Time-Warner Considers Per-Gigabyte Service Fee, After iTunes

destinyland writes "Time-Warner is now mulling a plan to charge a per-gigabyte fee for internet service. A leaked memo reveals they're now watching how many gigabytes customers use in a 'consumption-based' pricing experiment in Texas, which we discussed early last month. The announced plan was that they were considering a tier-based approach, as opposed to per-gigabyte fees. 'As few as 5 percent of our customers use 50 percent of the network,' Time-Warner complains, with plans to cap usage at 5-gigabytes, and more expensive pricing plans granting 10-, 20-, and 40-gigabyte quotas. Steven Levy at the Washington post suggests Time-Warner's real aim is to hobble iTunes, raising the cost of a movie download by $10 (or $30 for a high-definition movie). Eyeing Time-Warner's experiment, Comcast cable also says they're evaluating a pay-per-gigabyte model."

Comments

Not only is it a step in the wrong direction...

[hbean]

...but its an absolute shot in the foot for their business.

Right now, I could call up Verizon and get FiOS. In about 6 months I'll be able to call up Verizon and get FiOS TV. Hell, theyre currently installing FiOS in my parents tiny village of about 5000.

These cable companies are facing the first real competition they've ever had and instead of reacting by making their service better, they're planning out ways to make their service worse.

And no, this isn't some sort of viral FiOS ad. I'm just a dumbfounded consumer.

Good luck with that guys

[beavis88]

I, beavis88, hereby pledge I will immediately terminate my Time Warner Cable "service" in the event they implement this new scheme without SUBSTANTIALLY reducing the price of the "low tier". I don't even run BT or pirate movies/music, and I probably came close to 5GB downloaded *yesterday* - Vista and Windows 2008 .isos from MSDN, plus watched a movie online from Netflix. Now if they want to make it worth my while to reduce my usage, I might be amenable - but if they want to cap my usage, and keep charging the same insanely high prices, then fuck it, I'll put up with shitty, slow DSL.

Time Warner and Comcast need a reality check

[dj42]

Keep this shit up. Those "50% who use 5%" of the network will stop advising your idiot clients. When that happens, you'll see the same demise as "AOL" did. How many idiotic AOL dial-up users still exist?

Get ready for the apocalypse privacy-invading broadband douches.

MOD PARENT UP

[hey!]

It's not so bad that an ISP charges by bandwidth. It's bad that the pricing decision is tied up with other kinds of products they want to sell, in effect giving them the power to raise the price of other companies' products relative to their own in places where they have a broadband monopoly.

In this situation, the regulators ought to look at any competitive advantage this gives their content products and require them to price those products high enough that the bandwidth pricing is competition neutral.

Re:MOD PARENT UP

[mrxak]

It's not just that these companies create content, or that they need somebody else to pay for high-bandwidth users, it's that there's no competition in their markets. You have one cable company (usually) that has a cable franchise in the area. You might have one DSL company too (if you can really call that broadband). That's usually it for most people. So if you want speed x, you're forced to use company y, and they have no incentive to lower their prices. A company comes along that wants to lay down their own coax or fiber cables, and the established company can lobby against them getting their own franchise. There's nothing natural about these "natural monopolies", they are monopolies enforced by local government under the influence of the monopolies. There are very few market forces at work, so your cable company can charge whatever they want and then pull moves like this to get even more out of you.

Re:MOD PARENT UP

[Monkeybaister]

I don't think many slashdotters are privy to the actual costs of internet connections. I work in the networking department at my work where we had a T3 (45 Mbps). We've moved to leased fiber to a co-loc and now have 250 Mbps for less. It's the same ISP, all we did was take the phone company out and costs went way down.

The cable and phone companies are able to charge so much because they are the only last mile connection in many places. Having a data connection (phone, TV, internet) that the government (controlled at the town/state level) treats like the roads would be great.

My model would have the government run single-mode fiber to every house and bring it all together in a building in each town (or maybe larger). It would then be the responsibility of a company to actually give service over the fiber to homes. This would allow people much more flexibility, so if a group of people want to just share 100 Mbps from a big ISP, they have the power to do so.

Re:Charge or don't charge but don't hide it

[TheRaven64]

Exactly. Cut the marketing bullshit and give me a plain-English SLA. For a consumer connection, with a cheap price, the SLA might not be that great, but it should be well specified. I want to know:

• The minimum speed that I am guaranteed to get.
• The maximum speed I will get under optimal conditions.
• The percentage of the time I can expect to be within n% of the maximum speed.
• The maximum amount of downtime allowed before I am compensated.
• The maximum transfer I am allowed per month and the cost per GB of going over.

Ideally, each ISP would provide a grid with different levels / prices for each of these categories and I would be able to put together a plan that met my needs. They could even unify their consumer and business pricing structures, so businesses picked from the same grid but, if they were doing anything important with their connection, chose the higher level options.

As long as there's competition, and the customer is well-informed about the service they are buying, then a free market works. If either of these conditions fails then you might need some regulation.

Re:5GB?!

[matt4077]

You're assuming that these tiered prices are actually neccessary because of a high load on the network. I'd speculate that TW's network is fine and they're just seeing a nice opportunity to earn money. Note that this could be different in AU because of the rather expensive and long submarine cables.

1500 HD movies a month?

[ls -la]

From tfa:

one of these gluttons downloaded the equivalent of 1,500 high-definition movies in a month 18.5 Mbps 24/7? I call bullshit.

A bunch of smoke being blown in your...

[WindowLicker916]

I work for Comcast in the bay area and by spec our nodes are not to exced 70% usage. Which we managed just fine. We have tons of fiber not even lit in order to meet demand.

So these companies complaining makes no sense. In fact they just shared our regional numbers with us and HSI was profitable by some comparable sum equal to video.

IMO these companies should just become common carriers like AT&T and provide you access. Other companies should provide IPTV which would either be free or subscription based. Thats where I see the industry hopefully going!

Re:U.S. falling behind

[muszek]

Yep. In Poland many smaller ISPs used to do the same, but they faced the law. The smaller you are, the easier it is to go below the radar.

My friend runs a local network in his neighborhood (few apartament blocks, ~200 computers) and they've set up both DC and an FTP server to aid everybody's piracy needs. One of the side effects (besides everybody being able to get pretty much whatever they want in minutes) is that they've been running on something like one 2Gbps/256kbps DSL line (for http, games, ssh and stuff like that) and one 2Gbps/2Gpbs line (something much more expensive, I don't know much about this stuff though) for a few years and owners of ~200 computers are happy with it (partly because it costs peanuts).

Nothing New, we do it already and people LOVE IT

[rezalas]

I work for Allegiance Communications in Oklahoma, and we already do this basically. The difference is that we have bandwidth / gig packages without caps, we just charge extra if you go over your limit and most people don't have a problem with that. for example, if you choose our top end package for home use (residential gamer package) you get 5 meg down 1.5 meg up, and usage rate of 50 gigabytes per month. If you go over the 50, you get charged. However most people (even people downloading movies) don't use that up. Those who do are likely hosting servers or doing something else and don't mind if they get charged the extra fee simply because they were told before hand that we do it. Now we are even looking at offering extra usage each month for small fees (an extra 50gigs for $7 more, ect). Usage fees without caps and monitoring can work, it just has to be done ethically. As for the low low bandwith of 1 gig... well, even our basic users occupy that. Anything less than 10gig a month (which is as low as we go) is just ripping off your customers.