TimeWarner going to usage based internet billing

[Riggswolfe]

I hate the sound of this:

http://www.msnbc.msn.com/id/22707271/

[Morat20]

I hate the sound of this:

http://www.msnbc.msn.com/id/22707271/

Won't fly. Users will simply move to a fixed plan elsewhere. (Are there legal aspects to this? Beaumont is pretty much in the middle of nowhere, and TimeWarner might be the ONLY provider for high-speed in the area.).

Now, if they were doing something like tiering it -- unlimited users paying a premium and everyone else subject to a simple surcharge if they passed their monthly allotment, maybe. Users would probably tolerate tiered plans or fixed-rate surcharges. This sounds like the old-style "Pay-per-minute" style, just pay-per-gig.

I wonder if DSL has the same sorts of woes as cable? I wouldn't think to quite the same degree -- but then AT&T is currently talking committing financial suicide by monitoring their data stream (quick take: If they do NO monitoring, they are no liable for any use of their bandwith. Customers are. If they do ANY monitoring, suddenly they ARE liable. So basically, implementing monitoring for IP violations is putting a giant "SUE ME" and "PROSECUTE ME" sign on their back).

[naum]

I hate the sound of this:

http://www.msnbc.msn.com/id/22707271/

Won't fly. Users will simply move to a fixed plan elsewhere. (Are there legal aspects to this? Beaumont is pretty much in the middle of nowhere, and TimeWarner might be the ONLY provider for high-speed in the area.).

If you have a choice. I wonder what % of folks actually have a broadband choice (not factoring in the crappy satellite deal where the terms are more onerous than this…). I live in Phoenix metro area and have only 1 viable broadband choice - Cox cable. And funny thing is I can punch up my address on Qwest site and they say I can get DSL but when I call they tell me I'm out of range…

[Tebonas]

Users that don't download much will use it if its cheaper for them. We have both unlimited usage plans and plans with download limits over here, and one of my coworkers just moved from his unlimited plan to a different one because he just surfs and loads down little to nothing. He will pay a lot less money that way.

[slog]

It seems to me that it depends on pricing.

for example, at $3 to $5 dollars a gig, most users would see a price decrease.  Things get murky around $10 a gig.

All in all, I think it's a good idea, especially as bandwidth keeps increasing while capacity isn't.  Heavy users of a scarce resource should pay more.

[HaemishM]

The problem is it WON'T be cheaper for the regular customers. Time-Warner will charge the users what they already do now, and the high-usage guys will get stuck with the $200 Internet bill.

Fuck a bunch of this shit. The only way I'd support a pay-per-usage system is if the per unit price is something miniscule. And you know it won't be.

[slog]

The problem is it WON'T be cheaper for the regular customers. Time-Warner will charge the users what they already do now, and the high-usage guys will get stuck with the $200 Internet bill.

Fuck a bunch of this shit. The only way I'd support a pay-per-usage system is if the per unit price is something minuscule. And you know it won't be.

In that case, it makes great sense from Time Warner's point of view.  Dumping customers that you make low/no margin on is smart business.

[Soukyan]

It seems to me that it depends on pricing.

for example, at $3 to $5 dollars a gig, most users would see a price decrease.  Things get murky around $10 a gig.

All in all, I think it's a good idea, especially as bandwidth keeps increasing while capacity isn't.  Heavy users of a scarce resource should pay more.

I disagree with the notion that heavy users should pay more, especially when the broadband service providers in this country oversubscribed to the point that the infrastructure nearly collapsed this past year. No, going to a tiered plan is not an acceptable solution. Fixing the infrastructure is. Also, as a consumer, I pay $60/mo for a 16Mb connection. Not bad, but I feel it is a bit overpriced. It's time to increase capacity, or roll out viable infrastructure using new technology. I have been expecting to see someone try this at some point, and it very well may fly which is annoying. I don't want to go back to the days of dial-up/per-hour pricing. It sucked then, it will suck now.

[naum]

I disagree with the notion that heavy users should pay more, especially when the broadband service providers in this country oversubscribed to the point that the infrastructure nearly collapsed this past year. No, going to a tiered plan is not an acceptable solution. Fixing the infrastructure is. Also, as a consumer, I pay $60/mo for a 16Mb connection. Not bad, but I feel it is a bit overpriced. It's time to increase capacity, or roll out viable infrastructure using new technology. I have been expecting to see someone try this at some point, and it very well may fly which is annoying. I don't want to go back to the days of dial-up/per-hour pricing. It sucked then, it will suck now.

I don't buy that the infrastructure is overtaxed. Maybe the last mile, but not the backbone… …and there is so much opportunity in regard to the last mile… …furthermore, should be a backup net blanket piggybacking on cell phone towers, something that could serve in case of Katrina style disasters or power outages…

[HaemishM]

The infastructure argument is exactly true. The big telcos don't want to pay to upgrade the infastructure for people who, they believe rightly or wrongly, are stealing their intellectual property. While they might have a point, these are the same assholes who have been sending a mixed message. AT&T has touted their broadband services as "DOWNLOAD AS MUCH MUSIC AS YOU WANT!" then get pissy when you use too much bandwidth.

[slog]

It seems to me that it depends on pricing.

for example, at $3 to $5 dollars a gig, most users would see a price decrease.  Things get murky around $10 a gig.

All in all, I think it's a good idea, especially as bandwidth keeps increasing while capacity isn't.  Heavy users of a scarce resource should pay more.

I disagree with the notion that heavy users should pay more, especially when the broadband service providers in this country oversubscribed to the point that the infrastructure nearly collapsed this past year. No, going to a tiered plan is not an acceptable solution. Fixing the infrastructure is. Also, as a consumer, I pay $60/mo for a 16Mb connection. Not bad, but I feel it is a bit overpriced. It's time to increase capacity, or roll out viable infrastructure using new technology. I have been expecting to see someone try this at some point, and it very well may fly which is annoying. I don't want to go back to the days of dial-up/per-hour pricing. It sucked then, it will suck now.

If you substitute Electricity, Water/Sewer, or any other utility where costs increase with usage, a per diem charge is the solution.  Why should broadband be different?

[Soukyan]

It seems to me that it depends on pricing.

for example, at $3 to $5 dollars a gig, most users would see a price decrease.  Things get murky around $10 a gig.

All in all, I think it's a good idea, especially as bandwidth keeps increasing while capacity isn't.  Heavy users of a scarce resource should pay more.

I disagree with the notion that heavy users should pay more, especially when the broadband service providers in this country oversubscribed to the point that the infrastructure nearly collapsed this past year. No, going to a tiered plan is not an acceptable solution. Fixing the infrastructure is. Also, as a consumer, I pay $60/mo for a 16Mb connection. Not bad, but I feel it is a bit overpriced. It's time to increase capacity, or roll out viable infrastructure using new technology. I have been expecting to see someone try this at some point, and it very well may fly which is annoying. I don't want to go back to the days of dial-up/per-hour pricing. It sucked then, it will suck now.

If you substitute Electricity, Water/Sewer, or any other utility where costs increase with usage, a per diem charge is the solution.  Why should broadband be different?

Depends on where you live, I suppose. Water/sewer are reasonably priced in my area, but electricity used to be outrageous. It still is, however, natural gas prices have eclipsed it in recent years, making it look like a bargain. I notice you didn't mention natural gas. Perhaps you live in an area that doesn't have a winter requiring heat, but I do and I can tell you that we do pay for our usage here, and dearly. So much so that I keep my thermostat at a steady 55 degrees in the winter. This makes for a rather cold house, but it keeps the bill under $300 per month. If I were to keep the thermostat at a more comfortable 68 degrees, the bill would jump to over $600 per month. Pretty insane. But hey, scarcity of resources, right? Except natural gas is a natural resource. Bandwidth is a limited resource, but that's why I suggest a greater infrastructure buildout. So you make a good point about broadband being a utility that should be treated the same as others, however, that destroys the models of new media services such as streaming movies on the Internet (a Netflix one will be between 1 to 2 GB for a two hour movie). Suddenly, the price of "renting" becomes prohibitive. Also, cable television is a utility and we don't get charged by the minute. I think for controllable utilities, a different approach needs to be taken.

[shiznitz]

The high usage customers can whine all they want but we all know that $/bit is the future. 5% use 50% of the bandwidth. Those customers aren't going back to dial-up and if Time Warner loses them to Verizon's fixed price plan, then TW's profitability goes up quite a bit.

[Nebu]

As much as I hate to see this, it is good business.  If all plans go to this then MMO's may one day be fun again. 

"But mom... I need more internet time so I can play with my friends!"

[Phildo]

As much as I hate to see this, it is good business.  If all plans go to this then MMO's may one day be fun again. 

"But mom... I need more internet time so I can play with my friends!"

When I first started using the internet, I racked up a tremendous bill on AOL.  My mother made me cancel the plan myself.  There's a damn good reason they started offering unlimited usage plans in the first place.

[kaid]

I find it kinda funny that after all there advertisements even on their web pages about downloading music and movies at high speeds they get pissy when people start doing just that. I don't download much file wise but I play a lot of online games with a steady flow of data in and out so I would have no clue what my average usage would be.

[Riggswolfe]

I for one hate the idea. Once a company goes to something more profitable, at my expense, it only gets worse from there. We all know that they'll wait until you get used to it then jack things higher and higher.

I'm hoping this fails horribly but I doubt that it will. My biggest hope is that a few companies, including Cox, stick to unlimited and make it part of their advertising and take business from these other guys.

[Morat20]

If you substitute Electricity, Water/Sewer, or any other utility where costs increase with usage, a per diem charge is the solution.  Why should broadband be different?

Because they are different things? That seems a pretty straight-forward reason right there. Bandwidth isn't electricty, it's not water. It's something else entirely, and what's a good business model for pricing should be based on what it is, not what other unrelated things charge.

Frankly, it depends entirely on where their bottlenecks are. My experience with Time Warner (indeed, with any company with a near or actual monopoly over an area with limited oversight) is that the problem is just an excuse to jack up prices. They don't want to invest in infrastructure, or upgrade routers, or do ANYTHING because as long as the problem persists, they can jack up rates and make more money.

Sooner or later, of course, they'll go a bit too far. But if they're the only broadband providers (or one of two or three total) that "far" is pretty damn far. What are you going to do, go back to dialup?

The rest of the first world has more broadband capacity and speed than we do. Time Warner and AT&T are big reasons why we lag so far.

[Merusk]

I for one hate the idea. Once a company goes to something more profitable, at my expense, it only gets worse from there. We all know that they'll wait until you get used to it then jack things higher and higher.

I'm hoping this fails horribly but I doubt that it will. My biggest hope is that a few companies, including Cox, stick to unlimited and make it part of their advertising and take business from these other guys.

Not going to happen.  As Morat expressed above, TW, or indeed ANY cable company tends to be a monopoly for whatever region they're in.  TW is the only option if you live in Greater Cincinnati, and Insight is the only option if you live in most of Northern Kentucky.  There's a few areas where the city handles cable, but that's contracted through one of the two, and a few areas where the services overlap, but it's a monopoly for the most part. 

As a result, TW uses whatever excuse they can to jack-up or price-in stupid shit.  For example, TW charges $.38 a month for remote control rental... however, if you go to return the remote when you end your service, they won't take it.  So what, exactly, are you renting?  The same thing happened with my broadband router when I was on TW.  They chaged me $2.99 a month for the two and a half years I had TW, but they wouldn't take the router back when I ended my service.

That said, yeah, this move doesn't surprise me at all.  More and more devices are 'always on' or hit the net frequently, and more and more services are streaming data constantly to our PCs, Consoles, TVs, etc. before you even get into the silly net-connected devices.  It makes sense that as a way to expand their profit the carriers will move towards this.  If it works for TW, I expect more companies to move towards it, not away from it and I think the first bill will shock a lot of folks who say, "But I don't use the internet that much!"

[Rasix]

This is really going to kill the appeal of digital distribution when/if this pricing model makes it to Comcast. 

Hell, this goes into effect and those DSL price-for-life plans become a lot more attactrive. I'll take slower DL speeds and a higher ping (I'm not that much of a competitive gamer now, anyways)  if I can prevent my cable company from extorting even more cash from me.

[MrHat]

$3.99 for a HD movie rental just started to cost lots more.

[Montague]

The net is on borrowed time as an unregulated medium as it is. Crap like this will just accelerate it.

[Soukyan]

$3.99 for a HD movie rental just started to cost lots more.

Exactly my point. This would kill digital distribution, or make it a lot less consumer friendly. Perhaps it's "good" business, but it's not necessarily good.

[Samwise]

If you substitute Electricity, Water/Sewer, or any other utility where costs increase with usage, a per diem charge is the solution.  Why should broadband be different?

Cable TV is a much more apt analogy.  How many cable TV plans do you know of where you're charged based on how long your TV is on?

The difference is that with utilities, you're paying for the content.  With services like cable/sat TV and broadband Internet, you're paying for the delivery.  (Except for cases like pay-per-view TV or subscription websites, in which case you're paying for content as well.)

[Morat20]

The net is on borrowed time as an unregulated medium as it is. Crap like this will just accelerate it.

It depends on what you mean by "unregulated". The net is -- at least in the US -- subject to common carrier regulations. I suspect those regulations will tighten up, despite the best efforts of the common carriers to loosen them.

In terms of regulation of content, no. In terms of regulation of fees, payments, charges, etc....probably. Net service has the same basic monopolistic urges and subject to the same sorts of abuses that phone and cable companies have, hence the common carrier regulations.

[slog]

If you substitute Electricity, Water/Sewer, or any other utility where costs increase with usage, a per diem charge is the solution.  Why should broadband be different?

Cable TV is a much more apt analogy.  How many cable TV plans do you know of where you're charged based on how long your TV is on?

The difference is that with utilities, you're paying for the content.  With services like cable/sat TV and broadband Internet, you're paying for the delivery.  (Except for cases like pay-per-view TV or subscription websites, in which case you're paying for content as well.)

You mean like on demand movies?

[Comstar]

50% of the bandwidth is being consumed by 5% of the customer base. The Bandwidth is like water, there's a limited amount, and once it's oversubscribed everyone loses.

[Phildo]

Unlike water though, internet is not limited by natural scarcity.  It's limited by the companies' desire to save money by not upgrading their own infrastructure.

In regards to the On Demand aspect, the same could be said for Pay-Per-View.  However, I can still pay a fixed rate and get all the cable TV I went without paying a dime extra.  It's only the bonus content that costs extra.  This would be like if internet companies received kick-backs from content providers for large downloads.

Hey, now THERE'S a solution!  Instead of charging the users, charge the companies that are putting large files out there for everone to download (hello, Youtube!)

[Engels]

50% of the bandwidth is being consumed by 5% of the customer base. The Bandwidth is like water, there's a limited amount, and once it's oversubscribed everyone loses.

Nextdoor Joe watching Netflix isn't affecting Judy checking her Weight Watcher's message board.

Is Time Warner having to ramp up its infrastructure to accomodate these high-usage users? If there was a case for bandwidth scarcity, then I'd see the inevitability of this.  Perhaps in some remote areas where TW doesn't see the return on investment of putting in adequate bandwidth hardware, but in large "urban" areas, where the majority of customers live anyway, there's no way I'll buy the bandwidth scarcity arguement.

Its just the market doing its thing; figuring out how to get more money. This is normal for a balls-to-the-wall capitalistic economy like the US.

[slog]

Unlike water though, internet is not limited by natural scarcity.  It's limited by the companies' desire to save money by not upgrading their own infrastructure.

In regards to the On Demand aspect, the same could be said for Pay-Per-View.  However, I can still pay a fixed rate and get all the cable TV I went without paying a dime extra.  It's only the bonus content that costs extra.  This would be like if internet companies received kick-backs from content providers for large downloads.

Hey, now THERE'S a solution!  Instead of charging the users, charge the companies that are putting large files out there for everone to download (hello, Youtube!)

Just about everything is limited by scarcity.  That's basic economics.  It makes no sense for Time Warner to invest in additional capacity if they can't make a profit off their investment.  That's the path to Chapter 7.

Pricing schemes needs to be based on additional cost, not total cost.  Using your example of cable TV tiers, You can leave your TV on HBO 24-7 and it imposes almost zero extra costs to Time Warner.  When you run Bit Torrent 24-7 and saturate your connection, you tax the system.

Perhaps someday the technology will be there to shift the cost of bandwidth to be more like Cable TV. In the meantime, heavy users cost more then light users.

[Tebonas]

So heavy users pay for unlimited bandwith and the others go on cheaper plan that limits their bandwith. Or did I miss something and this new plan takes away the old unlimited plan? If so, shame of Time Warner.

[Mrbloodworth]

This sounds a lot like the Subscription VS. Micro payments (Not Item shops, but pay per time) augment in regards to MMO's.

and i

Most MMO's are over charging 50% of its player base, while the other 50% are under charged.

[Murgos]

Perhaps someday the technology will be there to shift the cost of bandwidth to be more like Cable TV. In the meantime, heavy users cost more then light users.

You are confused.

1) There is no natural scarcity to bandwidth.  The selling company can always add more and pass that price on to the consumer, on both ends of the line.  This is not a cost to the provider.

2) There is no 'real' cost to 5% of the users using 50% of the bandwidth.  The hardware exists, the lines exist and the power to those lines must be drawn regardless of if they transmit an idle pattern or a data pattern and maintenance must be done regardless.  Heavy users do not cost more than light users, they may temporarily retard growth as capacity is expanded (see 1) but even then that is true only up to the point that the market is saturated.

3) The worst case of over-saturation of the carrier network is simply a reduction of quality of service (slightly longer ping times and proportionally lower throughput).  If the QOS decreases enough then the opportunity cost for the competition will have decreased to the point where someone else can come in and profitably offer a higher QOS.

The only real need to go to usage based billing is if the carrier were providing extra lines only to a certain subset of customers and those customers needed to cover the cost of the expansion themselves (back to 1 again).  I.e providing a premium service.  Otherwise it's just intimidation to keep use down so they can place MORE users on the same lines (they are charging more AND reducing QOS) which is obviously only a short term money grab and not sustainable in a free market with plentiful resources.  The reason why they can do it at all is the previously discussed virtual monopolies that most broadband ISPs have in small communities.

[Engels]

Murgos hit the nail on the head.

[naum]

1) There is no natural scarcity to bandwidth.  The selling company can always add more and pass that price on to the consumer, on both ends of the line.  This is not a cost to the provider.

…

Thank you.

Comparing bandwidth to water is flawed and I though the only knowledgeable folks who figure as such are corrupt senators who prattle about how the internet is a "series of tubes"…

Infrastructure is larger in an exponential fashion (compared to 10, 20, 30 years ago)… …again, the big damper might be the last mile but there are so many solution options there…

And let's not forget that all of this network foundation was built on the public dime, still serviced by monopolistic entities (either state sanctioned and subsidized OR granted exclusivity)…