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."

The problem with consolidated multimedia

When the same company provides your cable service (including your cable pay-per-view service), your internet service, AND produces media content themselves; is there any doubt that this will cause a serious conflict of interest that will harm the consumer? Time-Warner has EVERY incentive to keep you from using movie download services instead of their own pay-per-view service and EVERY incentive to stop movie/TV pirate sites (to keep you from pirating Warner movies and TV).

This is why consolidation in media is such a BAD, BAD, BAD thing for consumers. When one single company (or even small group of companies) owns your newspaper, television stations, internet service, telephone company, cable company, etc. they basically own *YOU*.

MOD PARENT UP

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

Yes it is bad that an ISP charges by bandwidth. They justify it by saying that 5% use 50% of the network.. but the other 95% of users aren't even using the internet- 95% of americans only use it for checking yahoo webmail once every 2 weeks and automatic windows updates. The 5% of us shouldn't be penalized- we're the reason jacked-up American broadband has to cost $50 a month, and it makes absolutely no sense to penalize us for that when Americans are already paying the premium! They should be exploring new plans to offer broadband at $5/month for that 95% of people and the same old $50/month for high bandwidth users.

Re:MOD PARENT UP

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

That's fine as long as people who barely use any bandwidth see their prices REDUCED. Someone using 50MB per month should certainly not pay more than $5/mo.

Re:The problem with consolidated multimedia

The price per GB in competitive markets is around 6c/GB so their 40g plain should cost 30 *.06 = 1.80$ more than the 10GB plain. If they implemented this FIOS could start advertising 100GB, 200GB, and 400GB plain for the same price. Which would cause most people with the option to quickly switch.

So I know they want to do this but my guess is they are afraid to do it without:

A: Losing customers in competitive markets.
B: Becoming regulated in non competitive markets.

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

...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.

U.S. falling behind

Spending much of the last several years in Eastern Europe, I've admired how ISPs there offer Internet connections for cheap even by local standards and are tolerant of heavy P2P usage. The technique used by one ISP I've used in Romania to reduce bandwidth usage was setting up a DC++ server where people could trade music and films at lightning speed with people from the same city.

In the U.S., meanwhile, Internet connections are pricey and companies like to poke their nose into what you are doing with it. How ironic that a country which was a major force behind the creation of the Internet is lagging in many respects to poor former-Soviet states.

Re:U.S. falling behind

that has much more to do with the less sophisticated law enforcement in those countries...

Re:U.S. falling behind

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).

Re:U.S. falling behind

then they'll encourage more bandwidth usage and plow some of the new profits back into infrastructure

I bet you fall for Hillary Clinton crying too.

Users Used

'As few as 5 percent of our customers use 50 percent of the network,' Time-Warner complains...

So does that mean only 5 percent of their customers are making good use of what they paid for?

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

Charge me for bandwidth usage or charge me true unlimited bandwidth usage. I think that either method could be accetaple provided there was no throttling, blocking or hidden charges or caps.

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

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

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.

The problem is they're not competing for you as a customer, but for people who don't really understand what they are buying.

ISP A:
- Minimum speed: 1MBs/5MBs.
- Time over certain speed: 99% time over 5MBs-25MBs. 90% time over 5MBs-50MBs
- Max non-compensated downtime: 4 hours.
- Transfer limit: 1GB.
- Cost for extra transfer: 0.05$/GB.

ISP B:
- Minimum speed: 1MBs/5MBs.
- Time over certain speed: 90% time over 5MBs-25MBs. 5% time over 5MBs-50MBs
- Max non-compensated downtime: A month.
- Transfer limit: 1Gb.
- Cost for extra transfer: 5$/Gb.

ISP C:
Supermegaoffer!! 50MB MAX connection!
Sign up now! Don't put up with the slow ISPs!

Final customer cover result would probably end up like:
A: 25%
B: 15%
C: 60%

Time Warner and Comcast are cordiallly invited...

...to FUCK OFF AND DIE, because I'll go back to fucking dial-up before I pay their ransom!

Good luck with that guys

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.

I really hope they do this.

It will make it really easy for another broadband technology to take hold and utterly destroy them.

That's the biggest problem, Most cable areas have ZERO competition for broadband. DSL is not available as telcos like to drag their feet upgrading the infrastructure to get DSL working everywhere.

As soon as there is some real competition out their for broadband forcing time warner and comcast to quit playing their rape the customer games.

Also, the effect to people with open accesspoints will be chilling. Clueless people in their homes will be slapped with a shutoff or higher bill that month when a bunch of kids discover their accesspoint to download their stuff. It will create a underground "internet stealing" activity as people get their downloads without exceeding their own cap.

Cable companies dont give a rats ass, as long as they find a way to charge you more for what you already get and not upgrading their equipment, they are incredibly happy.

Time for the Electric Company to Jump in for Real

Is it time for broadband over powerlines [eei.org] finally?

The networking is already in your house:

"Providing broadband service to these customers would simply require adding equipment to their wires. The feature of BPL that would make it more attractive than DSL or cable modem is that BPL customers would immediately have in-house networks without having to purchase and install additional wiring in their homes."

Plug in a wireless hub or router and you're ready to roll.

Although all of this brings up the next problem: You're dealing with *another* monopoly. Bah!

1500 HD movies a month?

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...

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!

Nothing New, we do it already and people LOVE IT

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.

Re:5GB?!

We have had tiered pricing like this for a many years in Australia.

And its not about iTunes downloads.

My ISP (iinet.net.au) charges me $XX dollars for XX GB of usage per month on a 24Mbps ADSL2 connection. This is very common in Australia. My XX's are $49 for 10GB of usage but other higher and lower plans are available. After that I am "shaped" to a 64kbs connection.

Sounds bad right? But...

If I get me email off their POP server that doesnt count towards usage.

And they have some kind of agreement with Apple (mirror maybe?) that itunes downloads dont count. (NOTE: This partnership with Apple is highly visible and advertised on their website)

They also have a mirror for just about every linux distro (they are an official Ubuntu mirror) and for almost all game demos and patches. Not only does this not count towards my usage, but it means I can get these at the maximum speed of my connection as the download is only one short hop away (think linux iso in 3 to 4 minutes).

About the only thing that really counts towards your usage is web browsing - which even in a month of heavy use doesnt come close to the limit at about 2 to 3 GB - and BitTorrent/P2P which I have to admit I do use sometimes.

I hate to say it but if we all downloaded legal video content the ISPs wouldnt have to look at this. They would just setup legal local mirrors for large files.

Re:5GB?!

WOW.

An ISP has partnered with various content providers to offer specialized service: Network Neutrality nightmare #1 is here! To everybody who said all this network neutrality stuff was theoretical and we should wait until it happens - here's your example. Now, do we have to wait until this happens in the U.S. before we get some neutrality legislation?

I know that the parent poster was using this example to be a good thing, but it isn't. It is now cheaper for him to buy stuff from iTunes instead of Amazon. It's cheaper to play games from the companies they've partnered with. I'm sure that non-commercial games with large downloads aren't getting these special benefits. Nor small Linux distros. This sounds like a great way for an ISP to slip non-neutral policies into place: 1. Create some sort of cap that applies to everyone. 2. Make exceptions to the cap. Now, instead of it looking like they are penalizing Amazon's music download service, they can say they are doing something helpful to the iTunes users. Same thing, different spin.

Re:5GB?!-Breaking the honesty barrier.

Why should you hate to say the truth? The people who pirate brought this whole mess upon themselves and they don't have the balls to take responsability for it. Leaving the honest to suffer and clean-up after them. Phoeey! They're no friends of ours.

I downloaded the entire first season of Lost from iTunes at one point. That single download was (IIRC) over 9GB. I have rented several movies from iTunes in the past few weeks, each one around 1.5GB in size. I have taken an active interest in history and archeology as of late and have downloaded as many as 5 History Channel shows in a single weekend, each between 450MB and 1.5GB in size. (The History Channel has some special feature shows which are basically movies.)

I'd easily trample 5GB for my entertainment before you even START looking at my bandwidth usage for getting Solaris 10 & OpenSolaris downloads; evaluating the latest Linux version; playing video games online; downloading the latest OO.org, Netbeans, Seamonkey, Firefox, Opera, Safari, iTunes, GIMP, and other software that I need to keep up to date on a regular basis. Oh, and then there are free videos like Star Wreck, YouTube, Starship Exeter, New Voyages, Hidden Frontier, Java Gaming Vidcast, watching the lastest Macworld Expo, the JavaOne presentations, the Sun announcements, etc., etc., etc., etc.

Oh! And let's not forget about my day-to-day tasks of obtaining libraries, SDKs, documentation, and other tools I need for my work and hobby. (HTML & PDF documentation can easily exceed hundreds of megs for many projects. Some exceed several GB. Don't even ask me about the time I tried to get a copy of MonoDocs by spidering the MonoDoc website.)

As if that isn't enough, taking my game console online to play web games, watch videos, and otherwise interact over the web with the console easily chews through a significant chunk of bandwidth. A 3-10 MB Flash Game or a 20MB video clip might not seem like much, but it starts to add up after a while.

Am I a power user? Sure. And I'm more than willing to pay for quality service that provides me what I need to use my connection to its fullest potential. But don't think for a moment that using your connection implies illegal activity. There's more than enough data churning around the 'net before you even touch the illegal stuff. And when I'm paying upwards of $50/mo for broadband, you had better bet that I expect to be able to transfer as much as a hundred GB a month. As someone already mentioned, bandwidth is more than cheap enough to make that much transfer cost-effective.