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TWC to Test Broadband Toll Booth

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
1/17/2008
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A pilot project set for later this year by the second-largest U.S. cable MSO offers further evidence that the days of an "all-you-can-eat" high-speed Internet service are heading toward extinction.

DSL Reports got its hands on an internal memo outlining plans by Time Warner Cable Inc. (NYSE: TWC) to try out a usage-based billing model for its Road Runner service in Beaumont, Texas, in the first half of the year.

A Time Warner spokesman confirmed that such a project is underway but passed Cable Digital News along to another official who did not return a call prior to publication of this story.

Between peer-to-peer downloads and the increased quantity and quality of streaming TV shows and movies, cable broadband networks can be taxed. Today, a small fraction of customers are the source of this "problem," but that pool of heavy users will certainly grow as more customers tap the Web as source for short- and long-form video, including massive files in bandwidth-gobbling hi-def format.

According to the memo cited by DSL Reports, the consumption-based model will attempt to generate additional revenue from "5 percent of subscribers who utilize over half of the total network bandwidth."

The trial, which apparently will put some new customers on the metered billing plan, could turn into a national offering if successful. The memo further indicates that customers who are part of the trial will be able to track consumption via the Web and, if needed, upgrade to a higher tier.

That some MSOs are considering consumption-based services is not a surprise. Rogers Communications Inc. (NYSE: RG; Toronto: RCI) of Canada is already applying a cap of about 90 gigabytes to its 18-Mbit/s speed tier.

Others have already argued that the current, flat-rate HSD model is not sustainable as Internet traffic grows 50 percent a year and the consumption of video over the Internet goes through the roof. That effect will become even more pronounced should services such as Hulu, Joost , the reshaped Apple Inc. (Nasdaq: AAPL) TV, and the new "unlimited" movie offering from Netflix Inc. (Nasdaq: NFLX) gain in popularity. (See Apple TV: A New Channel for Movies.)

"Eventually, we will go to a usage-based solution," predicted Marwan Fawaz, CTO of Charter Communications Inc. , last month at the CableNEXT conference in Santa Clara.

But cable must also be wary of the consequences that could be wrought by customers, regulators, and consumer interest groups.

Comcast Corp. (Nasdaq: CMCSA, CMCSK) has faced heavy criticism over "invisible" byte caps and the throttling of P2P applications. The latter has resulted in a Federal Communications Commission (FCC) probe into the matter. (See FCC Probes Comcast, FCC Eyes Comcast's P2P Policies, and A Tip of the Broadband Cap.)

And even Time Warner Cable's coming trial has gained the attention of pressure groups.

In a statement issued Thursday afternoon, Ben Scott, policy director of Free Press, called TWC's metered approach "better" than impacting apps such as BitTorrent. "At least customers will know what they're getting into," he said.

"But," Scott warns, "metered prices may chill innovation in cutting-edge applications because consumers will have a disincentive to use them."

Scott suggests that a move toward metered pricing for broadband represents a "symptom of the deeper problems in our communications infrastructure."

Most MSOs have not outlined their deployment plans for Docsis 3.0, a new platform that promises shared speeds in excess of 100 Mbit/s, but Comcast has said it plans to have a Docsis 3.0 infrastructure in place in 20 percent of its footprint by year's end. Its PowerBoost system aims to provide faster bursts when there's latent capacity on the network. (See Comcast Closes In on 100 Mbit/s.)

— Jeff Baumgartner, Site Editor, Cable Digital News

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OldPOTS
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OldPOTS,
User Rank: Light Beer
12/5/2012 | 3:49:46 PM
re: TWC to Test Broadband Toll Booth
You will pay for more! Especially all those that believe BW is cheap.

I and many others have over the last few years posted reasonable ways to charge for this. The Cellphone model might be most applicable.

OP

PS VBNs soon
roybean
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roybean,
User Rank: Light Beer
12/5/2012 | 3:49:45 PM
re: TWC to Test Broadband Toll Booth
Go Fios.

roybean
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roybean,
User Rank: Light Beer
12/5/2012 | 3:49:45 PM
re: TWC to Test Broadband Toll Booth
That Comcast would go the other way.

For users that have very little usage, lower the rates ?

If an email only person, few web page, usage, that person should pay 50%-75% less.
vlui
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vlui,
User Rank: Light Beer
12/5/2012 | 3:49:45 PM
re: TWC to Test Broadband Toll Booth
So the carriers cannot come up with innovative profitable new services, and think they can squeeze more revenue out of the consumers charging by the bits. Most of the 95% of those consumers will be discouraged by this and watch fewer Youtube junk videos, download fewer porn movies (which is a LARGE % of videos consumption online), check their facebook messages fewer times each day (or just do it at work?!), and maybe twitter themselves every 5 mins instead of every min...

Perhaps it will not change the bahavior of those 5%, but is this really a profitable strategy, at all? The next thing you know is the carriers will have to lower $ per bits so low that it is no different than the cell phone plan with a flat rate 1000 mins that you can't use up. And it goes back to where we were yesterday (the all-u-can-eat plan). What is the point of all this? (Ok, i guess they capture some of the revenues from the porn industry)

Look at the usage behavior of the 15-25 age group. The current and next generation users are about videos, P2P, constant connectivity, etc. If the carriers make any wrong moves now, it is clearly detrimental to innovations.
Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 3:49:45 PM
re: TWC to Test Broadband Toll Booth
Even if it moves to the cell phone-like usage model, it will be intersting to see how consumers react to it because they've been paying a flat rate for so long. Probably no big deal for people who don't eat up the majority of the network resources, but there could be revolt among the power users.
OldPOTS
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OldPOTS,
User Rank: Light Beer
12/5/2012 | 3:49:43 PM
re: TWC to Test Broadband Toll Booth
That is true if you can get B-PON FIOS (like my neighborhood), but VZ is moving to new installs with IP FIOS that have the same type congestion points as Comcast & TWC.

OP
Jeff Baumgartner
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50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 3:49:41 PM
re: TWC to Test Broadband Toll Booth
I'll have to check, but I thought they offer a low-end, lite tier of some sort for people who don't need fast speeds or don't consumer much capacity... maybe not promoted openly but used as a save tactic.
rjs
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rjs,
User Rank: Light Beer
12/5/2012 | 3:49:35 PM
re: TWC to Test Broadband Toll Booth
A 100Kbps line operating 24hrs a day translates into 1.08GB of data. For a month that means about 30GB of data.

Think about it ... (FCC listen, FTA, Politicians, listen!) that means that a quota of 30GB per month translates into a 100Kbps line aggregate throughput!!!! They call this
BROADBAND ..... TIME WARNER should be ashamed of pulling such a con on the masses who, unfortunately cannot do arithmetic.


Just for reference, your good old telephone line since 1960's can provide a minimum of 64kbps.
This is a clear case of a monopoly trying to squeeze the stupid arithmetically challenged consumers.

By definition of Broadband, namely, 1Mbps of aggregate rate which is just 1% of 100Mbps Fast Ethernet peak rate, the data allocation should be a minimal of 300GB or more per month.
If Time Warner puts a quota less than this, they should be sued outright for misrepresentation since they are NOT providing broadband.

-RJS


Brad Green
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50%
Brad Green,
User Rank: Light Beer
12/5/2012 | 3:49:35 PM
re: TWC to Test Broadband Toll Booth
Thats an interesting way to think about it. Most people dont use 30GB a month, only speed is important, since we arent online all the time. Does the actual official definition of broadband require that the service provide sustained 1mbps?
rjs
50%
50%
rjs,
User Rank: Light Beer
12/5/2012 | 3:49:34 PM
re: TWC to Test Broadband Toll Booth
There is no standard agreed upon definition of
broadband. Maybe someone out there knows if there is anything defined by FCC.

If one is charging by bit, then the numbers are
as mentioned. If one is charging by peak capacity and not aggregate throughput, then it should be so defined. Apples to apples comparison is what is required to avoid misrepresentation and confusion.

One thing is quite clear though ... if you want to download media, you are better off having two pots lines and running them 24 hrs to get your download.

-RJS

"Arithmetic is not an opinion ...." as the saying goes.
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