Time Warner Pulls Plug On Metered Billing Tests

fudreporter is one of many who writes to tell us that Time Warner is not planning to continue their tiered consumption tests at this time. The company is not completely admitting defeat, stating that they "may return to the idea in the future," but for now the test has been shut down. "The plan would have established several tiers based on how much consumers use the Internet. Time Warner Cable had said at the time that it believed that consumers who download the most content need to pay more to cover infrastructure upgrades. The plan was first announced two weeks ago, then modified with higher download caps last week. In a news release yesterday, Glenn Britt, the chief executive of Time Warner Cable, said, 'We will not proceed with implementation of additional tests until further consultation with our customers and other interested parties, ensuring that community needs are being met.'"

Comments

If they'd just started with a simple price per gig

[Devout_IPUite]

If they'd just started with a simple price per gig and kept it to the reasonable electric/water model, they'd have been fine. The Cell phone model was a lot of the reason they had backlash I suspect.

translation

[pak9rabid]

We will not proceed with implementation of additional tests until further consultation with our customers and other interested parties, ensuring that community needs are being met.

Translation: We like having customers and don't want the government taking away our freedom to implement usage caps quite yet.

Re:If they'd just started with a simple price per

[Hatta]

It doesn't make sense to bill transfer like you do water or gas. Water you don't use is still there tomorrow. Transfer you don't use is lost forever.

Since the cost to run the system is fixed, price per gig is lowest when you're maximally utilizing the system. Since a per gig charge encourages people to use less, it's encouraging less economical behavior.

As in any other industry, if your customers want too much of your product you should make more. Punishing your customers for using your product is just backwards.

Re:Not sure what is wrong with Tierd service

[TheKidWho]

The problem is that the ISPs don't pay by the GB for what they use, they pay for bandwidth.

It's a bad idea

[drmemnoch]

I get what TW is trying to do here. With hulu, youtube, netflix, p2p, bittorrent and the plethora of other options for downloading entertaining content users are going to slowly start canceling their cable services. Especially the premium content that TW get's so much revenue from (HBO, Sports packages etc.)

Now you can pretty much stream any sporting event live, so even that isn't going to keep viewers subscribed.

But they are missing one critical piece. Most users don't know anything about how the software on their computers work. They automatically assume that their A/V product will protect them from every botnet and worm out there. Is some 66 year-old woman who is infected with a botnet and sending out gigs of SPAM per day really using the bandwidth she would pay for. She has been diligent in trying to protect he computer by installing A/V software, but she is by no means and expert and shouldn't be expected to know that a botnet has infected her computer. The botnet software is designed to hide itself from her knowledge.

So who is TW going to charge for that bandwidth usage. Because as far as she is concerned all she did was download a few pics of the grandkids, send a few emails, and do some genealogy research. Then she gets hit with a Tier1 usage bill. She won't be able to sufficiently explain the extra usage, and I'm pretty certain the person answering phones at TW won't be able to explain it either.

The problem is, Time Warner is right

[Locke2005]

I've been saying for years that any system wherein you can use as much as you want of a shared resource as you want for a single, fixed price inherently suffers from "The Tragedy of the Commons" problems, and that the internet must inevitably adopt some sort of "pay per byte" business model. I even think the multi-tier model makes more sense than counting every byte. My only objection is that as a consumer I would like to know in advance how much my bill will be every month (makes it a lot easier to stay on budget), and thus the consumer should have the option of choosing either reduced access or getting bumped into a higher cost tier when they exceed a bandwidth limit. Hughes Net satellite internet only gives you the first option, it automatically degrades your connection to less than dial-up bandwidth for 24 hours every time you download too many bytes. Yeah, I'd prefer to know how many bytes the limit is, and get some sort of warning when I'm approaching it, but the truth remains it is a shared resource, which justifies "punishing" those that use more than others.

Re:Um...

[VeNoM0619]

Yea, but this article comes with this gem of a quote:

Time Warner Cable had said at the time that it believed that consumers who download the most content need to pay more to cover infrastructure upgrades

Meaning, if you are a heavy user, you pay for the infrastructure upgrade (that you never actually get, while they oversell those upgrades!), and STILL get charged for being a heavy user! It's genius!

Re:If they'd just started with a simple price per

[regrepsnefpoh]

Wrong. The internet backbone is fundamentally limited and, thanks to bittorent, it's finally being congested. Think about it this way: if everyone maxed out their connections all the time, everyone's connection speed would be a small fraction of what they currently take for granted. As media streaming -- bittorent, netflix, hulu, or whatever -- becomes increasingly popular, connection speeds WILL hit a wall. When people do realize that internet bandwidth is a limited commodity, something is going to have to give. I, for one, am not going to pay the same monthly fee for 1GB/month (to use basic sites like slashdot) that 100GB/month users use to download illegal media. Sure, I'm opposed to RIAA, as is everyone on slashdot. But there comes a point where I'm fed up with these bandwidth leeches.

Economics 101

[falconwolf]

As we've learned in economics 101 if the price is too low for a scarce commodity, you get a shortage

Economics 101 also says that if you're short of resources you increase them. Broadband providers were given hundreds of billions of taxpayer dollars to buildout broadband but all they did with it was pad their bottomline.

Falcon

hogs need to pay more, or others pay less

[bwhalen]

Pricing should be based on usage, until you've worked for an ISP you won't realize that 5% of your users use a majority of the resources. People who download all day should pay more than a couple hour rec user after work who reads email and surfs.

Re:If they'd just started with a simple price per

[dgatwood]

I pretty much agree with you, with a couple of caveats. I don't think the water analogy is really all that good for two reasons:

• Water is cheap to extract up to a point, and then you hit an absolute maximum beyond which the price of extraction jumps up by orders of magnitude (desalinization plants, condensing towers, and so on). For networking infrastructure, by contrast, the cost for adding new trunk lines tends to be fairly linear assuming you divide the cost of each long haul link up among the more local links that it feeds. There's not a capacity wall (at least as long as the backbone router technology is able to keep up with demands on it).
• You don't pay a $50 connection fee to your water company in addition to the per-unit costs. Outside of the telecom industry, charging a base fee on top of per-unit fees is unheard of. Your power company doesn't do that, your gas company doesn't do that, your water doesn't do that. Your sewer company doesn't do that. Just telephone/ISP service (and to a limited degree, cable TV, except that most of the content they provide isn't metered).

So if the ISPs want to charge $2 per gigabyte across the board and not charge a base fee, that's their prerogative, but I guarantee they'll make a heck of a lot less money that way. I think they should have to choose flat rate or metered---not both.