Starting this Thursday, Time Warner Cable begins testing a pay-for-what-you-use program for its high speed Internet service in Beaumont, Texas. The new consumption based pricing model, Time Warner says, is being tested as a result of findings that reveal about 5 percent of the its customers account for more than half the bandwidth used.
The new payment scheme has the potential to impact all U.S. broadband customers. If Time Warner decides to implement this pricing plan nationally other ISPs could follow suit. Broadband providers are under a lot of pressure to meet the bandwidth demands of customers. Some ISPs have begun slowing access to the Internet and some such as Comcast give its biggest bandwidth hogs the boot.
According to reports, Time Warner Cable will make two service options available for new customers; $29.95 per month for a 768 kilobits per second download speed and a 5-gigabyte data cap or $54.95 per month for 15 megabits per second down with a 40-gigabyte cap.
Each gigabyte over the monthly allotted limit costs customers one dollar and Time Warner will be waiving those fees for the first two months of the trial. Customers will be able to check their usage by referencing a "gas gauge" on the ISP's home page. Existing customers, luckily, are grandfathered in to their unlimited-access plans, so these caps affect new customers only.
Who Wins?
Only in places where Time Warner has little-to-no competition (like Beaumont, coincidentally) - would something like this work.
If T-Mobile, for instance, offered 600 voice minutes for $99 per month when every other cell phone provider is offering unlimited minutes for the same price, T-Mobile would have a very hard time selling cell phone service. If Time Warner and, say, Comcast were both offered in Beaumont, Texas, you might get a few people signing up for Time Warner's $29.95 per month plan, but just about everybody else would go for Comcast's unlimited plan.
Luckily for Time Warner, it's currently the only cable Internet game in town for Beaumont so it won't need to compete too hard for business. The company might be able to grab some new price-sensitive consumers or light-Internet users with the $29.95 per month plan. On the other hand, if you download tons from Apple iTunes, stream content from Hulu.com, or use BitTorrent to download content you'll likely be paying overage charges.
Who Loses?
Consumers lose because of the data overage charges that many of them will have to pay. And they don't win if they don't use all their allotted data.
There's no roll-over plan and you don't get any money taken off your bill if you're paying for the 40-gigabyte per month service and don't use all your data.
The high bandwidth plan isn't any cheaper per month, either. The new plan is $54.95 per month and the old plan was $54.95 per month. I realize that currently-available unlimited plans don't reward people for going easy on the downloads, but if Time Warner is going to penalize people for downloading too much, why not offer customers who don't go overboard a little something back?
Online services that offer downloadable high definition content lose too.
I consume more than 40 gigabytes of bandwidth per month (not much more, though) due to the fact that I download HD movies and TV shows over my VUDU box, my Xbox 360, and my Windows Media Center PC.
Some or all of those three services would lose my money if I had a monthly cap because I wouldn't want to spend $2-$3 in overage charges just to rent a movie. When I'm worried about overage charges I'm not going to use these bandwidth-reliant services as much.
What Should Be Done
If Time Warner is dead set on keeping the 40-gigabyte limit, then it should at least let customers accrue unused gigabytes. Perhaps make the limit something like 500 gigabytes per year instead of 40 per month. Either that, or bump the monthly limit up to 100 gigabytes or 250 gigabytes.
I would consider myself a moderate Internet user, definitely capable of using more that 40 gigabytes each month. It'd be hard for me to use up over 100 gigabytes, though, and I'd be less likely to complain about paying a dollar for each gigabyte I used once I blew through a 100-gigabyte limit. I'd definitely complain about going over 40 gigabytes, though.
It'll be interesting to see if Time Warner keeps this pricing scheme going after the trial ends and it'll be even more interesting to see what happens if and when Beaumont gets services like FiOS and WiMAX, which will force Time Warner to compete.
The only way you can fight with this is by canceling the service.
So, if your Internet got metered, just CANCEL these bastards immediately! If no place to switch to, move to dial-up temporarily until the flat rate comes back.
man, i can see the word "unlimited" slowly fading away in every part of my life. i can't wait till fios is the norm.
Fuck the MPAA!!
On a lighter note, check out torrentfreak.com for a amazing archive of everything relating to online copyright reform and the like. They also have all the dirt on the MPAA and RIAA. These were the people that first discovered that Comcast was doing there dong there shit.
TPB 4 Life!!