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Time Warner Cable techs and the company's PR folk spent last week being smacked around by the Internet for the company's plan to expand ultra-low caps and metered billing into four additional markets. Back from last week's Cable Show in DC, Time Warner Cable COO Landel Hobbs has now jumped into the debate, offering a public statement. Hobbs defends the plan by citing (so far nonexistent) DOCSIS 3.0 deployment, promising a higher 100GB cap is coming for "heavy users," and by insisting that per-byte billing is what consumers want. As the amount of usage has dramatically diverged among users, this is becoming inherently unfair and not the way most consumers want to pay for goods they consume. Of course, consumers made it pretty clear last week across a vast variety of outlets that metered billing for broadband wasn't what they wanted. And if it really was something consumers wanted, Time Warner Cable wouldn't be intentionally avoiding offering such a incredibly desired service in markets where Verizon offers uncapped and faster Verizon FiOS service. If consumers really wanted to pay $1 per gigabyte, Time Warner Cable would be happily testing the metered billing option in New York City, where they'll compete with FiOS. Hobbs repeats the now-familiar industry meme that the move to metered billing is being done out of some kind of philanthropic desire for fairness -- not because Time Warner Cable wants to protect cable TV revenues from Internet video -- or because charging customers massive overages for bandwidth that costs pennies is hugely profitable. 1000%-1500% overage markups over cost are not only super fair, argues Hobbs, knee-capping American families just as HD Internet video takes off will help increase the use of broadband. Quote - "I think that such pricing options are not only fair, but also will actually encourage more use of broadband overall."Of course $1/GB overages will encourage more use of broadband -- just not theirs. I think that (metered billing is) not only fair, but also will actually encourage more use of broadband overall - Time Warner Cable COO Landel Hobbs. Meanwhile, were the move really about fairness, they wouldn't be punishing their entire customer base for the gluttony of 1% of their customers. Like Comcast, Time Warner Cable could simply impose a very high cap to rein in these customers, or force those heavy users to higher business-class tiers without resorting to charging overage fees. Were it really about fairness, customers who utilize virtually no network resources would pay virtually no money. Do you think Time Warner Cable is hard at work on a new, $4.95/month "grandma Xtreme tier" that accurately reflects her occasional e-mail and Weather.com use? Do you think Time Warner Cable really wants a massive swath of their userbase -- many of whom currently pay $45 or more per month just to check e-mail and browse the Internet -- to really be billed accurately for their usage? Of course not. No, the use of overage fees and metered billing isn't about fairness -- it's about monetizing and/or impeding the Internet video consumption of tomorrow's regular families, while creating a new revenue metric that can be jacked ever skyward to please investors when quarterly profit boosts are needed. The argument that Time Warner Cable wants to make more money probably would be less insulting if the company simply came out and stated the move is to make more money. The attempt to frame this as an issue of altruism adds a layer of insult to injury for consumers. The already very-profitable company, which last week stated that flat-rate billing was not a "viable" billing model, has yet to offer a shred of hard data to support this conclusion. Time Warner Cable is still fielding (polite) input via firstname.lastname@example.org.
As TWC expands its test markets for the data caps, it offers plans with 5GB of monthly data transfer for $30. Plans with 40GB of data go for $55. The thinking here is that most customers currently use only 4GB per month or so, and offering those customers a cheaper rate is actually doing them a favor. As Hobbs puts it, "Our current pricing plans require all users to pay the same amount, whether they check e-mail once a month or download six movies a day."But the only favors being done here are to TWC's bottom line. That base rate works out to a truly jaw-dropping $6 per GB per month, and it's so far out of line with competitors' plans as to shock even the most cynical heart.Take AT&T's DSL, for comparison. The most expensive plan on offer (unless one subscribes to the U-verse IPTV system) is $35 per month for 6Mbps DSL. AT&T has no explicit data cap, but let's use 400GB as an illustrative limit. AT&T DSL comes out to 9¢ per GB.Verizon's fiber-optic FiOS system can be had for as little as $44.99 a month if you're content with 10Mbps downstream. Assuming a 400GB cap (Verizon also has no explicit cap), this comes out to $.11 per GB. Upgrading to the much faster 50Mbps service for $144.95 a month still means that the charge per GB is only 36¢.The situation is similar at other cable operators. Comcast offers Internet service starting at $42.95 per month and has a 250GB cap in place; this works out to 17¢ per GB.TWC claims that the caps are needed to "make improvements to infrastructure" that are necessary for higher speed access, but it's hard to see how. Comcast is aggressively rolling out DOCSIS 3.0 upgrades across its service area. In Chicago, it already sells a 50Mbps plan for $139.95—only 56¢ per GB.
TWC claims that the caps are needed to "make improvements to infrastructure" that are necessary for higher speed access, but it's hard to see how.