NCTA's Kyle McSlarrow weighs in on metered broadband

On Testing Consumption Based Pricing Models [CableTechTalk]

NCTA President and CEO Kyle McSlarrow has weighed in on the metered broadband debate and the calls by the interest group Free Press for Congress to launch an investigation into Time Warner Cable's trials of metered broadband. Free Press is circulating a petition for opponents of metered broadband to request that Congress investigate Time Warner Cable's proposal.

According to McSlarrow, here's the most interesting part about the fuss Free Press is kicking up -- in a filing with the FCC on network management and in comments to the press, Free Press has previously suggested that metered billing could be a viable alternative to network management practices designed to limit high bandwidth users from degrading the Internet experience for everyone on the network. A bit of grownup self-regulation on the users' part, if you will.

Apparently either Free Press didn't expect that ISPs would take their suggestion seriously, or they've changed their minds since they suggested metered broadband as an alternative to network management (which I happen to agree with them about). If people are responsible for paying their own way for hugely consumptive activities, I say, "Go for it!  Download as much (legally) as you want!"

Last week I offered some thoughts for opponents of metered broadband and why Time Warner Cable is testing this new billing methodology. However, there's been one essential point notably missing from this debate -- the math.  It seems to me that Time Warner's plan would increase the cost of broadband to fewer than 10% of their customers, and perhaps considerably less.  And by the way, some would even get to pay less! 

Believe me.  My buddies in the business know that if I thought they were doing something wrong, I'd be the first one to call them to explain themselves.  This time, Time Warner's transparency and their willingnes to tweak the plan based on customer input are precisely what the usual critics of ISP business practices have previously called for.  Rather than calling for a Congressional investigation, they should be seeing TW's behavior as a model of openness. 

Comments

[Ben Katz]

Here's one of my big problems:

Free Press has previously suggested that metered billing could be a viable alternative to network management practices designed to limit high bandwidth users from degrading the Internet experience for everyone on the network

Is there ANY evidence that this happening on a regular basis at all, let alone in large enough scale that ISPs would feel it fair to charge 3x's as much for the same service?

[Ben Katz]

If less than 10% of users (probably far less you argue) are using levels that would cause annoyance to others on the network, why is there a need for caps to begin with? If such a minuscule number of users could even begin to degrade the network quality, there seems no need to triple the price for the same plan. Again, something doesn't add up here. Prices for bandwidth is going down and cable company profits are, generally, going up. All of a sudden, however, this is all we hear about. Something smells fishy here.

[Rob Dicken]

I think it would just be fare for Michael to say, "We plan on capping usage." He continually posts articles regarding this and stating his approval. It's quite evident he plans on doing this in the near future.

The business plan is the SAME exact business plan that AOL used in capping usage during the dial-up days. And WHAT happened to AOL? Oh, that's right...they nearly crashed and had to join Time Warner. So now, the same heads are thinking it's viable to try their sorry excuse for a business plan on the broadband market.

Folks, this why we have a free market system and free enterprise. The consumer determines the price of a product, not the supplier. If Time Warner and Insight want to charge outrageous prices for bandwidth capped usage, just go get service from another company. There is competition out there, and it will only increase in time.

These cable companies seem to think that by taking the consumer and technology industry back a decade will provide better sales figures. They are sadly mistaken.

But hey...the oil companies were warned about consumer demand waning and the price of oil crashing. But they continued to charge outrageous prices. And look where they are at now! The same thing will happen with this idea that Time Warner is proposing, only quicker.

[Mark]

Michael,

While I am far from a fan of capping the Internet (I was one of those metered AOL users in the early 90s), I would yelp and grumble quite less if these new metered offerings still offered an unlimited package. For those of us who consume large amounts of bandwidth (I refurbish / rebuild PCs, and pretty much live on the net for updates, etc.), I would be willing to pay a touch more for continued unlimited bandwidth, vs. being routinely beaten with a billy club with overage charges. It's as bad as going over your allowed minutes with your cellular company.

I'm currently considering dumping my cable modem for a fiber connection. It is just a bit more expensive, but my 10mb will be my own dedicated connection, and not shared with my neighbors. This way, I can consume as much bandwidth as I want, and still pay only one flat price for it. To me, it would be in Comcast's and every cable operator's best interest to offer an unlimited internet package, as well as metered packages. This way, you make everyone happy.

[sineswiper]

| Folks, this why we have a free market system and
| free enterprise. The consumer determines the
| price of a product, not the supplier. If Time
| Warner and Insight want to charge outrageous
| prices for bandwidth capped usage, just go get
| service from another company. There is
| competition out there, and it will only increase
| in time.

I think Michael agrees with you. It -is- a free market, and if the metered system works, then it will be reflected in the sales. If not, everybody will see that, too.

However, establishing government regulation of the matter before they get to test out these ideas is AGAINST a free market system, and would be counterproductive to all involved.

I'm typically far from confident of our capitalistic model. (Just look at the past 9 months.) However, this is something that can be tested, and if people don't like it, they can jump ship to the competition.

[Rob Dicken]

"However, this is something that can be tested, and if people don't like it, they can jump ship to the competition."

ANYTHING can be tested. I could go throw a pig off the roof to see if it sprouts wings and flies, but it won't.

Charging $150 for something that 4 months ago was $40 is exactly what the oil companies did. They gouged the product, and are now suffering the consequences. Along with the oil companies, the cable companies are some of the most hated in the United States, and rightfully so. Making boneheaded business decisions that benefit the company are usually something that doesn't necessarily do that in the long-run.

If you support bandwidth capping, you are either a worker of the cable company (and probably a rather large brown noser) or you really don't have the slightest grip on reality.