Time Warner Metered Pricing: Not the Solution
January 17th, 2008 by lerskineTime Warner Cable’s plan to charge higher prices to high-bandwidth customers – revealed in a leaked memo obtained by Broadband Reports – is better than blocking applications and throwing users off their networks. But it’s far from an ideal solution for the millions of people who use the Internet for a range of rich media applications.
Internet service providers like Comcast have claimed that the only way to manage their networks is to either disconnect customers that exceed undisclosed bandwidth limitations or secretly block applications like BitTorrent and Gnutella. Clearly, Time Warner Cable’s metered-pricing approach – which will have a trial run in Beaumont, Texas before a possible national rollout – is preferable to such deceptive practices. With metered pricing, consumers can still choose which Web sites they visit, which files they want to share, and what software they want. But it’s little more than a band-aid for our bigger broadband problems.
“Metered prices may chill innovation in cutting-edge applications because consumers will have a disincentive to use them,” explains Ben Scott of Free Press. “Viewed in the context of our long-term national goals for a world-class broadband infrastructure, telling consumers they must choose between blocking and metered pricing is a worrying development.”
Network providers should build better networks, and not squeeze users to pay more for infrastructure that’s a generation behind what’s available in parts of Europe and Asia. In Japan, for instance, consumers can purchase connections of 100 Megabits per second, for both uploads and downloads, for less than it costs to get only 6 Mbs (at best) download and 1 Mbs upload in the United States. France is also far ahead of the United States in providing high-speed Internet at affordable prices (see Free.fr ).
Until cable companies improve their networks, our global competitors will continue to have the edge in technological innovations. And consumers will continue to be deprived of affordable access to the content, software, and networks available abroad. Metering may not be as bad as blocking – but we can do much, much better.
January 17th, 2008 at 11:23 pm
From a Time Warner Statement:
“Company spokesman Alex Dudley said the trial was aimed at improving the network performance by making it more costly for heavy users of large downloads.
Dudley said that a small group of super-heavy users of downloads, around 5 percent of the customer base, can account for up to 50 percent of network capacity.”
So Time Warner plans to make it “more costly”, for what? Using the capacity paid for? A common download broadband speed is 4 Megabits per second. Although the fine print explains that the connection is provided on “good faith” terms - which means it can be interrupted or downgraded at will by Time Warner, the marketing and advertising designed to sell the connection is clear - the connection is made intentionally attractive as having 4 Mbps of available, maximum capacity.
It’s like buying a car with a top speed of 90 mph. One may rarely drive that fast, but that’s what was paid for and expected to be available as desired.
So what’s the problem with using the full capacity of the broadband connection paid for as well? Why are these customers instead classified into the “heavy user” category?
The answer is this is not the customers’ problem. It’s Time Warner’s problem for overselling the capacity in the first place. As stated above, Time Warner complains that 5% of the customers use up to 50% of the capacity. So why didn’t it build the system network large enough to provide what was sold?
Do 5% of the customers of a 90 mph car that actually drive 90 mph cause the car company a problem? Even if all car customers drove at 90 mph, why is that a problem for the car company? The problem occurs only if the cars don’t perform at 90 mph as sold, and even then, it’s not the customers’ problem.
Now that users are starting to use more capacity per customer, Time Warner is backpedaling from it’s marketing promises and claiming “heavy users” must “pay more”. Why? Because they’re using all of what was sold to them, while before they were using only part of it?
Instead of Time Warner providing the original broadband speed necessary to serve ALL customers on the network at the MAXIMUM SPEED SOLD per customer, it is now planning to single out customers who actually use the maximum speed and raise the price - again, just for using what they were sold, like driving the car at 90 mph instead of 50 mph.
Why shouldn’t the Federal Trade Commission or the Federal Communications Commission intervene in on the basis of deceptive business practices? If all cars were sold as 90 mph cars but only 5% of them could actually go that fast, wouldn’t that be deceptive for the other customers who cannot go 90 mph as the cars were sold? And if the car company attempted to charge extra, after the fact, so all cars could go 90 mph, wouldn’t that be deceptive as well?
If certain customers are indeed exceeding the maximum 4 Mbps capacity of the connection as originally sold, that’s a different question and perhaps they should pay more. If so, then that should be the starting, floor point for new, higher metered rates above 4 Mbps - not a retroactive starting point that penalizes existing customers who are just now starting to use the full speed of the connection as sold, up to 4 Mbps.
Another way to ask the question is, if Time Warner insists that “heavy users” should pay more, then why shouldn’t “light users” get a refund - or lower rate - for not using all of what they paid for in the first place?
Finally, it is essential to understand that Time Warner is a landline monopoly or duopoly in many places, which explains why it can casually announce price increases that violate existing contracts by raising prices rather than providing the capacity sold.
While not an explicit violation of net neutrality by direct, selected content manipulation, this policy could become a serious implicit violation of net neutrality by restricting certain high-volume uses through prohibitively high prices assessed retroactively in areas where there are no competitive alternatives.
January 18th, 2008 at 2:38 pm
I am a Road Runner and TW digital phone subscriber. If they do this nation wide I will cancel my service with them. They say this just has to do with some people downloading a lot of videos, multimedia, etc. What they fail to tell people is that your operating system downloads a lot of patches that could be 5MB, 100MB or over 200MB. Not to mention updating anti-virus and other security software.
There is so much wrong with this idea. I stream videos from AOL, I purchase programs, videos, music, etc. Now Time Warner is telling me I have to pay even more?
I have the fastest internet in this area. I pay more for it. If they want to cap bandwidth and start charging more then why am I paying for what I have now?
Time Warner is not the only option. I have been a long customer of Road Runner and their phone services. I stopped paying for cable for these same reasons. To much money, digital cable is the same price as non-digital and I pay for most stations that have commercials and a lot of infomercials. Our I have to pay almost 60 dollars a month plus premium channels if I want more. Forget it.
This Time Warner customer is already looking for alternatives before they go nation wide with this.
January 19th, 2008 at 6:59 pm
[…] begin with, I most certainly agree with Lynn Erskine: “Network providers should build better networks, and not squeeze users to pay more for […]
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