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Here come the broadband user fees
The newly-spun off Time Warner Cable says it'll introduce tiered pricing for internet users in several markets. That means the more YouTube videos you upload and Hulu TV shows you download, the more you're gonna pay.
Here's the TWC plan as laid out by Businessweek:
Customers will be charged from $29.95 to $54.90 a month, based on data consumption and desired connection speed. Customers will be charged $1 for each gigabyte (GB) over their plan's cap. 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.
Time-Warner says it's trying to alleviate the "strain" on broadband because more people are downloading movies and TV shows. So far, a small percentage of people are bandwidth hogs, but that percentage is likely to grow. The company says in a trial run in Beaumont, Texas, only about 14% of customers exceeded their cap and had to pay additional fees that averaged $19 a month.
Perhaps TWC is just jumping the gun on something that's inevitable, but there has to be a significant risk of losing customers with so much broadband competition that charges a flat rate. Not that TWC has a history of making its customers warm and fuzzy. There's also the argument that this kind of pricing discourages innovation and experimenting in the fast-growing video segment of the web.
What do you think?
In other news, Time-Warner, the parent company, just spun off TWC in an effort to be smaller, more focused company.
Time-Warner is still huge, but it's no longer the biggest US media company by revenue. That spot now belongs to Disney, with Rupert Murdoch's News Corp number two, as Bloomberg points out.
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The caps may keep the base price from increasing as fast. With flat pricing the customers that are low bandwidth users are subsidizing the 14% or heavy users. The caps put a price on usage just like high gas prices made people think about their driving habits. The Netflix and Hulus of the world were getting a free ride. Now the customer that wants to download a movie every night will have to pay the ISP more. It will also cut out some wasted usage. I saw a post where a guy streamed radio 24/7 even when he was not home. If his ISP goes to caps he will have to decide to pay if that puts him over or turn the stream off when he is not using it. I was watching a video where a major ISP executive said broadband costs were increasing 50% per year while revenue was increasing 3%. In the past the content was not there to download and the end user equipment could not download the amount even a cheap computer can today.
yes, but charging extra for heavy users doesn't necessarily help the rest of their unless they re-invest that money into more bandwidth or it gets people to change services.
Bandwidth is still increasing all the time, so there will be alternatives. WiMax is going to be widely available soon, for example.
TW probably WANTS to drive their heavy users to other systems.
All this while in my own area, Broadband is not and will likely not be available for some time. In fact, even over dial-up my best speed is 24k.
Verizon is the only real cell company that gets a signal but their ridiculously overpriced wireless service isn't available.
To boot, verizon doesn't even offer isdn lines to consumers here.
Now, to hear about these limit caps on data just further points out the failures of unlimited capitalism. People just trying to maximize profits, without providing the services to match.
It would be different if they were offering cutting edge technology, but compared to many other countries, the US is far, far behind in the internet scene.
"...there has to be a significant risk of losing customers with so much broadband competition that charges a flat rate."
I don't know where you live, but in my city (Madison, WI) we have two broadband operators, and they both charge the same amount for their basic service ($45/mo. plus taxes and fees for <1Mbps). Both have a reputation for lousy customer service and inconsistent connectivity, and since they are both exactly the same, there is no competition. I've been waiting for three years for new blood, or a price war, and I think I'll be waiting until I move.
Okay, forget what I said above. This has nothing to do with bandwidth.
I think Time Warner is doing this to take a swipe at competition from Satellite companies and Neflix, who are now letting customers use their broadband connections to supplement their media usage.
Customers of Dish and Netflix and the like can now plug DVRs into broadband like the kind supplied by Time Warner to watch movies and "On-Demand TV."
It's a business move. Time Warner could probably care less if your internet gets congested.
Aside from Video and Gaming users, downloading emails with pictures or video, and resending them will use up that data cap. Also tele-commuters and SOHO will not like that change.
Cables companies need to watch what they do, because phone companies are trying to make up for the loss in land lines to wireless and DSL is where they expect to make up the difference. Also wireless cell phone providers are trying to get into that market with all you can use wireless internet.
"The company says in a trial run in Beaumont, Texas, only about 14% of customers exceeded their cap and had to pay additional fees that averaged $19 a month."
It's not clear whether the 86% of customers that stayed below their cap did so with their typical (pre-cap) usage patterns, or whether their behavior was altered by the fact that they had to watch their consumption.
I am a fairly high consumer of internet content, so I understand that my atypical behavior should come at some cost. If my choices are between network throttling and usage caps, then I would easily choose the latter. The only problem is that if they are charging $50+ for a mere 40 GB cap (as you pointed out, streaming HD content can be 8 GB) it seems that the end cost could be extremely prohibitive for me.
Has anyone talked to companies like Dish and Netflix about this? They're offering movie downloads via the internet these days.
Come to think of it, this is starting to sound an awful lot like a stealth move by Time Warner to eat into the competition. It may have nothing to do with bandwidth.
Since when did a big company like TW ever care if your internet slowed down between 7PM and 10 PM?
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