Time Warner Links Web Prices With Usage

[Siji]

One more reason for people to leave cable for FiOS or DSL. Personally, I'm rather sick of being restricted as to what I can run on my computer with my Internet access. (No FTP server, no instant messaging xfers, etc) They're complaining about people downloading video - sorry guys, that's where the world is headed. (See iTunes video announcement, see NetFlix Watch it Now option, etc).

Time Warner Links Web Prices With Usage
Thursday January 17, 1:53 pm ET
Time Warner Cable Will Do Trial on Setting High-Speed Internet Charges Based on Usage

NEW YORK (AP) -- Time Warner Cable will experiment with a new pricing structure for high-speed Internet access later this year, charging customers based on how much data they download, a company spokesman said Wednesday.

The company, the second-largest cable provider in the United States, will start a trial in Beaumont, Texas, in which it will sell new Internet customers tiered levels of service based on how much data they download per month, rather than the usual fixed-price packages with unlimited downloads.

http://biz.yahoo.com/ap/080117/time_war ... .html?.v=2

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.

Dudley said he did not know what the pricing tiers would be nor the download limits. He said the heavy users were likely using the network to download large amounts of video, most likely in high definition.

It was not clear when exactly the trial would begin, but Dudley said it would likely be around the second quarter. The tiered pricing would only affect new customers in Beaumont, not existing ones.

Time Warner Cable is a subsidiary of Time Warner Inc., the world's largest media company.

[Funkmasterr]

Yeah with all this shit coming out about cable lately im considering moving to DSL myself.

[Winnow]

They'll overcharge the average user that checks email and then way overcharge the users who download binaries and this is just in time to screw anyone considering IPTV which the cable companies don't want you using instead of their TV service.

Somehow Japan manages to have cheap, fast, unlimited bandwidth and a few of those frigid Euro countries do as well.

[Funkmasterr]

They'll overcharge the average user that checks email and then way overcharge the users who download binaries and this is just in time to screw anyone considering IPTV which the cable companies don't want you using instead of their TV service.

Somehow Japan manages to have cheap, fast, unlimited bandwidth and a few of those frigid Euro countries do as well.

Yeah my cousin pays pennies for his phone and home internet compared to what you pay here, it's sad. I think last I talked to him he said he pays about 10 dollars a month for his data plan on his phone (they don't have flat charges for phone internet, it's charged by use, but it's still extremely minimal) and his home internet is like 15 or 20 a month for good bandwidth.

However, he is just now getting his installed because he got the run around - apparently in Japan you have to have a Japanese bank account to get cable internet, and the Japanese banks wouldn't let him open a bank account because he isn't Japanese, lol. Finally he got them to give it to him because the reality company he used guaranteed him he would be able to get the internet, and they negotiated with the internet company, lol.

[Midnyte_Ragebringer]

Any time a company charges for an intangible like this it's such a fucking scam. Another country being able to charge such a small amount just goes to show it's complete bullshit.

[Animale]

If people were willing to pay taxes to support cheap broadband wireless/wired to homes, then it'd be a reality. Those countries have high governmental subsidies for broadband connections (although Japan and Korea accomplished it mainly through forced competition in admittedly high demand marketplaces) http://riskman.typepad.com/perilocity/2 ... nd_ba.html

Basically, you are getting what you pay for. When the government stifles competition (FCC I'm looking at you) by letting the big boys have monopolies you get what you see here. Also, a general slowing of governmental funding into R&D country and discipline wide will eventually slow innovation in our country, leading to who knows what. Private companies can't do everything in R&D, as they have a necessity to "make money" in the short to medium term. Government can look long term (such as providing benefits for fiber-optic wiring of cities or wireless broadband throughout a city). But to do that a cost must be payed. Maybe that's "big government" but the advantages are stark, as demonstrated by this one, small area.

Animale

[Xyun]

Sorry, but I don't consider broadband use an "intangible". If that were the case, your cell phone and electricity and other utilities should not be billed to you according to how much you use them. It is only a matter of time before all ISPs (including DSL) begin billing people in this manner, especially if it will make them more money, which is pretty much guaranteed.

[Winnow]

Sorry, but I don't consider broadband use an "intangible". If that were the case, your cell phone and electricity and other utilities should not be billed to you according to how much you use them. It is only a matter of time before all ISPs (including DSL) begin billing people in this manner, especially if it will make them more money, which is pretty much guaranteed.

Even cell phones have unlimited data plans. I know Sprint does.

Someone using high bandwidth only hurts others if people in the same subnet are also needing the bandwidth. Cox already has 'burst' speed that gives you 30Mbps 'IF" it's available, meaning if there's low traffic on the subnet. After talking to "cable guy' that came to investigate my connection issues, I know there's no bandwidth problem in my area because I always get 30Mbps 50MB burst and then a steady full 12.65Mbps flow of data for hours on end if needed. Cox plans to raise my bandwidth to 30Mbps but are waiting for competition to do so...so me using a full 12.65 is meaningless. They're already limiting people to less than half of the max bandwidth for the sole purpose of having something to counter (match) FIOS if it ever gets here...so we sit with half the bandwidth we could have artificially.

If you meant that it's inevitable that they will eventually rip us off, then I agree. I pay 60.00/month for my cable internet service...how much more should I be paying? It's more like others should be paying less, not me paying more. Mom and Pop that just check their emails and check a few websites are getting royally ripped.

This is a move to counter IPTV which will take money away from cable company TV services but it will screw everyone that uses high bandwidth even though that's not the real issue here.

[Aabidano]

Someone using high bandwidth only hurts others if people in the same subnet are also needing the bandwidth. Cox already has 'burst' speed that gives you 30Mbps 'IF" it's available, meaning if there's low traffic on the subnet.

To me this is akin to a driver of a semi paying higher highway taxes than someone driving a car.

Oversubscribed subnets aren't generally a problem in most areas anymore, it's the upstream infrastructure and sometimes the cableco's connection points to their providers. FIOS doesn't allow you to run webservers and such either unless you have a commercial account, which wasn't generally available in most areas last I looked.

Edit - I really doubt this has anything to do with IPTV, it's pointed at people who keep their connection pegged 24x7. That wasn't a big deal once upon a time, now it's costing them money as more and more people are doing it. They can may everyone pay a little, or the "offenders" pay a extra. Likely they'll do both.

Private companies can't do everything in R&D, as they have a necessity to "make money" in the short to medium term.

Restated:
American companies can do very little in R&D, as they have a necessity to "make money" every quarter to keep the analysts happy and the executives' stock options viable. Long term planning isn't something they're capable of following through with on a consistent basis. (Working for a French company is a refreshing change in this respect.)

[Sueven]

If the companies have plenty of bandwidth and aren't having any problems providing their customers with capacity, then this seems stupid.

Of course, that's not always the case. In places where it's not the case, this move makes perfect sense. If bandwidth is finite, and some people are using more and others less, why should they pay the same price?

Also: I doubt that cable companies mind if you switch over to DSL. As it stands, in their minds, you're using more than your share of resources and paying the same as everybody who is using less. This change presents you with a choice: get the fuck out or pay your fair share. I doubt they care which option you choose.

[Funkmasterr]

If the companies have plenty of bandwidth and aren't having any problems providing their customers with capacity, then this seems stupid.

Of course, that's not always the case. In places where it's not the case, this move makes perfect sense. If bandwidth is finite, and some people are using more and others less, why should they pay the same price?

Also: I doubt that cable companies mind if you switch over to DSL. As it stands, in their minds, you're using more than your share of resources and paying the same as everybody who is using less. This change presents you with a choice: get the fuck out or pay your fair share. I doubt they care which option you choose.

That's bullshit dude, 50-60 dollars a month has to be pulling a crazy profit for them, excuse me if I have a hard time feeling bad and accepting their bullshit reasons to make their profit even crazier. My problem is half with the price cable internet is at already, 50-60 dollars a month just seems like too much money to me, and I can honestly say I would go without the internet at home before I will pay much more than that. If we were paying 20-30 dollars a month and they were saying this same thing, I would feel a lot better about it.

[Aslanna]

I could almost support this if it led to a price reduction for people who just use the internet for email and the occassional web browsing. But I doubt that would happen. It all depends on how the tiers are defined.

[Winnow]

I pay for the premium package, which costs 15.00 more a month and is 12Mbps instead of 9Mbps. I doubt they'll screw with the people that are already paying the higher rate but those that suck bandwidth at the lower level (still 45-50.00) might start getting singled out. Both packages are supposedly "unlimited"though.

[Aslanna]

Not much different than the original article.. But has possible rates. So if you end up paying more blame Canada.

January 17, 2008, 4:47 pm
Time Warner: Download Too Much and You Might Pay $30 a Movie
By Saul Hansell

Let’s say you buy a new Apple TV because you want to rent high-definition movies. And say you are about to move to Beaumont, Tex. If so, you might wind up paying Time Warner Cable as much as $30 when you download a movie using its high-speed Internet service.

Time Warner said on Wednesday that it was going to start testing a new rate plan in Beaumont that would limit the amount of bandwidth each customer can use each month before additional fees kick in. Alexander Dudley, a Time Warner spokesman, said that the exact terms had not been set, but that packages would probably offer between 5 gigabytes and 40 gigabytes a month. The top plan would cost roughly the same as the company’s highest-speed service, which typically runs between $50 and $60 a month.

Mr. Dudley said the company was still working on what to charge people who exceed their limits, but he pointed to Bell Canada, which has imposed bandwidth limits on its customers. According to its Web site, Bell Canada charges as much as 7.50 Canadian dollars ($7.42) for each gigabyte when customers exceed the 30-gigabyte limit on a plan that costs 29.95 Canadian dollars a month. Since the average high-definition movie is 4 gigabytes to 5 gigabytes, that would mean a charge of at least $30 a download for customers on a plan like that who were over their limit.

On more expensive plans, the over-limit charges at Bell Canada are as low as 1 Canadian dollar a gigabyte. That would represent a $4 to $5 charge for an HD movie for people over their monthly limits. Standard-definition movies are typically 1 gigabyte to 2 gigabytes.

Mr. Dudley said that Time Warner wants to test bandwidth limits to crack down on a minority of customers who are heavy downloaders. Indeed, only five percent of customers use half of its total bandwidth, he said.

I spoke to Dave Burstein, the editor of DSL Prime, and one of the most knowledgeable people around on the economics of high-speed Internet service.

He argued that Time Warner’s interest in bandwidth caps had little to do with its own costs and a lot to do with the emergence of movie downloads and streaming television programs over the Internet.
“The smart people at Time Warner are scared of people watching TV directly over the Internet,” he said. “‘Lost’ and ‘Desperate Housewives’ look better over the Internet than they do on digital cable.”

Moreover, the marginal cost of extra bandwidth is very small, he said. For broadband Internet service, 80 percent to 90 percent of the costs are fixed regardless of use. And the all-in cost of a gigabyte of use is about 10 cents or less. Most cable and phone systems keep their costs secret. Mr. Burstein cited an interview he conducted two years ago with Tony Werner, then the chief technical officer of Liberty Global, John Malone’s collection of European cable systems. Costs in Europe, he added, are likely to be a bit higher than in the United States.
Mr. Dudley disputed this view. “This is not targeted at people who download movies from Apple,” he said. “This is aimed at people who use peer-to-peer networks and download terabytes.”

Reaction to Time Warner’s test has been somewhat mixed. Some, of course, see this as a price increase that gives mainstream users the added stress of keeping track of bandwidth use.

Others suggest that it is a more straightforward pricing system that does make heavy users pay more, especially since some Internet service providers are quietly slowing down or otherwise restricting some service, most notably to users of the BitTorrent file-sharing protocol. That’s why Public Knowledge, a group that is certainly not afraid to criticize telecom companies, put out a statement praising the test:

Time Warner’s pricing test could be a welcome development for consumers and for the cable industry. Consumers will have a better idea of how they are using their Internet connections and will have the flexibility to adjust according to the rates. Cable companies could be able to better manage their networks and costs, so they won’t have to resort to cutting off customers for exceeding phantom usage levels or throttling some applications.

Whether cable users agree, or they start to complain because of occasional surprise bills for $30 movie downloads, depends on how Time Warner actually structures its rate plans.
“A big part of what we are doing is to test customer feedback,” Mr. Dudley said. “We want our customers to feel like they are getting a good value.”

Not really sure I would classify someone who downloads more than 30GB a month as a "heavy user". That's only 1GB a day! 100GB a month would be a more reasonable target.

[Sueven]

Not really sure I would classify someone who downloads more than 30GB a month as a "heavy user". That's only 1GB a day! 100GB a month would be a more reasonable target.

Really? Christ, what do you people do on the internet?

That's a serious question, by the way. I can't fathom how you can download that much, unless you're just constantly downloading movies/music/etc, or doing some web-heavy sorts of work that require you to download large video files, or something.

[Noysyrump]

How much do online games use? eq, eq2, wow... would these put you over that 30gb a month? Most of us LIVED on those games for 10 hours a day...

[Siji]

Also: I doubt that cable companies mind if you switch over to DSL. As it stands, in their minds, you're using more than your share of resources and paying the same as everybody who is using less. This change presents you with a choice: get the fuck out or pay your fair share. I doubt they care which option you choose.

I'd have to disagree with that. If they were just an ISP, then maybe. However, you're talking about cable television, cable internet and in some cases cable phone service. My cable cost each month with just Internet and cable is over a hundred bucks. Add phone service, there's another 30 or 40 or whatever it is. Lose a few thousand households and it adds up quickly.

I don't believe online games use much bandwidth (minus patches). Thought I remembered seeing a post about that a long time ago and EQ was a hundred kb or two.

[Sueven]

fyi: for all those who tell me I'm wrong on this or any other technology-related thread, you're probably right, since I don't know shit about shit. And I accept that.

[Aabidano]

Really? Christ, what do you people do on the internet?

That's a serious question, by the way. I can't fathom how you can download that much, unless you're just constantly downloading movies/music/etc, or doing some web-heavy sorts of work that require you to download large video files, or something.

I telecommute full time and only do 20-50Mb a day, rarely up to a gig if I'm pushing patches or whatever.

EQ\WoW, etc... are are lightweight, as is an IP phone. Even pay per view wouldn't put you over the hump, unless you ordered a couple movies every day.

People sucking mass quantities of music, movies, binaries, etc.. are the one's who'll get hit. From talking my son and his friends, they each had far more than they could ever realistically use, all hoarded away like a pack of demented squirrels for who knows what reason. My son got bored with the game and nuked it all maybe a year ago.

[Winnow]

Not much different than the original article.. But has possible rates. So if you end up paying more blame Canada.

He argued that Time Warner’s interest in bandwidth caps had little to do with its own costs and a lot to do with the emergence of movie downloads and streaming television programs over the Internet.

“The smart people at Time Warner are scared of people watching TV directly over the Internet,” he said. “‘Lost’ and ‘Desperate Housewives’ look better over the Internet than they do on digital cable.”

This is exactly what I said. It's not about the bandwidth. It's all about IPTV and lost revenue.

I'd be OK with paying a $1 per gigabyte set fee. Thing is, they wouldn't be ok with that because they fleece mom and pop using less than a gigabyte a month. If you think about it that way though, you'd be paying your cable company an extra dollar or two each time you grabbed an HD movie on your Xbox or ITunes.

I see this as an excellent way for the phone companies to get back into the business...stop offering TV through FIOS and advertise unlimited bandwidth because people will flock from the cable companies as soon as IPTV and movie downloads are established within a year.

[Animalor]

I just checked out my month to month usage and in a month where I thought I did heavy torrenting, I came up with about 50GB total transfer in a month.

My monthly bandwidth usage is ~ 20GB a month.

This includes a healthy amount of XBL, no MMO's and normal downloads.

My cap is 100GB before I hit surcharges.
Their FAQ also states that I "MAY" be charged 1.25$ for every GB of transfer over 100 GB.

Frankly if Rogers could give me the same speed, a lowered cap and a lowered price, I would take advantage of that.

[Xyun]

I'm a novice when it comes to computers and internet and all that jive. What I do know is that profit is the single most important thing to corporations. If I'm the cable company, I charge a base fee for EVERYONE, including people who barely use the internet, then I add an additional fee to those that go over a certain amount of bandwidth. That's how I maximize my profit, and I think that is exactly what they are doing according to this article.

[Aslanna]

I'm a novice when it comes to computers and internet and all that jive. What I do know is that profit is the single most important thing to corporations. If I'm the cable company, I charge a base fee for EVERYONE, including people who barely use the internet, then I add an additional fee to those that go over a certain amount of bandwidth. That's how I maximize my profit, and I think that is exactly what they are doing according to this article.

And how does encouraging people to use another provider maximize profit? Seems to me they'd actually be losing money. If Time Warner were the only game in town perhaps I could see your point.

[Winnow]

I'm a novice when it comes to computers and internet and all that jive. What I do know is that profit is the single most important thing to corporations. If I'm the cable company, I charge a base fee for EVERYONE, including people who barely use the internet, then I add an additional fee to those that go over a certain amount of bandwidth. That's how I maximize my profit, and I think that is exactly what they are doing according to this article.

It's the wrong time to be doing this although I understand the base price strategy, adding additional costs to high bandwidth users when there are finally alternative sources for high speed cable emerging is the wrong thing to do. Since we've establish that the actual bandwidth isn't important, the cable companies aren't stupid and see the writing on the wall with all of this downloadable content, Netflix, Xbox 360, iTunes, etc offering movie rental downloads, the major networks offering free viewing of their TV programs online...they are about to lose a big chunk of revenue. Really, the only thing left is live sports and news which can be streamed as well using IPTV technology which Microsoft and others have mastered. Microsoft's Xbox 360 IPTV tech is particularly good and ready to be rolled out.

The cable companies can raise prices as a stop gap to try and save revenue but unless they want to lose their user base to the phone companies within a few years, they need to develop their own IPTV.

I pay $150 for cable which includes TV and Internet. My first step will be to drop the $70.00 (which really is a monster waste as I only watch sports and that's the first thing that I enjoy I could live without and a lot of it is on free OTA HD anyway) I spend on TV and add that do the Internet side if they start charging "per gigabyte" extra fees above a certain bandwidth usage limit. My second step will be to drop them completely when an alternative is offered in my area.

Cable (TV) is dying. They managed to move from analog TV to digital TV. Now, to survive, they better be actively planning a move to IPTV to save their revenue. It may be less revenue than they make through normal digital cable TV but at least they won't completely lose their revenue stream over the course of 3 or 4 years. I've read articles where methods are discussed that will allow cable companies to use On Demand packet technology to deliver TV channels individually to the end user instead of having to broadcast all channels, all the time through the cable lines which ties up shit tons of bandwidth. This would allow them to offer a limitless number of HD channels and PPV while opening up even more bandwidth on the internet side of things which, while simply maintaining competitive speeds with other highspeed options, could be taken advantage of with IPTV options from cable. People (who actually know what IPTV is) know it's value and desire a "pick and pay for exactly what you watch" package as opposed to being forced to pay for a package including shopping channels, religious channels, etc.

I don't hate the cable companies...yet. They have an opportunity to do the right thing while preserving their revenue and actually increasing it without being dicks, instead of thinking only of the short term gain by charging higher rates for high bandwidth which will make me dump them altogether.

[Fairweather Pure]

Can they also pro rate my cable bill by how much I actually watch TV?

This is a big, corporate "fuck you". Nothing more.

[Xyun]

Can they also pro rate my cable bill by how much I actually watch TV?

This is a big, corporate "fuck you". Nothing more.

Maybe you're new to how corporations behave in America?

[Aabidano]

People (who actually know what IPTV is) know it's value and desire a "pick and pay for exactly what you watch" package as opposed to being forced to pay for a package including shopping channels, religious channels, etc.

That was something I was going to ask you, what you thought IPTV was. To me it's just another transport method.

What you're referring to is the restructuring of their business model, the technology is (almost) irrelevant. Pussy executives chasing analyst's opinions will never change their tune until they're absolutely forced to.

They'll continue to milk the dieing cow until the bitter end, and if their shareholders are lucky they'll make successfully the jump at the last minute.

"OMGZ!!! I HAVE 300 CHANNELS" sells pretty well to most people still. If I could just pick 5 channels I'd be happy.

*Edit:
Comedy
SciFi
Discover
History
+ a floater

[Tyek]

I have a ton of channels, but probably between the wife, kids and myself, watch no more then 30 total.

[Sueven]

ESPN
ESPN2
.......

I guess I wouldn't mind Comedy and Discovery.

[Boogahz]

In other news, Time Warner will also have HBO on Broadband to help milk their users wallets thought he usage-based surcharges:

Time Warner not in sync with HBO online videos, usage caps
By Jacqui Cheng | Published: January 21, 2008 - 03:34PM CT

Subscribers of HBO's On Demand services will soon be able to get video downloads of their favorite shows and movies online, free of charge. That is, if they run Windows, live in Wisconsin, and use Time Warner Cable. HBO announced today that the service would launch this week—initially in Wisconsin and eventually expanding out—to an increasingly crowded video download market. With HBO on Broadband, the content provider hopes to keep the customers it might have previously lost to other services (such as Netflix) by offering them a wide selection of content with a decent level of flexibility. But HBO could be getting ahead of itself by launching this now, because its parent company, Time Warner, has other plans for customers' bandwidth.

First the nitty gritty: HBO on Broadband will offer over 600 of HBO's shows and movies for unlimited download to HBO On Demand subscribers. Users can download and watch videos as often as they like for no additional charge, a representative from parent company Time Warner wrote on DVD Dossier this morning.

Using a proprietary media player from HBO, users can also authorize up to five computers on a single account, but they must be using Windows Vista or XP SP2 in order to make use of the service. (Predictably, the company says that a Mac version is in the works, "but no release date has yet been announced.") Content will constantly be rotated in and out so that there are new selections to watch, and users will even be able to watch a live stream of the east coast HBO feed at the same time it's being broadcast on TV.

There will, however, be some level of DRM. While users will be able to take files with them on a laptop, they can't be transferred to other portable devices (like iPods and Zunes), and won't remain watchable forever. "Individual titles will be available on the service for 4-12 weeks, with episodes of HBO original series generally available for longer periods than theatrical films," reads the DVD Dossier post. "When a title reaches its 'expiration date,' it will automatically be deleted from your computer."

Despite its limitations, HBO on Broadband doesn't sound too shabby. But it seems a little odd that HBO is introducing this service now. Why? Time Warner is planning to start rolling out bandwidth caps on its broadband services this year. This means that some of Time Warner's own customers won't be able to make full use of HBO on Broadband—at least not without paying for a higher tier of service.

It seems that one of two things is happening here: either the right hand doesn't know what the left hand is doing, or this is all part of Time Warner's plan to milk more money out of subscribers. For now, Time Warner only plans to test the bandwidth caps in Texas, while HBO plans to introduce HBO on Broadband in Wisconsin, so the services won't cross paths just yet. But when they do, customers aren't likely to be happy to find out that their "free" online services from HBO are eating up their bandwidth quotas elsewhere.

[Siji]

That actually made me laugh.

TW: Hey guys, lets get people to stop using all our bandwidth.
HBO: Hey guys, lets let people d/l our movies, bandwidth is plentiful.
TW: wtf?

[Aabidano]

It seems that one of two things is happening here: either the right hand doesn't know what the left hand is doing, or this is all part of Time Warner's plan to milk more money out of subscribers

I'm guessing plan B.