How to ruin the Internet
By stretch | Monday, June 16, 2008 at 3:01 a.m. UTC
The New York Times published an article Sunday entitled Charging by the Byte to Curb Internet Traffic, discussing Time Warner's recent experiment with "Internet metering" and similar initiatives by Comcast and AT&T. These companies intend to implement data transfer caps for home broadband services, and to impose surcharges for excess traffic, to "ensure fair access for all users."
From the article:
One of them, Time Warner Cable, began a trial of "Internet metering" in [Beaumont, TX,] early this month, asking customers to select a monthly plan and pay surcharges when they exceed their bandwidth limit. The idea is that people who use the network more heavily should pay more, the way they do for water, electricity, or, in many cases, cellphone minutes.
In that trial, new customers can buy plans with a 5-gigabyte cap, a 20-gigabyte cap or a 40-gigabyte cap. Prices for those plans range from $30 to $50. Above the cap, customers pay $1 a gigabyte. Plans with higher caps come with faster service.
I feel ill.
As an industry, I really hoped we had grown beyond such immature, underhanded grabs for a dollar. But the proposal seen here is a clear intention to undercut innovation for the sake of squeezing yet more profit out of an already inflated service. It has been known for years where the Internet is heading, and rather than grow their infrastructures to support increasing demands, these corporations saw fit to idle. As Internet service approaches a level of demand where it rivals the telephone, greed prevails and a new pricing structure is being eyed to wring the consumer's wallet even tighter.
Decades ago, when mainframe computers were struggling to meet the needs of their users, did we simply decide to charge more for access? No, we built faster computers. Did we relent when 10 Mbps Ethernet wasn't fast enough? No, we developed technology to increase the speed, tenfold, again and again. This is the essence of technological evolution, and it is the catalyst which drives the advancement of society. A quote from the Times article illustrates how bandwidth caps stand in contrast to such progression:
The Time Warner plan has the potential to bring Internet use full circle, back to the days when pay-as-you-go pricing held back the Web's popularity. In the early days of dial-up access, America Online and other providers offered tiered pricing, in part because audio and video were barely viable online. Consumers feared going over their allotted time and bristled at the idea that access to cyberspace was billed by the hour.
Some other points to ponder:
- "Time Warner would not reveal how many gigabytes an average customer uses, saying only that 95 percent of customers use under 40 gigabytes each in a month." If that's true, why not release the numbers?
- The inverse of the previous quote (if accurate) is that at least one in twenty of Time Warner's customers stand to face a significant increase in what they pay for a service that isn't being improved.
- Time Warner is quoted as charging $50/mo for a measly 40 GB cap. How much are you paying right now for unlimited broadband service, and how much data are you pushing every month?
- Transfer overage for a home connection is quoted as $1/GB. My cost for overage on a high-speed, redundant, managed connection in a controlled data center is $0.30/GB.
Do the math. Consumers lose.
Posted in Rants
June 16, 2008 at 3:20 a.m. UTC
Sadly we have been living with per GB plans in Australia for a long time now with no end in sight. some carriers including our dear old national carrier Telstra, also charge traffic both ways. Net result is that Australian broadband consumers are being ripped off and an already backwards attitude to broadband is causing a technology lag, Fibre to the node is but a pipe dream. Its a consumer nightmare trying to pick a broadband plan with speeds/feeds/data/bundling as well as availability of technology based on where you live. You have every right to feel sick at the prospect, I think i speak for the majority of broadband users in oz when i say we are truly sick of broadband metering.
June 16, 2008 at 4:58 a.m. UTC
The problem is though unlimited broadband costs the ISP....an unlimited amount of $'s! Various companies have gone bust when their bandwidth bills exceeded their income - that is in situations where the ISPs have to pay a monopoly telco per Gb.
I'm in the UK and get a deal for £15/month ($30 or so) of 15Gb between 8am-Midnight and unlimited usage between Midnight-8am. That seems pretty fair to me so I will accept that the prices you have quoted for Time Warner in the US do seem high but there's a simple solution to that. The market! As long as someone else offers a better deal customers will flow towards them and away from TW - problem (nearly) solved?
June 16, 2008 at 12:33 p.m. UTC
Unfortunately, many places in the US do not have the option of competitive service. Many areas only have the option of one ISP.
Metered bandwidth is a terrible idea, but not surprising in the least from the aforementioned companies. I deal with Comcast, TWC, and ATT on a regular basis and it appears they're merely trying to bring their service and service fees more in line with the support you receive.
As pointed out previously, if the carriers had not remained idle and actually bothered to further their infrastructure, this change would be less of an atrocity.
Comcast, ATT, Time Warner, please think of your customers for once.
June 16, 2008 at 6:05 p.m. UTC
I wonder what effect this will have on companies that have more and more people moving to teleworking. Seems that pretty soon it wont be so cost effective, best avoid VoIP or video conferencing from home while teleworking.
June 18, 2008 at 3:50 p.m. UTC
speaking of inflated.... there is also monopoly situations going on.
a long time ago when i used to live in new orleans, way before katrina....there was only one cable company....COX.....where i am now....south florida.....again the same thing.....one cable company.....COMCAST......because of this, this is why prices are inflated.....when there is only one company providing a service they can charge whatever they want, even if it's highway robbery prices.....only other choice is satellite, but we all know what the downside to that is....bad reception during bad weather.....
i hate monopolies!
July 1, 2008 at 2:45 a.m. UTC
The belief that the bits are free so why should we pay extra for how much we use seems a little naive to me.
This is simply an alternative cost model. Yes, the 5% or so of people that end up being metered will be worse off but I agree that this introduces fairness so that those that only download a GB or two a month will not have to pay anywhere near as much.
July 1, 2008 at 3:08 a.m. UTC
"The belief that the bits are free so why should we pay extra for how much we use seems a little naive to me."
I don't recall ever making that claim, although a customer should obviously be provided what he has paid for. The point of my post is that the mentioned service providers are making a blatant attempt to artificially limit supply in the presence of ever-increasing demand. And by the way, the phrase "alternative cost model" is merely a euphemism for disguising a rate hike.
June 7, 2011 at 3:59 p.m. UTC
I know, 3 years after the fact, but...
You said,"This is simply an alternative cost model. Yes, the 5% or so of people that end up being metered will be worse off but I agree that this introduces fairness so that those that only download a GB or two a month will not have to pay anywhere near as much."
I don't disagree with the logic of covering operational overhead, as some have suggested; however, if this is the case, then would it not work as effectively if they offered a metered option for their customers with lower utilization requirements? I mean why not charge them say $25/month for a 20GB cap, then charge an exorbitant fee (say $1/GB) to discourage exceeding their subscription? It sounds to me that instead of penalizing ones customers for (Time Warner's) lack of foresight and/or keeping pace, they should provide incentive to the alleged 95% of their customer base to use less internet. According to their logic they'd even appeal to prospective customers in multi-provider markets.
Good article Stretch.