus
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optodoofus,
User Rank: Light Beer
12/5/2012 | 4:06:48 PM
re: TWC Mothballs New Metering Trials


Fiber Lord wrote: Why not a la carte channels choices?


An excellent question.  I would love to have a la carte channel selection.  Most of the channels in my bundle are garbage and I would gladly rid myself of the clutter and expense of receiving them.  Cable companies know this and will fight tooth and nail to avoid a la carte.  Eventually, the ability to pick and choose video over teh Web will free us from the tyranny of bundles (I hope)


 


optodoofus


Menotomy
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Menotomy,
User Rank: Light Beer
12/5/2012 | 4:06:48 PM
re: TWC Mothballs New Metering Trials


@optodoofus


"You don't get flat-rate electricity.  You don't get flat-rate water.  Information is a utility just like these."


I have to disagree with this. You only get one kind of electricty and one kind of water. There isn't just one kind of information: there is text like Wikipedia (HTTP), downloadable book files (FTP or p2p), streaming videos from websites (MMS, HTTP, etc.). On top of that, there is also entertainment in so many forms. Not to mention, we aren't always requesting this information, sometimes it's sent to us in the form of advertisements, which now include embedded video. Billing information like water would be as if the water company started charging us a little extra because Aquafina decided to send us a gallon sized trial of their water instead of normal tap water.


"I don't consume large amounts of Internet bandwidth, so I should I pay more to subsidize someone who does?"


Keep in mind, you're not just paying for the ISP to send bits in your direction, you're also paying your share for the company to build and maintain the infrastructure to get those bits to your house. That includes the copper or fiber in your yard, down the street to a splitter box, back to a CO with switches, routers, DSLAMs, cable equipment, the electricty to keep them running, the employees to install, maintain and design the newtork, etc. Then there's the backbone equipment, or the charges the ISP has to pay to access this. A lot of these costs are the same whether you're sending emails or watching TV over the Internet. While a high-bandwidth user may be driving up these costs, so are the companies that want to push that high-bandwidth content across the web. This is where consumer caps make more sense. Everyone puts in their share into the maintenance, CapEx and OpEx of the network, then the power users either have to pay more, or they get temporarily (or even permanently) removed from the network. In other scenarios they may get a lower share of the bandwidth during the congestion.


I also wonder if a per-byte pricing model would hurt the ISP, because people who aren't using their full monthly bandwidth wouldn't be sending as much money to the company, and I believe the majority of the consumers fit into this category. That's less money to maintain the network and send that high-bandwidth content to whoever needs it. It could also spill over into the TV network. Haven't put much thought into this last paragraph, but it seems like a possible scenario.


paolo.franzoi
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paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 4:06:47 PM
re: TWC Mothballs New Metering Trials


 


A la carte viewing is not a problem with the cable companies but the content companies.  Disney says that if you want EPSN you must take ESPN2, ESPNU, ESPN Classic and ESPN news.  Disney will not allow them to sell the content any other way.


seven


 

Menotomy
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Menotomy,
User Rank: Light Beer
12/5/2012 | 4:06:47 PM
re: TWC Mothballs New Metering Trials


@brookseven


This depends on the provider though, right? Even though Disney wants you to have everything, Comcast (then TWC) only provided ESPN and ESPN2. Cox (in Boston) provided ESPN, ESPN2, and ESPNEWS. FiOS (in D.C. area) provides all of those - plus ESPN360.com via the web. So if we go to a la carte, then it's all or nothing?

Menotomy
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Menotomy,
User Rank: Light Beer
12/5/2012 | 4:06:47 PM
re: TWC Mothballs New Metering Trials


I pay for a 15Mb/s connection, and I also pay for MLB.tv which is a service that plays baseball games live through a streaming media connection. Let's say they offer this at 2Mb/s (they used to offer 1.2Mb/s, but their new service doesn't specify speed, but seems to be a higher quality).


Both of us are using a fraction of the bandwidth we are paying for. Doing very fuzzy math, that's well over 50GB per month if I watch every game, not including any other surfing. Now, neither of us appear to be stressing the network. Web browsing may rack up 10GB. So why should I pay 5x more if I'm not stressing the network?


Say we do go to the per-byte model. I'm sure the MLB won't be very happy that not as many people want to buy their sevice because their bill went up much higher, while they're paying lots of money to access the Internet to provide their high-bandwidth service. I guess they can just cut back on the amount of bandwidth they send out, while providing a lower quality experience for the user.


So far the innovation of the Internet has been fueled by the ability to provide these higher-bandwidth services. With the per-byte model, will we see more services like Hulu.com, YouTube, MLB.tv, etc?

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