Update 1: Look at the end of this post.

Update 2: Colin has some interesting analysis of the number crunching in the Business Week article..and he beat me to posting about this by 2 minutes, but I believe having both posts will be good for the discussion.  Perhaps we can keep mine limited to the discussion of agenda and future of bandwidth with ISP’s and Colin’s can be for data analysis of media providers on the Web these days.

Update 3: Look below for some interesting commentary from the fine folks over @ stopthecap.com

Pardon the caps, but it’s warranted.  Trust me:

In April, Time Warner Cable will begin collecting information on its customers’ Internet use in the Texas cities of Austin and San Antonio and in Rochester, N.Y. Consumption billing will begin in those cities later this summer. In Greensboro, N.C., the billing changes will begin sooner. Spun off from Time Warner (TWX) this month, Time Warner Cable had been testing a plan to meter Internet usage in Beaumont, Tex., since last year.

By charging a premium to the heaviest broadband users, much the same way cell-phone providers collect fees from subscribers who exceed their allotted minutes, Time Warner would upend a longstanding pricing strategy among Internet service providers. Typically, phone and cable companies charge flat fees for unlimited access to the Web. “We need a viable model to be able to support the infrastructure of the broadband business,” Time Warner Cable CEO Glenn Britt says in an interview. “We made a mistake early on by not defining our business based on the consumption dimension.” Time Warner Cable has 8.4 million broadband customers.

FOUR PROPOSED BROADBAND TIERS

Consumer advocates and Web site owners say tiered Web-use pricing limits customer choice and could stifle innovation by crimping demand for high-bandwidth services such as online video and music. Cable and phone companies say they need flexibility in setting prices for use of large, expensive, heavily used broadband networks.

In the case of Time Warner Cable, 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. A recent report from Sanford C. Bernstein suggests that a family on the 40 GB plan that streams 7.25 hours of online video a week (a fraction of the 60 hours Americans spend watching TV in a week) could end up spending $200 per month on broadband usage fees. And that’s just for video viewing, before factoring in such Internet activities as music downloads and photo sharing. “To put it mildly,” says Bernstein analyst Craig Moffett, “the decision to limit data consumption can be expected to have profound implications for [consumer] behavior.”

But Time Warner says most people are not using that much data. The company’s trial in Beaumont, Tex., lasted several months. Of the 10,000 broadband customers enrolled—about 25% of the company’s total for Beaumont—about 14% exceeded their cap and had to pay additional fees that averaged about $19 a month. Time Warner Cable also discovered that the top 25% of users consumed 100 times more data than the bottom 25% of users, suggesting an enormous gap in usage patterns.

This is such a crock of fucking shit.  What about my legit uses of bandwidth:

- YouTube, Hulu, Vimeo, DailyMotion, and every other streaming video site.

- Netflix Instant queue streaming.

- iTunes (Podcasts, TV Shows, Movies, etc etc)

and the one that gets me the most enraged…

- XBOX Live/PS Network/Wii Online  (Are you going to fucking tell me I have to pay extra now just to fucking download 1 GB demos and/or content for games…or play Halo!?)

Hell, for all the shit Comcast pulls, at least they give you a 250GB cap.  I mean…that’s LIVEABLE, but 25$ 30$ a month for 5GB?

ARE YOU FUCKING KIDDING ME?!

Let me hear your rage, fellow and/or former Rochesterians.

Update: Hit the jump for less anger and more rationale.

One of my biggest rants regarding this has always been “Why the FUCK can’t they just go invest in infrastructure improvements already?”

Well…here we go:

CEO Glenn Britt tells BusinessWeek, “We need a viable model to be able to support the infrastructure of the broadband business. We made a mistake early on by not defining our business based on the consumption dimension.”

To do that, TWC has been testing plans with 5, 10, 20, or 40GB of data transfer per month, with prices ranging from $30 to $55 a month. Compared to other ISPs, this seems like an abysmal deal, since AT&T’s DSL has no official cap and Comcast offers 250GB per month, generous by comparison. As it expands the trial this year, TWC is adding a 100GB/month level as well, though pricing is not yet available.

Britt’s rationale for the change—infrastructure is expensive—is tough to understand. Cable’s physical plant has been in the ground for years; even hybrid fiber-coax systems have been widely deployed for some time. Internet access simply runs across the existing network, and one of cable’s big advantages over DSL is that speeds can be upgraded cheaply by swapping in new DOCSIS headend gear, with DOCSIS 3.0 the current standard. Compared to what Verizon is doing with fiber and AT&T with its quasi-fiber U-Verse, cable Internet is a bargain (well, for the operators).

And…the obvious reasoning (in my mind, and also in Nate Anderson’s) for the change:

One the one hand, this suggests that caps don’t really bother most people; on the other, it indicates that low cap levels aren’t needed to keep traffic “reasonable” since it’s actually quite low to begin with. The shift toward metered pricing can’t help but benefit TWC’s cable business (unless consumers truly revolt), since low caps will ensure that Internet users think twice before doing data-intensive activities on the Internet such as streaming files from Hulu or downloading HD movies and TV episodes from Amazon and iTunes. TWC’s own cable video service may prove more compelling than the online alternatives because it has no “caps” or additional fees for watching too much TV.

I knew when I heard about how they were pulling this shit in Texas last year that it was going to be “successful” to them regardless of the outcome.  We have an ISP that also happens to be the World’s Third Largest Media and Entertainment Conglomerate (according to Wikipedia).

Regardless, I’m going to be cancelling my TW Cable subscription by the end of the week.

Update 3:

Stopthegap.com has been all over the issue (with regards to Rochester, but now more so to the other poor victims of this soon to be highway robbery of bandwidth charges):

But there’s more.  Beaumont, Texas is not Rochester, or Austin, or San Antonio, or Greensboro.  StoptheCap! looked at the Beaumont trial last summer and found it to be hardly representative of what Internet customers would find acceptable.  The Beaumont trial only applied to new customers, not to existing ones.  That skewed the results to show favorable acceptance only by those who signed up for new service figuring they would never exceed the caps.  Yet 14% did so anyway, and many of those were likely first time broadband customers.  And an average monthly overage of $19, half the price of the original monthly subscription, is nothing to sneeze at.

Indeed, we also do not know for certain what happened to those customers who received overage charges.  Did they cancel service and head for a competitor?  Did they succumb to Time Warner’s rationing plan and simply force themselves away from the computer?  Did they force themselves to pay more for a higher tier, or simply discover they maxed out at the highest tier then available (40GB) and will forever more be paying those overage charges on an Internet that is always growing and expanding.

Now unless there’s another article on the site with regards to their statements about the test billing only affecting the NEW customers in Beaumont, and not the existing, I’m going to take this with a grain of salt.

Intriguing none-the-less, however.

Tags: ARRRRGGH, Bullshit, Fuck You, Internet, Lots and lots of fucking pulp, Time Warner

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