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.)
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."
As I understand it, content providers try to bundle as much as they can and will fight any a la carte program tooth and nail.
The cable companies sometimes try to put the brakes on the content providers but so long as they can pass the cost on without too much harm I think that's what they do. There was a big fight in Chicago over the Big 10 network who wanted it carried over the regular tier via Comcast (and wanted iirc $1.10 per sub for the privilege) while Comcast wanted to put it in a premium or sports tier where you would have to subscribe to it. Whatever those subscription take rates were going to be, it was going to be for a lot less money to the Big 10 than if they made everyone get it. Eventually it got added to Channel 64, and you don't have to subscribe to anything to get it. I don't know what the financial terms were but I'm sure I'm paying for it somewhere. I'd LOVE a la carte programming.
The thing I like about metering is that hypothetically it could create an incentive for the providers to increase capacity. If the provider earns a penny to transport something they'll have an incentive to move things faster to earn more pennies. Take away that incentive and we may end up with the tragedy of the commons.
The thing for politicians to do is not to pander to misguided internet ideologes who have been born into everything being free but rather to monitor the price per bit and make sure it is following technology improvements. Address the primary issue which is investment into infrastructures while making sure the prices charged are legitimate and not due to market power.
Network costs are mostly fixed, and are just a portion of the total cost.
If you introduce metering, you complicate the product. Metering drives cost in OSS/IT, customer service and sales/marketing. Thus, metering will increase overall cost, and the savings in networks costs plus increased revenue must be larger. That's why metering is very uncommon, globally, for fixed broadband but the norm for wireless broadband. Political/ethical arguments are probably less important.
That would be if Disney would even allow such a package to be offered. Remember they also own Disney channel and ABC. The funny thing is I see all these DPI companies saying how they are going to get the content companies to pay for the distribution of web content from people like Disney. Of course an MSOs single biggest expense is the money to allow them to show the channels they have.
seven
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?
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.
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?
You're right: there are two kinds. Ones and zeroes. Not to be too glib, but the cable company doesn't care what you are using the ones and zeroes for.
it's a fair point that there is not a lot of transparency on the bandwidth required for browsing since you don't always know how much info will come back when you click on a link. But do you believe that surfing the Web is a big consumer of Internet bandwidth? When you click on YouTube, you know you're accessing a video stream. When you downlaod music, you know you're pulling big files. When you upload files to an online backup server, you know that you are pushing a lot of data. I think these are the applications where people rack up the big totals. I surf the Web all the time, as does the rest of my family. And we are definitely not stressing our Internet connection.
> 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 guess I am lucky. I can choose between Cablevision and Verizon (DSL or FIOS). Competition from Verizon keeps the cable cos honest, I think, and I receive good service and good rates. But if one of those companies were to go away or to raise their prices significantly to cover higher infrastructure costs, the other one would match them in a heart beat.
> 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?
You are correct that there is a baseline cost. I really have no clue what it might be, but I am certain that the providers could figure it out. The phone company knows how to determine the cost of basic POTS service without any add-on services or long distance calling plans. I am sure they could figure out thebaseline broadband cost if they wanted to.
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)
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