Time Warner Cable getting greedy

A colleague first made me aware of Time Warner Cable’s move to sneak bandwidth caps into their existing markets. Now the news seems to be exploding in the blogosphere.

I received this from FreePress.net just yesterday.

We Want More Internet, Not Less
Just as Americans are suffering economically, Time Warner Cable is trying to squeeze us even further, forcing customers to pay a steep Internet penalty for exceeding an absurdly low monthly limit. This is ridiculous. Instead of meeting growing broadband demand, Time Warner Cable is gouging Internet users.

And when I posted the issue to my Facebook profile, a free-marketeer friend had the following to say:

While we are at it, we should insist on air traffic neutrality where you pay one price to fly all you want. Or ocean neutrality where you pay one price to fish all you want. Movie neutrality where one price allows you to watch all the movies you want (I guess Netflix already does this despite not having to.)

Phillip – don’t you think that people who hog bandwidth should pay more for reducing the bandwidth available to other net surfers. Do you think it’s unfair that cell phone companies charge differently for different times of the day so as to reduce network congestion? Or that charge me by the number of pages loaded?

Of course there is the small matter of monopoly providers of broadband access. But with competition I would expect that people would pay for the bandwidth they value and reduce the tragedy of the commons that occurs when I try to watch Netflix Watch it Now movies.

Right now, since I live in an area without real competition, I’m happy to raise awareness of TWC’s doings by any means available. I’ll lobby Congress if Congress is the mechanism by which I can stop TWC from switching their pricing mechanism midstream.

Should network providers charge more from individuals or businesses who use more bandwidth? Sure. But I should also have realistic options from my Internet Service Provider about which bandwidth cap I can sign up for. Right now, Time Warner Cable offers unlimited megabytes of downloaded data, within a context of limited download speeds. And that seems reasonable.

Think of it as if the Water Department offered residences unlimited use of water, through a pipe of predetermined width. That is, you could use each month as much water as you want. More precisely, you could use as much water will fit through a residential-sized pipe per month. The difference between business-class and residential-class service would be the diameter of the pipe.

For the most part, ISPs like TWC  have determined their monthly charges in this way. They allow unlimited use of the service, piped into your home at a predetermined speed. That is, they use speed caps, not cumulative caps.

Surely I’m not suggesting that the Water Department shouldn’t charge my neighbor more than me when he waters his entire property, driveway included, every week. That’s right, I’m not suggesting that at all. Water is a precious limited resource. YouTube isn’t.

A better analogy might be cable television. For years, the model for cable television pricing has been based on the number of channels to which one wants to subscribe. Once I sign up for basic, premium, deluxe, or the super-over-the-top-all-movies package, I can watch as much TV as I want. Whether I leave a television turned on 24/7 or tune in for just the nightly Daily Show, the cable company isn’t going to charge me any more or less.

Cable TV providers have somehow avoided the “tragedy of the commons.” Never in my life has the television program I’ve been watching been “slow” because all my neighbors also have their televisions turned on.

So why isn’t TWC keeping cable Internet priced like cable TV? Because people are dropping their cable TV. TWC’s move to implement download caps is a typically monopolistic response to the growing popularity of Netflix on-demand, Roku boxes, Apple TV and other ways of streaming the TV you want to watch into your home, without signing up for TWC’s cable television service. And if they can set their bandwidth caps low enough, they’ll find a wellspring of new revenue. Business Insider reports that

…[i]n Beaumont, [TWC] had been testing caps of 40 gigabytes per month. That’s less than it sounds, especially as companies like Apple (AAPL) and Netflix (NFLX) increasingly offer hi-def movie services. (A hi-def movie can take up about 4 gigabytes.)

We think Comcast’s (CMCSA) caps are more reasonable — about 250 gigabytes per month. But Comcast is mostly trying to manage its network and weed out pirates. Time Warner Cable seems to be looking for new revenue growth areas as subscriber growth slows.

I think my friend is right on; TWC wouldn’t be able to get away with this if there were real competition. AT&T’s new service has not yet reached into my part of town, but as soon as it does, I’ll consider switching. But I’m also not going to wait (nor encourage) competition from another big business.

As for the suggestion that we ought to push for ocean neutrality while we’re at it… First, as a vegan, I probably don’t have a lot to say about this. But as far as I understand an individual’s fishing license, you can fish as much as you want with your license. If I could get away from work every day and go fishing, the state isn’t going to charge me any more than my friend who can fish only on weekends. Pricing based on volume comes into play only for commerical fishing, which just isn’t a relevant analog to home Internet service.

Like Woodward and Armstrong say about Justice William Douglas’ unabashed liberalism, I am “for individuals over government, government over big business, and the environment over all else.”  In this case, by contacting members of Congress through freepress.net, I’m OK with using the government to protect the individual and stick it to the corporation.


Time Warner Cable getting greedy — 12 Comments

  1. As long as the government is not in the business of insulating big business from competition, the decisions of individuals will be far more effective in disciplining them.

    The more power you give government to regulate business, the more business will seek these levers of power to enrich themselves at the expense of individuals.

    And corporations are, by definition, a hell of a lot better organized.

  2. > AT&T’s new service has not yet reached into my part of town, but as soon as it does, I’ll consider switching.

    Is U-VERSE likely to show up in Durham? I thought not because Durham is serviced by Verizon. They have their own fiber offering called FiOS that would be awesome, but it’s not available in Durham at all. 🙁

  3. And here we get to the heart of our differences, Kyle. I’m not at all invested in who’s better organized. In fact, I’m weary of organized bodies generally since they predominantly maintain organized efficiency through strict hierarchical structures. The more organized an entity, the more efficiently it can usurp power from individuals.

    Besides, all that institutional organization comes at a cost — the institutional dilemma is just the accounting of all the energy that institutions expend to maintain their efficient output. Corporations excel in organizing for productivity; governments (some better than others) excel at managerial tasks.

    I am more interested in post-managerial organizing, or the kind of organizing that’s made possible when the costs of forming groups is lowered and/or abolished. The Internet facilitates forming groups by making available the tools of self-organizing and self-publishing. Blogs, Flickr, wikis… these are all tools that facilitate spontaneous and unplanned, as well as deliberate and planned, group-forming behavior. That is, I’d rather opt out of the institutional dilemma, and many of the tools made available to the public, often for free, via the Internet, make it more possible than ever before to opt out.

    So, my issue is with limiting the use of, and thereby access to, the Internet. And given the requirements that we place on governments for transparency and accountability, and the fact that in a democracy the people are the rule-makers, I’ll take more government oversight and less corporate oversight.

  4. I’ll take Big Brothers over Big Brother any day.

    There is, for me, something fundamentally wrong with the use of coercion. Not morally or ethically wrong. I could care less about that nonsense. No – practically wrong. It undermines the very social dynamism you seem to value as much as I do. It disallows experimentation with new forms.

    Yes – even “oversight” of “big business.” Especially oversight of big business.

    Democracy is a pathetic substitute for peoples’ ability to vote with their dollars. That is about as fluid and non-hierarchical as you can get. Especially when compared to the state. Any state.

    Sure a government that imposes what we want on everyone else (and makes them pay for it) is the best of all possible worlds. But it is not a practical expectation.

    But then – I don’t think either one of us is being very practical. But I do think you could make a solid public goods argument for coercively financed free internet. Just don’t expect the internet we get to improve much. Without a profit motive, why would anyone take the extraordinary risks needed to seed innovation.

  5. Success… for now.


    April 16, 2009
    Time Warner Cable Shelves Plan to Cap Internet Use

    Filed at 4:43 p.m. ET

    Time Warner Cable Inc. is shelving its plan to bill customers based on how much Internet traffic they generate, following mounting public and political outcry.

    Time Warner Cable’s capitulation doesn’t bode well for the future of metered billing of the Internet, in which people who use more bandwidth pay more.

    Frontier Communications Corp., a Time Warner Cable rival in one key test market, Rochester, N.Y., also has dropped its plans for metering Internet use.

  6. And so bandwidth congestion will continue and get worse as providers have no incentive to increase capacity or engage in peak load pricing to encourage users to access bandwidth-heavy content during off-peak hours.

  7. That’s not the way I see it. TWC now has an incentive to set its bandwidth caps (when it rolls them out, because it will roll them out) much higher than the ridiculous 4 — 40GB/month. Something more like 250GB/month might be more reasonable.

    And… we agree that coercive force is sub-optimal. I just think that government coercing corporations is a lot more tolerable than corporations coercing individuals.

  8. Just download that mix and bump that Buck Owens while the marginal cost of tunes is still nil.


  9. I don’t have a problem with limits in theory.

    What I do have a problem with is a reduction in my service. To compare it to cell phones, you’re currently paying for, and receiving, an “unlimited plan”. They’re now wanting to charge you the same and restrict your minutes.

    Don’t forget that it’s not exactly a free market. Local government have granted (or sold) monopoly rights to these companies. A monopoly should come with restrictions. Ask TWC whether they’d rather give up their bandwidth cap or allow another provider to start pulling cable and you’ll see my point.

    I’ll cancel just on principal at this point. They’re never going to stop pushing as long as people are willing to keep paying through the nose.

  10. What I want to know is what happened to all the alternative braodband providers. Sprint had a great cellular service. Worked in the west because you had to have line of sight. There was also going to be broadband through the power lines.

    Wonder where it all went.

  11. Tanner — UVerse is already available in some parts of Durham. I believe in the southern portions.

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