Goodbye, All-You-Can-Eat Web; Hello, Higher Broadband Profits
Not sure why this is big news but Time-Warner is testing the concept of metered bandwidth usage with broadband customers in Beaumont, Tex.
Come on, we’re talking about a cable company looking at yet another way to squeeze even more profits out of a lucrative business where there’s little or no competition, and price increases are usually met with a shrug rather than a backlash.
Face it, broadband access has become a must-have utility for many people. You need it, you’ll pay for it - and don’t try to convince me people could downgrade their services to dial-up. In many ways, broadband has become like gasoline; people will pay whatever it takes to get to where they need to go.
As a result, the cablecos and telecom carriers know they have us by the short and curlys. That means they can experiment with new concepts such as metered usage, bandwidth shaping and throttling with little fear of a backlash. If metered usage is seen as a way to boost sales and profits, it’s going to happen.
Given the cablecos and carriers can do pretty much they want given the, um, competitive landscape, nothing should come as a surprise. This is just the beginning of the New Web - a place that will be a far cry from the Wild West that has made the Web so much fun, interesting and innovative.
I can understand Michael Arrington getting all hot under the collar by calling Time-Warner’s move “Going Medieval”, and accusing the cable companies of “standing in the way of economic growth and innovation”. But come on, Mike, you’re a big boy so none of these moves should come as a surprise.
Unless governments change course and decide to intervene, which seems like a huge long-shot, broadband is what it is, so get used to it.
More: Silicon Valley Insider suggests Timer-Warner’s experiment will fail due to competition from carriers. Come on, there’s is no “competition” given the cablecos and carriers want to damage the Golden (Broadband) Goose.
Technorati Tags: Broadband, Time-Warner
June 2nd, 2008 at 11:32 pm
So Time-Warner and Comcast are floating the idea of bandwidth metering. Why? They claim infrastructure costs, and the P2P usage of the ‘top 5%’ bandwidth abusers.
I don’t think this is a P2P issue. I think they are afraid that downloadable high def video (Hulu, Apple TV, etc) is going to make their regular cable broadcast video & PPV obsolete.
For me, it already has.
June 3rd, 2008 at 12:40 am
This month, I received a message at the top of my web browser saying that I had used 95% of my monthly bandwidth and that if I go over in June, it will cost me extra.
I am using Rogers just out side of London, Ontario Canada. Metered bandwidth is already here. Regular Rogers Cable Internet users have 60GB a month, Extreme users have 95GB and lower speeds have lower limits.
Sure 95GB in a month might sound like TONS, but I download songs and tv shows on iTunes, watch a variety of TV on Hulu and other sites, and make backups of my web server to my home as often as possible. These things add up fast. Not to mention all of the video and audio podcasts I subscribe to.
The maximum overage charge is an additional $25 but on what is already a $70/m cable internet bill… that feels a little like I am being robbed.
I guess when Cable companies can’t get people to buy Cable TV, they find a new way to add a similar fee on the Cable Internet bill. (Basic cable, 15 channels is around $25-$35m last time I checked).
June 3rd, 2008 at 11:42 am
Broadband is just becoming more like gasoline - who has a deal with their local Shell station where you pay a flat rate for gasoline each month, no matter how much you use.
It is generally considered to be a bad idea by Economists to not charge for a good as people will overuse it. That’s why the city of Toronto is paying millions to install water meters on all homes that don’t yet have them.
With hard drives less than $200 per terabyte why not download every episode of every TV show that you ever wanted using bittorrent? Doing this has a cost to someone as it uses bandwidth and bandwidth isn’t quite free.
Am I happy about moving to metered net usage - no? But I wasn’t happy when I went to a water meter and I would love to not have an electricity meter! That way someone else can pay for my gluttony.
June 3rd, 2008 at 3:28 pm
This is first year economics. Metering reduces use.
A good portion of today’s users are leaving their p2p programs running 24×7. Under a metered system conceivably they won’t. If the people want carriers to reduce traffic shaping they need to reduce extraneous use, of other users - for a lack of a better term - leaving their taps running all the time. This would be a good first step.
June 3rd, 2008 at 6:31 pm
[...] reality is as my fellow Canadian Mark Evans suggests that none of these moves should come as a surprise and that like Michael Arrington; along with Mike Masnick, believe that this move will do nothing [...]
June 3rd, 2008 at 8:32 pm
While I agree that this type of fee creep is inevitable I don’t think the Gas comparison is really a good one. Gas is a consumable commodity that has a significant variable cost associated with extracting, refining, etc. The fiber, etc is all laid on the cable highway and it is a sunk cost with no incremental variable expense to deliver at this point.
This is more of a true capitalist gouge.
June 3rd, 2008 at 11:40 pm
But I think the water analogy is a good one. The bulk of the cost is in laying the pipes and building the plants. The variable cost of pumping water is small - here in Toronto the city doesn’t have to buy the water - they pump it out of Lake Ontario.
Not unlike broadband, the bulk of the cost is in laying fibre but there is a cost to access the backbone, the more bandwidth that is used the more your ISP has to pay for a bigger pipe into the backbone.