Time Warner’s Unlimited Bandwidth Plan: $150 a Month [NYT Bits Blog]
Responding to customer input in the wake of their announcement of metered broadband tiers, Time Warner Cable has announced some changes to their proposed metered tiers. During the company's testing in Beaumont, Texas, packages were available from 5 GB per month to 40 GB per month. The company had planned to roll out those levels in additional locations, but has modified the plans to run from 10 GB per month up to 60 GB per month. Time Warner Cable also is creating a 100 GB super-tier for very heavy users. For customers who exceed their package's included bandwidth, each gigabyte will be charged at $1 per gigabyte.
The metered rates will not apply for the first two months in the next trial markets, allowing customers to have an opportunity to become familiar with the meter being offered. That will help customers measure their data usage and pick the right plan for their needs and budget.
There's a snag.
Time Warner's plan is turning into a slab of red meat for a few politicians who seem intent to create a divisive political issue out of it. In doing so, they ignore the fact that broadband is a job creator as cable operators continue to invest heavily in their networks. The fact is, if you want to kill job creation and reduce the quality of service to everyone, pass a law to prohibit companies from finding ways to fairly distribute the cost of providing world-class broadband service to all users, large and small.
It's very costly to have customer usage continue to rise exponentially. Large amounts of capital must be deployed to upgrade networks in order to keep up with the demand. Those investments are being made to expand capacity in our technical centers (headends), in the neighborhood nodes and throughout the community (the fiber optic cables) connecting the two.
Ten years ago, when flat rate billing was decided upon (primarily because consumer usage patterns were similar and there wasn't a developed technology in place to check consumption), no one anticipated that video would become so prevalent on the Internet -- not to mention the insatiable appetite for bandwidth of high definition video. But it has and we have to find ways to fairly distribute the cost of providing the products and services that today consume such large amounts of bandwidth.
Just this morning in the Evansville (IN) Courier and Press, Justin Williams, a respected local blogger and owner of a web and software development firm, offered his own thoughts about Time Warner's metered billing plans. Justin makes a good point about the way companies like America Online used to sell access to the Internet -- by the minute on a dial-up connection, not an unlimited plan. It was American Online's form of "metered narrowband." So, in truth, this is a concept that customers have seen before.
But, I disagree with Justin's notion that metered broadband is simply about retention of cable companies' video customers. If anything, we are encouraging the expansion of video alternatives by offering faster and faster speeds. Besides, there really isn't any evidence to suggest that subscribers are dropping cable television programming in favor of online options like Hulu, Netflix or iTunes. Customers have looked at those options and compared the quantity and quality of content and value available in cable television, and they realize there's no comparison -- conventional cable is just too inexpensive, too rich in content and too simple to use to replace it with exclusive online viewing.
If you question whether that's true, check out this post on Cable TechTalk about how much it would cost the average American to consume the same amount of video on iTunes as they do on cable TV. Instead, viewers generally are opting for these new video sources to enhance their viewing decisions, not to replace existing ones. Sure, some younger folks have become Internet-only TV viewers, but their numbers are extremely low and often limited to college campuses.
Where's all this coming from?
First term Congressman Eric Massa (D-NY), who represents one of the areas slated for consumption based billing, appears to be determined to jump on the bandwagon of uninformed criticism. He seems to be defining this complicated issue as something out of a class warfare playbook. Here's what he said according to Multichannel News earlier this week:
Come on. Consumption based billing isn't simply about charging more. It's about fairly distributing the substantial cost of keeping the Internet running smoothly while usage patterns increase dramatically. Rising consumption is a critical issue and, if ignored, would ultimately result in reduced quality of online experiences for everyone. If this was only about making more money, why would Time Warner also announce a plan for light broadband users to save money, charging only $15 for a 1 GB? That's a move that certainly calls into question the Congressman's contention that this all about extracting more money from consumers.
Once again, I openly admit that most cable companies, including Insight, are closely following Time Warner launch of these plans. In my opinion, there will be other ISPs joining their ranks. Full disclosure -- here at Insight, we're among those monitoring these developments. While we don't currently have any plans to implement metered broadband, should that change, we'll be giving customers plenty of notice and we will provide the tools to track their data usage.
In truth, Time Warner's new plan is much more reflective of today's usage patterns, including the light users plan to charge less than they do today. Opponents hang their hat on the argument that they deserve flat rate billing just because they always had it. That's how companies -- no -- that's how entire industries become obsolete. Refusing to change with the times is a recipe for disaster.
Just ask the auto industry.