Industry Analyst: Internet Metering 'Is Going to Happen'

Craig Moffett, cable and telecom analyst at Sanford C. Bernstein & Company, is back rallying for consumption based billing, dismissing accusations it represents a stealth rate increase.

Guest post by Phillip Dampier of StoptheCap.com

Moffett characterized Time Warner Cable’s negative experience as only a temporary setback. He told The Wall Street Journal: “Look, there’s a real argument for some form of consumption-based billing, and it’s going to happen.”

Moffet said, “Time Warner got the pricing wrong, it got the P.R. wrong, but this is not some kind of stealth price increase. They’ve been clear - they don’t want to discourage the use of the [broadband] product, but they have be able to manage the increased use of bandwidth that goes with Web-based video.”

In the same article, however, Moffett had nothing but praise for attempts to control web video so that only authenticated cable TV subscribers get access, for a price. Bandwidth caps and limits help discourage online video consumption among subscribers concerned about exceeding monthly limits, particularly those set at paltry levels that virtually assure video watchers exceed them.

One topic addressed at the Bernstein conference was “TV Everywhere,” the initiative spearheaded by Time Warner Cable to make sure that online viewing of cable programs is only available to consumers who subscribe to video service provided by a cable, satellite or telephone company.

Cable operators say that if they’re going to pay millions of dollars in fees to film and TV studios in exchange for the right to air their programs, those studios shouldn’t turn around and offer the same shows over the Web for free.

Moffett says that while there “are a lot of specifics” to be worked out, including how to authenticate paid video subscribers on the Web without hassle, “TV Everywhere” is a “very positive step for operators and programmers, because it’s at least some attempt at a strategic alignment, rather than for each side to go it alone, which is what they’ve done traditionally.”

The broader scope of the Journal article was to measure Wall Street’s reaction to cable stocks in general. Investors are looking for assurances of significant returns, something more difficult to achieve in a problematic economy.

Stop the Cap! contends that changing the business model of cable broadband with "Cap ‘n Tier" billing like Time Warner Cable tested, is precisely aimed at increasing those returns, particularly in markets where limited or insufficient competition holds customers virtually hostage to the cable provider.